Tercon and clauses limiting contractual liability

In Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, the Supreme Court considered an exclusion clause in a public tendering dispute. The majority found that the clause did not exclude the claim on its proper interpretation.

The public procurement dispute concerned the Province's consideration and acceptance of a bid involving an ineligible participant. Tercon claimed that this conduct breached the tendering arrangement. Although the agreement contained language limiting claims connected with participation in the process, the majority concluded that the particular claim fell outside the clause's proper reach. The analysis therefore began with interpretation of the clause, rather than assuming that any provision described as an exclusion automatically barred recovery for every kind of breach.

The decision sets out an analysis involving whether the clause applies, whether it was unconscionable when made, and whether an overriding public policy justifies refusing enforcement. It does not mean courts routinely disregard liability limits whenever a result seems harsh. For an Ontario service or consumer dispute, preserve the complete agreement and evidence showing how the term became part of the bargain. Statutory consumer protections can raise additional questions. Determine the clause's actual reach before accepting that it defeats every possible claim.

In a smaller commercial dispute, obtain the full contract and identify the alleged breach before evaluating a limitation or exclusion. Check what losses, conduct, parties, and circumstances the wording actually addresses. Also review how the term became part of the agreement and whether applicable legislation supplies protections that cannot be removed. An unfavourable result does not itself make a clause unenforceable. The practical task is to connect the specific claim to each relevant legal question, using the actual wording and evidence rather than a general belief that liability limits are either always valid or always unfair.

Sources

• Tercon Contractors Ltd v British Columbia 2010 SCC 4
• Consumer Protection Act 2002 current in force legislation

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General Ontario legal information, not legal advice for your matter, and reading it does not create a retainer. Sources checked 15 October 2026: check the current law, forms and dates before you act.

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This article is general information for people in Ontario, not legal advice. Rules, forms and deadlines change, and every situation is different. Check the current rule or speak to a licensed legal professional before you act.