Performing the Job Flashcards
Obligations of the Contractor to the Owner
- Duty to complete the work
- Implied term that they will perform work diligently and in good and workmanlike manner
Duty to complete the work
Contractor has the duty to complete the work in accordance with the contract, its drawings, plans, and other documents
Performance both obligation and right meaning
Owner not able to perform any part of the contractor’s scope of work without breaching the contract
Party of duty to complete work is implied duty that
that the owner will not do anything to prevent or hinder the contractor in its performance of the work
Owner/ design pro does not owe a duty of care to….
advise contractor on how to perform the work
When will obligation to complete extend?
If generally contemplated in the anticipated scope
Implied terms for contractors under duty to complete
- That work will be performed in good workmanlike manner (implies fitness in some cases)
- Work will comply with building regulations
Performance is ____ to payment
Condition precedent
whether full performance depends on the contract
Partial performance will not entitle partial payment when
owner does not benefit from anything other than full performance
Breaches that absolve the owner of obligation to pay
Those that go to the root of the contract
Substantial Performance
achieved where there is remaining work but the work remaining does not go to the root of the contract (case by case basis)
What happens at substantial performance?
Owner required to pay contract price (unless contract says due on total completion)
Entitlement to be paid for sub performance different when
Residential as well as if there is unique design or aesthetic preferences
Time for completion
Duty to complete means complete at a specified time (usually completion time in contract expressed in milestones or date)
Time at large contracts
Contract without timeframe
Time at large times calculated
Reasonable amount of time (fact dependant inquiry)
Contracts that do stipulate can be time at large
If owner interferes
Cases where contractor’s actions caused concurrent delay
- Ex: owner preventing access to site but contractor falling behind as well
- Contract may still be considered time at large
3 kinds of delay
1) Excusable delay
2) Compensable delay
3) Non-compensable delay
Excusable delay
- delays for which neither party is responsible (ex: force major)
- may justify schedule extensions but not compensation
Compensable delay
- delay caused by an act or omission of the owner (ex: impeding access)
- Compensation to contractor and schedule extensions
Non-compensable delay
- delay caused by contractor’s own failure to perform its duties
- Contractor may be liable for damages
- Contractor may have to do additional work without pay
Owner obligation
- Not to impede/ provide sufficient access to site and materials
- Payment
- Not to interfere with contractors work
- Get permits, easements, and rights of servitude
- In D-B-B appropriate, timely, and sufficiently appropriate drawings
Owner obligation not to impede creates what implied terms?
- implied term that site will be handed over to the contractor within a reasonable time after signing the contract
- implied term that specified documents will be supplied at an appropriate time
- where owner responsible for material implied obligation to supply those materials in the stipulated form and at an appropriate time to allow contractor to meet schedule
What if owner breaches obligation not to impede
Required to pay costs to contractor resulting from breach
Increased duty to supply materials when schedule is tight
failure to supply items that would have just been an inconvenience tight schedule can up this from a nuisance to a significant breach
Compensable delay damages
Contractor can claim for:
- Some recovery for offsite overhead costs
- Loss of profit earning capacity
- Specific on sight overhead costs for legitimate period of extension
Compensable delay damages not awarded
Where caused by contractors failure to mitigate
Must determine causation for compensable delay damages how
causation established where the defendants acts materially contributed to the delay
Onus on contractor to prove what in compensable delay
1) Delay was caused by the owner
2) That delay resulted in the loss they are claiming
3) That they were not able to mitigate
Onus on owner to prove what in compensable delay
show contractor caused or contributed to the delay
Bar on claims
- Owners have entitlement in the contract to stipulate a claims bar on delay claims
- Must be clear and unambiguous
Liquidated damage clauses
Provision saying contractor must pay the owner a fixed amount for each day that the work remains incomplete after a stated time
Liquidate damages only enforceable if…
genuine pre-estimate of the innocent party’s damages and are not merely a financial penalty
Penalty if at the time of contract formation
- Extravagant/unconscionable
- Breach consists of amount of damages is greater than money that ought to be paid
- Contracts with a single lump sum for liquidated damages that can apply in more than one scenario, some of which are worse than the other, it will be a penalty
If actual damage exceeds penalty damage
The damage awarded is the penalty amount
NB law reform act on penalty enforcement
Penalties enforceable provided they are reasonable in light of all circumstances
Partial performance does not (owners)
absolve owners from paying anything (unjust enrichment)
Negligent/deficient work effect on payment
Negligent/deficient work does not absolve owner for paying, pay the price minus cost of repairing
Duty where owner knows the design professional has failed
owes contractor a duty to ensure all design work done properly
Contractor responsible for (paperwork)
permits, licenses or certificates they need to carry out the work
Extra work
If there is work not contemplated in initial contracted scope but that is necessary for the completion the contract, usually obliges the contractor to perform the work with an appropriate adjustment to price and schedule
Contractor can refuse extra work without being in breach if
work is not necessary or reasonably inferable from the contract and the scope of work in that contract
Scope deductions
- Where contract entitles owner to deduct part of the work
- Cannot delete a major part or delete to have someone else do the work
Contractor deviates from scope
If contractor supplies or uses material that is of better quality than necessary or does more work because of failure to understand project, they cannot claim additional costs
Contractor can claim extra to be compensated if failure by owner
- Caused contractor to do more work than necessary by improperly saying what was needed
- Owner failed to do work so contractor had to
- Owner actively misleads about extent of work
- Owner makes extra changes to schedule
Contractor not entitled to extra compensation if
- Deviates from clear contractual specifications without authorization
- If failure if due to contractors work
- Remedial work to correct defect by contractor
Unit price extras
Only if contract doesn’t describe a certain class of work
Authorization of extra work requirement
owner needs prior notice and to give authorization to be liable
Two ways authorization provided
1) Express or implied
2) In writing
Work done under protest
When owner rejects claim but have duty to keep working can do this so you aren’t saying extras without pay okay
If no work under protest provision two options
1) Do the work and waive any right to additional compensation
2) Refuse the work and risk being in breach of contract
*dispute res provisions can cure this
Contractor liable to do what in design bid build
Only liable to build in accordance with design (unless warranty of fitness PR human habitation)
Warranty of fitness or human habitation does not
Carry on to subsequent purchasers
If specified materials
Not liable if materials not suitable
If contractor guarantees result on suitability of specifications
Bound to achieve result even if specifications are defective
Damages for defect
- Cost of making good defects
- Unless cost unreasonable high compared to value of fixing
Defect
• Defect occurs where work or materials do not conform to the specifications of the contract
Contract Legally Frustrated where
through no fault of anyone a material part of the contract is incapable of being performed because carrying forward would result in something drastically different
Examples of legal frustration not caused by delay
- Legislative changes that alter a fundamental element
- In abnormal/ extraordinary circumstances the failure to get the permit
Termination
- A party electing to end the contract
- Done by either party
- Contract likely has process for termination
Typical process for termination
1) Fails to comply with contractual requirements to a substantial degree
2) Fails to correct breach after getting notice in writing, AND
3) Consultant gives written statement to both that termination is justified
Remedies for termination
Party terminating can seek damages for loss of breach and loss of bargain
Bombardier Transportation Canada v Metro Lake
if contract specifies a process you are stuck with it. Default is not enough to terminate have to go through process. Need to give contractor ability to remedy default. If breach not cured party may be allowed to terminate.
Repudiation
Owner can terminate where there has been a substantial breach by the contractor where the defects are so bad they deny owner the very substance of the thing contracted for
condition vs warranty
- Condition: term so important that failure entitles termination
- Warranty: much less important
*look at intention of the parties to determine which
Innominate terms
terms that are neither condition or warranty but depending on consequences may operate as condition
For repudiation the clause needs to be
A condition or innominate term acting as one
To get damages in repudiation
repudiation needs to have been communicated clearly to the other party. Without it cannot treat contracts as at an end
Recession
- Comes from fraud or misrepresentation
- Puts party into position they were in before entering
