A consulting firm contracted with a manufacturing company to implement an integrated management system, including a limitation of liability clause that had been freely negotiated between sophisticated commercial parties.
When the system implementation failed, the lower courts declared the non-liability clause inoperative on the basis of the doctrine of breach of a fundamental obligation in Quebec civil law.
The Supreme Court allowed the appeal, holding that neither of the two possible legal bases for the doctrine — public order or absence of an objective cause of the obligation — applied to render the clause inoperative in a contract by mutual agreement between sophisticated legal persons.
The Court confirmed that the Civil Code of Québec limits the doctrine of breach of a fundamental obligation to consumer contracts and contracts of adhesion under art. 1437 C.C.Q., and that the legislature deliberately chose not to extend such a mandatory rule to freely negotiated commercial contracts.
The clause did not deprive the debtor's obligation of its objective cause because specific performance and agreed damages remained available as sanctions for nonperformance.
