Contractual time limits on indemnities not excluded by Limitations Act

NFC Acquisition L.P. v. Centennial 2000 Inc., 2011 ONCA 43 is a useful source for the principle that contractually imposed time limits are not barred by the Limitations Act. The Court holds:

[4]              We do not agree that the notice requirement imposed by s. 3.5 was of no force and effect by virtue of the Limitations Act, 2002, s. 22. S.O. 2002, c. 24, Sch. B that provided that a limitation period prescribed by the act "applies despite any agreement to vary or exclude it".  (Section 22 was amended, S.O. 2006, c. 21, Sch. D, s. 2 with respect to permit the variation of statutory limitation periods in business agreements but this case is governed by the earlier provision.)  The notice provision at issue did not vary or exclude the limitation period prescribed by the Limitations Act.  The right of indemnity was purely contractual in nature in a commercial agreement between sophisticated parties.  The various indemnity rights granted were, by agreement, time limited.  The timely notice requirement was a mutually agreed contractual condition precedent for triggering a right of indemnity.  Once a timely notice is given, the cause of action accrued and at that point, the statutory limitation period begins to run.  Notice provisions of this kind are acceptable in the context of commercial agreements between sophisticated parties.