Can A Statutory Limitation Period Be Varied By Agreement?

• Published date: 02 December 2020
• Subject Matter: Corporate/Commercial Law, Contracts and Commercial Law
• Law Firm: MLT Aikins LLP
• Author: Mr Kevin Mehi

What is a limitation period?

Generally speaking, a limitation period is a time limit for a person to commence legal proceedings as a result of some loss or damage. Limitation periods vary from province to province: applicable legislation in Alberta, British Columbia, Ontario and Saskatchewan each prescribe a basic limitation period of two years from the date that the loss or damage was discovered, while applicable legislation in Manitoba prescribes a basic limitation period between one to six years depending on the nature of the claim. If a person does not commence legal proceedings within the applicable time limit, then any claim is considered to be statute barred (except in special circumstances) and may be dismissed by the courts.

However, it is not uncommon for parties to a commercial contract to attempt to vary a limitation period by agreement. Parties may seek to either extend or reduce a limitation period by agreement. A key question for these types of commercial agreements is: can a statutory limitation period be varied by agreement? We outline the variances across jurisdictions below.

Alberta

Section 7(1) of the Limitations Act (Alberta) provides that the basic limitation period may be extended by agreement. However, this is subject to certain requirements: in particular, a party who is adversely affected by this extension must acknowledge and agree to the extension in writing.

However, section 7(2) of the Limitations Act (Alberta) provides that the basic limitation period cannot be reduced by agreement. Rather, any agreement that purports to reduce the basic limitation period is made invalid by this provision of the statute.

Accordingly, parties to a commercial contract in Alberta may agree to extend a basic limitation period, but cannot agree to reduce it.

British Columbia

The Limitation Act (British Columbia) is silent as to whether the basic limitation period may be extended or reduced by agreement. Further, the issue does not appear to have been decided at common law in British Columbia. However, in Rosas v. Toca, 2018 BCCA 191, the Court of Appeal for British Columbia suggests that it may be possible:

[70] Assuming without deciding that it is open to the parties to contract around the limitation period, even if Henderson J.A.'s line of reasoning was not explicitly rejected by Rand J., in my view the Supreme Court of Canada's decision in Hunter Engineering Co. v. Syncrude Canada Ltd., 1989 CanLII 129 (SCC), [1989] 1 S.C.R. 426, forecloses it...