When will a contractual provision purporting to shorten a
statutory limitation period be effective? The Ontario Court
of Appeal addressed this issue in its recent decision in Boyce v.
The Co-Operators Insurance Company, 2013 ONCA 298.
The facts of the Boyce are straightforward. The owners of
a fashion boutique suffered loss as a result of a foul odour in
their business premises on October 20, 2010. They sued their
insurer in February 2012 – more than a year after suffering
the underlying loss – seeking indemnification for the
The owners' insurance policy contained a clause which stated
that: "Every action or proceeding against the insurer
for recovery of any claim under or by virtue of this contract is
absolutely barred unless commenced within one year after the loss
or damage occurs." (This clause was intended to
contractually incorporate a statutory condition that applies to
other types of policies).
The insurer sought to summarily dismiss the claim, based on the
expiry of this contractual limitation period. The motion
judge dismissed the summary judgment motion. He did so by, among
others things, ruling that a contractual provision that shortens
the statutory limitation period (in Ontario's Limitations Act,
2002) can only be effective if various pre-conditions are met,
namely, such a provision must:
make specific reference to the statutory limitation period;
use clear and unequivocal language that the parties were intending
to vary the statutory protection;
clearly alert the insured that they were foregoing a statutory
right to a longer limitation period; and
(iv) be signed
by the person(s) foregoing such a right in order to make clear that
he/she understands the forfeiture of that statutory right.
The Court of Appeal reversed the decision of the motions judge,
giving effect to the contractual limitation period and dismissing
the insureds' claim. The Court of Appeal expressly
rejected these preconditions to the enforceability of a contractual
limitation period clause, stating that nothing in the language of
the Limitations Act supported the imposition of such conditions (at
In order to be valid, the Court of Appeal stated (at para. 20)
that a contractual limitation period provision must (assuming it is
found in a "business agreement", as it was in the instant
case, rather than in an agreement that is for "personal,
family or household purposes") simply:
"[I]n 'clear language" describe a limitation
period, identif[y] the scope of the application of that limitation
period, and exclude the operation of other limitation
As these requirements had been met in this case, the contractual
limitation period was given effect and the case dismissed.
The decision in Boyce is an important one which gives effect to
the legislative intention to permit the shortening of limitation
periods in business agreements. The Court was reluctant to import
conditions into the validity of such contractual clauses that were
not found in the legislative text. The types of safeguards
rejected by the Court of Appeal are more suited to the consumer
context, and consumers who enter into agreements for personal,
family or household purposes are already precluded from forfeiting
the benefit of a longer statutory limitation period in the
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