Released today, Strongco Corporation v Nordstrong Equipment Limited, is a significant decision for commercial contracting in Alberta: the Court of Appeal has clarified the law governing indemnity clauses for a party’s own negligence. Our lawyers, Philip Prowse and Melissa Boyles, successfully represented Nordstrong Equipment Limited at trial and on appeal.
The Court confirmed that the longstanding Canada Steamship principles are guidelines, not a rigid legal test. Indemnity clauses are interpreted using the modern approach to contractual interpretation—looking at the agreement as a whole, its commercial context, and the parties’ intentions. When choosing between competing interpretations of a contract, the interpretation that better promotes commercial certainty should generally be preferred.
The decision provides important guidance for both litigators and commercial lawyers on how risk must be allocated—and drafted—in asset purchase and other commercial agreements.