Inclusion Is Not Incorporation: Alberta Court Reaffirms Heightened Notice Requirement For Limitation Of Liability Clauses

In Interra Energy Services Canada Ltd v Yangarra Resources Ltd,¹ while considering a summary application, the Alberta Court of King’s Bench held that the mere inclusion of limitation of liability clauses in standard form terms and conditions attached to a commercial proposal may not, without more, establish that those clauses form part of the parties’ agreement. The decision makes two important findings. First, even between sophisticated commercial parties, limitation of liability clauses contained in standard form contracts might not form part of the contract. Second, disputes of this nature may contain genuine issues for trial, and as such may not be suitable for summary determination.

Background

Interra Energy Services Canada Ltd (“Interra”) proposed to provide hydraulic fracturing products and services to Yangarra Resources Ltd (“Yangarra”). Multiple drafts of the eventual contract included Interra’s standard form Terms and Conditions (“T&Cs”), which contained limitation of liability provisions. While Yangarra was aware that the T&Cs accompanied the proposals, and were part of the continuing pagination of the contract, Interra did not specifically draw the limitation provisions to Yangarra’s attention.

Following operational difficulties, Yangarra refused to pay approximately $854,000 in invoices and alleged defective products and negligent services. Interra commenced an action for payment and sought summary dismissal of Yangarra’s counterclaim based on the limitation provisions contained in its T&Cs. Applications Judge Farrington granted Interra’s applications, finding that the T&Cs formed part of the contract and thus the counterclaim was summarily dismissed.

Heightened Notice for Limitation of Liability Clauses

On appeal, Justice Feasby heard the matter de novo on an expanded record. The central issue was whether the limitation of liability clauses contained in Interra’s standard form T&Cs had been sufficiently brought to Yangarra’s attention to form part of the parties’ agreement.

Justice Feasby held that where a standard form document is not signed but merely delivered, the terms upon which a party seeks to rely must be brought to the attention of the counterparty before or at the time the contract is formed. The Court noted the parties agreed that a heightened standard applies to limitation and exclusion clauses. Relying on Tilden Rent-A-Car Co v Clendenning, the Court held that a party seeking to rely on such clauses must take reasonable measures to draw them to the other party’s attention.² The Court further noted that this principle applies even in commercial relationships between sophisticated parties with equal bargaining power.

The Court also referred to Trigg v MI Movers International Transport Services Ltd, where the Ontario Court of Appeal held that a limitation or exemption clause is not incorporated into a contract unless it is brought to the other party so prominently that the party can fairly be taken to have known of and agreed to it.³

Interra advanced two arguments in response. First, Interra relied on Motkoski Holdings Ltd v Yellowhead (County), where the Alberta Court of Appeal held that a party cannot avoid contractual terms simply because it failed to read them.⁴ Justice Feasby noted that decision did not involve a standard form contract and did not consider the authorities governing exclusion clauses in standard form agreements. Moreover, Interra also argued that the limitation clauses should be analyzed under the framework established by the Supreme Court of Canada in Tercon Contractors Ltd v British Columbia (Transportation and Highways).⁵ Justice Feasby found that Tercon deals with whether an exclusion or limitation clause is enforceable, and does not consider whether it has been incorporated into a contract, which was the issue in this appeal.

Applying these principles, Justice Feasby found that although Interra had attached the T&Cs to its proposals and referenced them in accompanying correspondence, it had never specifically drawn the limitation provisions to Yangarra’s attention. Yangarra’s evidence was that it did not read the T&Cs, and Interra’s sales manager acknowledged that he had not identified the limitation of liability provisions or any other specific clauses for Yangarra. The Court concluded that Yangarra had an arguable position that it lacked sufficient notice of the provisions and that this constituted a genuine issue requiring a trial. The Court further found that there was a sufficient link between the claim and counterclaim that they must proceed to trial together. As a result, the Court set aside both the summary judgment and the summary dismissal.

Implications for Commercial Parties

Commercial parties that rely on standard form terms and conditions to limit liability should review their contracting practices carefully. The decision highlights several practical considerations:

• Simply attaching standard terms and conditions to a proposal or contract may not be sufficient to incorporate limitation of liability provisions. The party seeking to rely on such clauses bears the burden of demonstrating that reasonable steps were taken to draw them to the counterparty’s attention.
• Businesses should consider expressly identifying limitation of liability provisions in cover correspondence, highlighting them in the principal agreement, or requiring separate acknowledgment through initials, signatures, or other forms of confirmation.
• Where possible, limitation of liability provisions should be included in the body of the principal agreement rather than solely in attached standard form terms and conditions.
• Parties should not assume that limitation of liability provisions will be enforceable simply because they are attached to, or referenced in, the operative contract documents.

Justice Feasby observed that following Tilden, car rental companies commonly required customers to initial or sign beside limitation of liability provisions. Similar mechanisms remain available to commercial parties and may provide persuasive evidence that the relevant clauses were brought to the counterparty’s attention.

Conclusion

The merits of Yangarra’s counterclaim and the ultimate enforceability of the limitation provisions remain to be determined at trial. Nevertheless, the decision underscores an important distinction between inclusion and incorporation. Even sophisticated commercial parties may not be bound by limitation of liability clauses contained in standard form terms and conditions unless reasonable steps are taken to bring those clauses to their attention at the time of contract formation. Furthermore, this decision raises separate questions about when a record is suitable for summary determination.

Footnotes

1 Interra Energy Services Canada Ltd v. Yangarra Resources Ltd, 2026 ABKB 387.

2 Tilden Rent-A-Car Co v. Clendenning, 1978 CanLII 1446 (ON CA) (“Tilden“).

3 Trigg v. MI Movers International Transport Services Ltd., c.o.b. as Movers International, Canada Line Ltd., D. & C. Wardrobe Cartage Ltd., CP Rail and CP Ltd., 4 O.R. (3d) 562 [1991] O.J. No. 1548.

4 Motkoski Holdings Ltd. v. Yellowhead (County), 2010 ABCA 72.

5 Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4 (“Tercon”).