QSL Canada Inc v Cliffs Mining Company, 2025 FC 1653
Background
QSL Canada Inc. (“QSL”) provided stevedoring services to United States Steel Corporation (“USS”) and Cliffs Mining Company (“Cliffs”) at the Port of Quebec for nearly two decades. In July 2022, QLS co-mingled USS’s and Cliffs’ cargo. USS and Cliffs filed an action for damages against QSL. QSL sought declarations that USS’s claim was limited or excluded pursuant to its standard terms and conditions with USS. QSL incorporated its standard terms and conditions in an annual agreement, which USS did not sign.
USS argued that QSL’s terms and conditions did not apply, because USS rejected QSL’s terms and counter-offered with a purchase order that contained USS’s own terms and conditions.
The Court’s Analysis and Decision
To decide which terms and conditions applied, the Federal Court applied well-established principles regarding the formation of contracts under Canadian maritime law. Among other things, the Court considered the parties’ longstanding commercial relationship and their conduct.
Since 2003, QSL circulated a written “proposed” agreement annually, which incorporated its standard terms by reference. For the better part of the commercial relationship, QSL’s comprehensive standard terms were located on its website. USS rarely signed the annual agreement. The parties were primarily focused on the commercial terms as between them, not their respective contractual terms and conditions. Once rates were agreed upon, USS consistently proceeded with shipments, forecasts, and performance without formal objection to QSL’s terms.
In approximately December 2015, USS began sending purchase orders to QSS, which referenced USS’s own standard Purchase Order General Terms and Conditions. The purchase order expressly rejected QSL’s terms and conditions.
USS argued that QSL’s standard terms and conditions in the unsigned agreement did not apply and that USS’s purchase orders constituted counteroffers. The Court did not accept that position.
Despite the absence of signatures on QSL’s annual agreements, the Court found that USS’s silence was not neutrality but acquiescence by conduct. Analyzed objectively, USS’s conduct was evidence of its intent to be contractually bound to QSL’s terms. Directing a ship bearing cargo to QSL’s facility for the provision of QSL’s services indicated acceptance of QSL’s proposed agreement.
The Court further held that there was no evidence that USS expressly rejected QSL’s terms. There was a lack of evidence detailing the purpose of USS’s purchase prders, which could have had an administrative purpose rather than a contractual purposes. The Court also found that the structure and content of QSL’s terms were closely aligned with the services rendered, whereas the terms of USS’s purchase orders were boilerplate conditions.
Therefore, the Court found that QSL’s terms, including the limitation of liability clause, applied.
Merlin Shipping Limited v Aegir-Marine Americas LLC, 2025 FC 1373
Background
Aegir-Marine Americas LLC (“Aegir-Marine”), a Delaware company, and D.F. Barnes Services Ltd. provided labour and materials and repair installation services, respectively, for a bow thruster on the Vessel Atlantic Merlin (the “Vessel”).
The Plaintiffs, the owners and managers of the Vessel, alleged that the Defendants did not fix the bow thruster. The Plaintiffs alleged that the Defendants’ negligence and breach of contract caused further damage to the bow thruster.
The Plaintiffs commenced an action for damages against Aegir-Marine and D.F. Barnes Services Ltd.
Aegir-Marine brought a motion to permanently stay the Plaintiffs’ action against it on the basis that the parties’ contract included a binding forum selection clause that required the parties to litigate disputes in the Commonwealth of Virginia. In particular, Aegir Marine relied on the On-Site Maintenance & Repair Service Terms that it emailed to the Vessel’s Chief Engineer together with a rate sheet and estimate.
In response, the Plaintiffs argued that the parties were bound by the terms and conditions of J.D. Irving, Limited (“JDI”), which contained a governing law and jurisdiction clause in favour of the Province of New Brunswick. As part of a pre-qualification process, Aegir-Marine acknowledged and accepted that all future purchase orders would be governed by the JDI terms and conditions. The Plaintiffs argued that there was no mutual agreement to adopt different terms or a different jurisdiction clause.
The Court’s Analysis and Decision
To obtain a stay, Aegir-Marine had to show that the jurisdiction clause it relied on was valid, clear, and enforceable, and that it applied to the cause of action before the Court.
The Federal Court found that Aegir failed to meet its burden to prove that the jurisdiction clause in its service terms was binding.
The Federal Court accepted that Aegir-Marine agreed during the pre-qualification process that the JDI Terms and Conditions would apply to all future purchase orders. Therefore, those terms and conditions applied to the purchase order the Plaintiffs issued for bow thruster repair work.
There was no subsequent agreement to modify the JDI Terms and Conditions or to adopt different terms. For example, the Aegir-Marine service terms required the end-user to initial each page and sign the document. The Plaintiffs did not sign or otherwise acknowledge Aegir-Marine’s service terms. Rather, the Plaintiffs issued a purchase order that was subject to the JDI Terms and Conditions.
Key Takeaways
The recent Federal Court cases discussed above underscore the importance of clear and consistent communication regarding applicable contractual terms. If it is not clear what documents form the parties’ contract, disputes can arise or become more complex.
Where the contractual terms are not finalized or the parties exchange multiple terms and conditions, the Federal Court’s approach to resolving a “battle-of-the-forms” in maritime related contracts provides clear guidance:
- Context is key: a court will examine the entire commercial relationship, not just the last document exchanged.
- Conduct can crystallize contractual intent: where contractual documents are unsigned, courts will consider the parties’ actions to determine if they have agreed to terms through conduct or acquiescence.
- Not all contractual documents are equal: for example, unilaterally issued terms with boilerplate conditions may not be binding.
- Binding contracts will be enforced: sophisticated parties are expected to live with the legal consequences of their contracts, unless such terms are varied by express mutual agreement.
Please contact Ian Breneman or Aleksandar Polic if you have any questions regarding the above.
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