Summary

38904

6362222 Canada inc. v. Prelco inc.

(Quebec) (Civil) (By Leave)

(Publication ban in case) (Sealing order) (Certain information not available to the public)

Keywords

Contracts - Contract - Limitation of liability clause - Clause set aside - Whether Quebec civil law should recognize doctrine, created by courts and authors, of breach of so called essential obligation, which allows exculpatory clause going to essence of contract to be set aside - If so, what are parameters of this doctrine, and whether doctrine was correctly applied in this case.

Summary

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(SEALING ORDER AND PUBLICATION BAN)

The respondent, Prelco inc., a company specializing in the processing of flat glass, sued the appellant, 6362222 Canada inc., for additional costs and loss of profits associated with a project to implement an integrated management system for its operations. 6362222 Canada inc. contested the application and filed a cross application for unpaid invoices.

The Superior Court found that 6362222 Canada inc. was at fault in its implementation approach, that the service provider was responsible for determining the appropriate type of implementation and that this was an essential obligation. In its view, this fundamental error giving rise to the damage made the limitation of liability clause in the agreement inapplicable. 6362222 Canada inc. was ordered to pay Prelco $1,872,266 with interest and the additional indemnity.

The Court of Appeal found that the trial judge had not erred in determining the applicable principles or in applying those principles to the facts. The appeal and the incidental appeal were dismissed.