Limitation period for deal claims

After closing, a buyer who finds a problem and a seller facing a claim both work against a statutory deadline. That deadline is separate from the claim window in the purchase agreement, called the survival period, so check how the two fit together.

How provinces set the clock

• Ontario: under the Limitations Act, 2002, unless the Act provides otherwise, a proceeding cannot start after the second anniversary of the day the claim was discovered (s. 4), and a claim is discovered on the earlier of when the person first knew the listed facts or when a reasonable person ought to have (s. 5(1)). Section 15(2) adds an outer limit of the 15th anniversary of the act or omission, subject to the rest of s. 15.
• British Columbia: under the Limitation Act, subject to the Act, a court proceeding must not start more than 2 years after the day the claim is discovered (s. 6(1)), and, subject to Parts 4 and 5, not more than 15 years after the act or omission (s. 21(1)).
• Alberta has its own Limitations Act, and Quebec uses extinctive prescription under its Civil Code.

Questions to raise

Ask which province’s law governs the agreement, when the claim could be treated as discovered, and whether the agreement tries to change the statutory period. Ontario’s Act (s. 22) lets a business agreement, one made by parties none of whom is a consumer, vary or exclude some periods within limits set in that section, as covered in can a purchase agreement change the limitation period. Related issues arise in a post-closing dispute.