Liability Exclusion Clauses: Contractual Freedom with Limits
The landlord’s obligation to deliver the premises to the tenant “in good repair in every respects and to ensure the tenant’s undisturbed enjoyment of them”1 is frequently subject to disputes.
This is because landlords often attempt to contractually exclude their liability with respect to this obligation, particularly regarding the maintenance of the property or the equipment located therein, which may lead to claims.
These clauses are open to various interpretations and must adhere to certain guidelines. Indeed, although the Civil Code provides a legal framework governing the obligations of the parties to a commercial lease, this framework generally applies only in the absence of a contrary stipulation. However, there is an exception to this principle when the Civil Code establishes obligations whose violation would be contrary to “public policy.” For example, as our colleagues noted in a recent article, a landlord cannot deprive the tenant of the right to register the lease in the land registry without violating “public policy.”
In practice, the provisions that the parties may include in the lease to exclude their liability with respect to the obligations set forth in the Civil Code are therefore not unlimited. Meticulous drafting of the clauses is necessary to ensure that the risks associated with each party’s activities are taken into account.
The recent cases of Galarie Lisabel Inc. and Immeubles Redbourne South Shore Inc. illustrate the impact that the inclusion of a liability exclusion clause—or, to the opposite, the failure to include one—can have on a lease.
The Galarie Lisabel Inc. Case2: When an Exclusion Clause Protects the Landlord
Following a water leak that damaged the tenant’s works of art, the tenant filed a lawsuit seeking several million dollars from the landlord, representing the value of the works, which the tenant considered to be total losses. The tenant alleged that the landlord had failed to maintain a sump pump that would have caused the water leak. However, the parties had agreed to an amendment to the lease whereby the landlord had excluded its liability specifically with respect to water leaks.
The Court had to ensure that the liability exclusion clause did not have the effect of excluding the landlord’s gross negligence or willful misconduct with respect to the property damage caused to the tenant3, as this provision was a matter of “public policy.” It concluded that the tenant had not demonstrated the existence of gross negligence or willful misconduct in the maintenance of the pump, which would have allowed the liability exclusion clause to be set aside. The tenant was therefore required to solely bear the losses resulting from the water infiltration.
Nevertheless, the court’s conclusion could have been the opposite if the event that caused the damage had not been included in the list set forth in the liability exclusion clause.
The Immeubles Redbourne South Shore Inc. Case4: Force Majeure Does Not Necessarily Preclude Contractual Freedom
Who—the landlord or the tenant—must bear the consequences of the restrictions arising from public health regulations that limited activities carried out in certain premises during the COVID-19 pandemic?
This is the question the Court of Appeal had to answer when the landlord sued the tenant, who refused to pay rent for the period covered by the decrees that restricting his operations on the leased premises.
Generally, the Civil Code5 provides that in the event of force majeure, the landlord may be relieved of his obligation to provide the tenant with the use of the premises, in whole or in part; however, in return, he cannot require the tenant to completely fulfill his obligations, including the payment of rent. In this case, the Court determined that the pandemic constituted a force majeure event and therefore that the landlord could not require the tenant to pay the full amount of rent, as the tenant had been unable to fully use the premises.
Nevertheless, the Court will hold that, since the tenant was still able to store its equipment on the premises and use it to some extent despite the government decrees, it was nonetheless required to pay a portion of its rent.
In its analysis, the Court of Appeal clarified that the parties could have negotiated a different solution at the time the lease was signed, confirming that the freedom of contract that prevails in commercial leases also applies in cases of force majeure, as the relevant provisions are not a matter of “public policy.” Thus, the parties could have sought to deviate from the definition of force majeure contained in the Civil Code or could have specified in advance the proportion of rent payable in the event of a restriction on the use of the premises.
Landlord or Tenant: Be Sure to Clearly Define Your Responsibilities When Negotiating a Commercial Lease
These two cases clearly demonstrate how essential it is for both landlords and tenants to carefully review liability exclusion clauses when signing a lease in order to ensure that the planned operations and associated risks are taken into account.
It is in the parties’ best interest to make sure that their respective obligations are clearly set forth in the lease or, failing that, to fully understand the supplementary rules provided for in the Civil Code.
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[1] Article 1854 of the Civil Code of Québec.
[2] Galarie Lisabel inc. c. 4158008 Canada inc., 2025 QCCS 1914.
[3] Article 1474 of the Civil Code of Québec.
[4] Immeubles Redbourne South Shore inc. c. Soutex inc., 2026 QCCA 434.
[5] Article 1470 of the Civil Code of Québec.
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