Varying Limitation Periods by Contract Made After October 16, 2006

....Bill 14, rhe Acces to Justice Act, 2006 (Ontario) received [loyal Assent on October 19, 2006 and is now in effect.

Among other things, Bill 14 makes important changes to the no contracting our rule in the Limitations Act, 2002(Ontario) (Act).

What follows is a summary of how the amended Act affects the variation of limitation periods by contract (including tolling agreements)

For the basic two year limitation period:

Business agreements can be extended or suspended for example by way of a tolling agreement.

Consumer agreements can be extended or suspended for examle by way of tolling agreement but cannot be shortened.

For the ultimate 15 years period:

Business agreements can be extended or suspended only if relevant claim has been discovered--ie tolling agreements only. They can be shortened regardless of whether relevant claim has been discovered.

Consumer agreements can be extended or suspended only if relevant claim has been discovered--ie only tollig agreements. Thet cannot be shortened.


Notes:

1 . No statutory restrictions on contracting out of limitation periods apply to agreements entered into before January 1, 2004.

2. After December 31, 2004 but before October 19, 2006, the Act prohibits contracting out of any limitation Period

3. A “consumer agreement” is every agreement other than a “business agreement”.

4. A “business agreement” is an agreement made by the parties none of whom is a “consumer” as defined in the Consumer Protection Act, 2002.

5. The basic 2-year limitation period runs from day on which the claim is discovered (or was discoverable).

6. The ultimate 15-year limitation period runs from the day on which the act or omission on which the claim is based took place.

7 . Tolling agreements are now permitted in all circumstances (business and consumer agreements) and for all limitation periods (basic and ultimate) regardless of whether the parties agree to have an independent third party (mediator or arbitrator) assist in resolving the claim....

(Written by Wayne D. Gray)