What You Need to Know About Limitation Periods Applicable to Construction Contracts in Ontario
Limitation periods related to construction contracts are essential to understand, whether it is a contract between a construction company and a contractor, municipality or business. In Ontario, these legal deadlines set the window for taking action and missing them can result in losing the right to pursue a claim altogether. Ensuring your contract reflects these timelines and protects your business if a dispute arises is a key reason to work with a construction lawyer. These are the basics of Ontario construction law limitation periods to consider.
Types of Limitation Periods in Construction Contracts
In Ontario, construction contracts are subject to both a basic two-year limitation period and an ultimate fifteen-year limitation period. Ontario’s Limitations Act, 2002 outlines these main types of limitation periods that apply to most construction disputes:
1. The Basic Limitation Period – Two Years
This starts when a claim is discovered. In legal terms, a claim is discovered when you knew—or should reasonably have known—that an injury, loss, or damage occurred that was caused by someone else’s act or omission, and a legal proceeding would be an appropriate way to seek a remedy. Essentially, the clock starts ticking when you become aware (or ought to be aware) of the issue.
2. The Ultimate Limitation Period – Fifteen Years
This is the outer time limit. Regardless of when a problem is discovered, a claim cannot be made more than 15 years after the date of the act or omission that gave rise to the issue.
Can Limitation Periods in a Construction Contract Be Changed?
Yes, but with conditions. In Ontario, parties to a business agreement (such as a construction contract between commercial parties) can agree to change the two-year basic limitation period. For example, they may choose to shorten or extend the period or suspend it entirely. This only applies when both parties are acting for business purposes. These contractual changes cannot override the 15-year ultimate limitation period.
The Role of the Construction Act
Beyond the Limitations Act, Ontario’s Construction Act imposes strict deadlines specifically for construction liens.. Once the lien period expires, the right to enforce the lien is lost with no exceptions. These timelines are strict and must be followed regardless of other contractual terms.
Working with a lawyer who is experienced in construction law will help you work within the confines of Ontario’s legal guidelines.
Dispute Resolution in Construction Contracts
Construction projects are complex, and disputes are common. That’s why most contracts include dispute resolution clauses—some straightforward, others highly detailed with multiple levels of review and deadlines.
A well-drafted dispute resolution clause might involve:
Direct negotiation
Mediation with a neutral third party
Binding arbitration
Court proceedings, if necessary
These processes often have built-in timelines that interact with statutory limitation periods. It is critical to understand how these timelines affect your right to make a claim which is why you should consult with a construction lawyer when drafting or signing a contract. Failing to follow these procedures—or missing a deadline—can result in your claim being dismissed.
Best Practices for Protecting Your Rights
When you are getting prepared to enter a construction contract, you will want to be sure to protect your assets if a dispute arises. To avoid unpleasant surprises, keep these tips in mind:
Consult a construction lawyer early. An experienced lawyer can help you understand your contractual rights and legal obligations, ensure compliance with limitation periods, and draft or review contracts to protect your interests.
Review contracts carefully before signing. Understand what limitation and dispute resolution clauses say and how they work in practice.
Be proactive. If a dispute arises, act quickly. Do not wait to see if it gets worse.
Document everything, especially the timing of key project milestones and communications.
Why Legal Guidance Matters
Limitation periods can be tricky and the consequences of getting them wrong are serious. Courts will generally enforce clear contractual limitation clauses, even if they are shorter than what the law would normally allow. That is why having a construction lawyer on your side is essential.
A knowledgeable lawyer can help you interpret limitation clauses in your contract and ensure you are meeting key deadlines under both the Limitations Act and the Construction Act. They can also draft and negotiate clear dispute resolution provisions and represent you if a claim becomes necessary.
Need Help Understanding Limitations in A Construction Contract? GFW Law Has the Experienced Lawyers to Keep Your Business Protected
When it comes to construction disputes and limitation periods, Gionet Fairley Wood LLP has the background and skills to represent your business from the moment you consider a contract. We have many years of legal experience, from the boardroom to the court room, in Simcoe County, Muskoka, Grey Highlands, and the surrounding area. Contact our experienced legal team today through our website, or call us at 705-468-1088.
***The information provided in this blog is for general informational purposes only and should not be construed as legal advice. If you have legal questions, we strongly advise you to contact us.