Can a contract limit how much I can recover if the other party breaches in Ontario?

Yes. Limitation of liability clauses — which cap the damages recoverable for a breach or exclude liability for certain types of loss — are common in commercial contracts and are generally enforceable in Ontario between businesses of roughly equal bargaining power.

Courts enforce these clauses where the language is clear and unambiguous. However, they scrutinize exclusion and limitation clauses carefully, especially in standard form agreements and where one party had significantly less bargaining power. The contra proferentem rule applies — any ambiguity in a limitation clause is read against the party who drafted it.

A clause will not be enforced if it purports to exclude liability for fraud or deliberate misconduct. Courts are also reluctant to enforce limitation clauses that would produce a grossly unconscionable result. The Consumer Protection Act, 2002 limits the extent to which businesses can contractually exclude statutory consumer rights.

In practice, caps on liability set at the contract price or a fixed dollar amount are common in IT services, professional services, and supply agreements. If you are negotiating a contract with a significant limitation of liability clause, consider whether the cap is proportionate to the risk you are accepting and whether the other party can credibly stand behind the agreement at all.