Chapter 19 – Breach of Contract

 If a party fails to perform the obligations specified in the contract, they have breached the contract
 The innocent party is entitled to remedies (damages) and can consider the contract terminated because of
the breach
 An obligation that is essential to the contract is a condition
 An obligation that isn’t essential to the contract is a warranty
 Breach of either a condition or warranty may entitle the non-defaulting party to damages, but only
breach of condition will terminate the contract
 Ex: a contractor was supposed to provide temporary heat in a building while he was working in the
winter. He didn’t, but that wasn’t a fundamental condition. The work could still be done without heat, so
it wasn’t enough to terminate the contract.

Repudiation
 When one party expressly tells the other party that he has no intention of fulfilling contractual
obligations, he has repudiated the contract
 This doesn’t have to be done verbally, it can be expressed by actions that the work will not get done
 The non-defaulting party can either ignore the breach (so the contract keeps going), or assume that the
contract has been discharged because of repudiation
 If the non-defaulting party treats the contract as discharged, he can seek damages
 The non-defaulting party has to tell the defaulting party that the contract is discharged within a
reasonable time

Remedies
 A non-defaulting party is entitled to damages incurred as a result of breach of contract
 The injured party may also be entitles to a quantum meruit remedy (equitable remedies called specific
performance and injunction).
 Both parties must foresee the consequences of breach of contract before entering into the contract.
 A mill owner hired a carrier to deliver a broken shaft to the manufacturer for repair. By the carrier’s
negligence, the shaft was delivered late. The owner took the carrier to court and sued for lost wages
from the lack of shaft. The court noted that the carrier didn’t know that the shaft was a vital part of the
mill.

Direct and Indirect Damages

 Direct Damages: an owner received bids from three contractors for a project. The lowest bidder won,
but refused to perform and immediately defaulted. The next lowest bidder is given the contract. The
direct damage the owner suffered is the difference between the two bids.
 Indirect Damages: a consequence of the breach (ie: lost wages. If a contractor is negligent and cuts
power to a factory, the factory can’t produce anything, and would lose money).
 If you put in the contract “In no way will the party be responsible for any direct or indirect damages”,
you’re off the hook.

Duty to Mitigate
 The party who suffers loss from breach of contract must take reasonable steps to mitigate the damage
  If they’re assholes about it, the court will take that into account when they decide their compensation

Penalty Clauses
 Contracts can have clauses that a party must pay specified damages if a certain event happens (ie:
contract not fulfilled by a certain date)
 Both parties have to make a genuine attempt to estimate the damages that may occur as a result of the
breach. If it’s an unreasonable number, the court won’t uphold it.
 These pre-estimated damages are called liquidated damages. You have to call it that instead of penalty
in a contract.

Quantum Meruit
 If a service has been provided, but no agreement was made on payment, the court will determine that the
service provider should be paid a reasonable amount based on quantum meruit (as much as is deserved)
for the time spent and materials used.
 If a contract expressly outlines payment, but one party defaults and the innocent party decides to
discharge the contract, quantum meruit may apply.
 A contract said that the owner would pay the contractor for his services once the architect has been
shown that the contractor paid his subcontractors. The architect didn’t believe the subcontractors had
been paid. The work was delayed, and the owner and the architect both complained about defects in the
construction. The owner discharged the contract and hired another contractor to finish the job. The court
said that the contractor not being able to convince the architect that he paid the subcontractors didn’t
amount to a breach of an essential term of the contract, so this breach wasn’t sufficient for the owner to
discharge the contract. The owner was ordered to pay the contractor for work done based on quantum
meruit.

Substantial Compliance
 A contractor might substantially comply with the terms of a contract, but fail to comply with a minor
aspect of the contract’s provisions
 In this case, the contractor will be paid the cost of the contract, minus the damages for the aspect he
didn’t comply with
 This is called the doctrine of substantial compliance
 For it to uphold, the noncompliance must be minor
 The contractor should be paid what he deserves for what he has done

Specific Performance and Injunction

 Equitable remedies (supplement the remedy of damages)
 The court won’t grant remedies of specific performance and injunction where damages provide
sufficient relief

Specific Performance
 If someone is in a contract for the sale of a unique item (like land or an antique car), and the seller goes
back on the contract, the court will make him hand over the item as laid out in the contract
 When monetary compensation for damages just won’t fix the problem, because money won’t buy them
anything exactly like what they had contracted to buy
  If the court had to supervise the performance of an obligation, they wouldn’t award specific performance
remedies (not awarded for construction, manufacturing, etc.)

Injunction
 A court order that prohibits a party from the performance of an act, such as breach of contract
 The court won’t grant an injunction unless the contract contains a negative covenant (a promise not to
do something)
 Ex: if parties signed a non-competition agreement, the court could issue an injunction if one party
started competition

Chapter 20 – Fundamental Breach

 The Doctrine of Fundamental Breach can be applied to a contract that contains an exemption clause. It
renders the exemption clause ineffective in the event of fundamental breach of contract.
 An exemption clause is a provision whereby the contracting parties can limit the extent of liability that
arises from breach of contract
 A factory owner hired a contractor to install a pipeline and tank to be used for heating and liquefying
wax. They installed plastic pipes, which melted, caught fire, and burned down the factory. The court
determined that this was a fundamental breach of contract, but the contractor had a provision in the
contract that limited his liability to $2,300. The court said that because it was a fundamental breach, the
liability limitation couldn’t be upheld, and the contractor had to pay to rebuild the factory.
 So, if a party commits fundamental breach (breach going right to the root of the contract), an exemption
clause won’t get them off the hook
 In England, an owner hired a security team to guard his factory. One of the night guards started a fire
that burned down the whole factory. The security company had an exemption clause that said “in no way
is the security company responsible for fire, except if it is caused wholly by the negligence of the
security employee while on the job”. Because the owner didn’t claim negligence in his case, the judge
ruled that the security company could rely on their exemption clause.
 In Canada, they will cancel an exemption clause if fundamental breach occurred.
 If it is still fair to enact the exemption clause, it has to be clear and unambiguous.

Chapter 21 – The Agreement Between Client and Engineer

 Contracts between an owner and an engineer don’t include the standard of care required of the engineer.
They include what work the engineer will do, but the standard of care is implied.

The Agency Relationship

-Engineer is the agent, client is the principal
-do not extend the scope of work beyond what is required by the contract (more chance for messing up)
-engineer must get the client’s approval for everything (unless given full written permission)

Engineer’s Remuneration
- the contract between the owner and engineer will contain how much the engineer gets paid
- if it doesn’t, then the engineer will be paid on a quantum meruit basis
-based largely on experience
 - % of project cost, # of hours +overhead + profit, compare to previous jobs

Estimated Fee
- when entering into a contract, engineers must cautiously estimate their fee
- in a past case, the engineer estimated that he’d need $5000 to pay his employees during the project, but
he ended up needing $15000, and he billed this much
- court decided in favour of the owner because estimate was so far from actual cost (3 times greater)
- no unusual circumstances caused this discrepancy, so estimate is considered negligent
- if it is more reasonable they are usually covered (margin of error for estimate)

Standard-Form Engineering Agreements

-Standard forms are published by several sources ie. PEO, Consulting Engineers of Canada
-Standard forms can modified to accommodate specific unique cases

Limiting Liability by Contract

-Have Liability Insurance (to protect you against errors and omissions)
-State in your contracts you are only liable up to what your insurance will cover
-you can’t state that you’re only liable up to a cost that is less than your total payment for the project

Planning and Zoning

 There is a planning administration that oversees plans made in Canada
 There are zoning bylaws that govern what you can use a property for (what you can build there)

Chapter 22 – Concurrent Liability in Tort and Contract

 Unless otherwise stated, the standard of care required of an engineer in fulfilling contract obligations is
the same standard of care as required in tort law. This raises the question of whether an engineer can be
liable both for breach of contract and tort.
 This is difficult, because the damages might not be the same for breach of contract and tort, and
limitation periods may be different as well.
 In a past case, a party sued the defendant for negligence in selling them a home. The court decided that
the defendant’s duty of care arose from the contractual agreement, so his breach was of contract, not
tort. The limitation period runs 6 years from the day of the breach, not from when it is discovered.
 In tort, the time limit starts when the damage is discovered (or ought to be discovered).
 An owner hired a contractor and an engineer to build a factory. Five years later, the roof had a serious
problem, so the owner sued them both. The contractor had an exemption clause in the contract, so the
owner couldn’t hold him liable for damage past the guarantee period. The judge determined, however,
that the roof problem was 75% the contractor’s fault, and 25% the engineer’s fault. Because of the
contractor’s exemption clause, the engineer had to pay all the damages.
 A lawyer can be held liable for tort and contract if he doesn’t deliver the standard of care he should to
his client.
 In a past case, a contract was signed to install transmission lines. In the contract, BC Hydro stated that
the right of way had been cleared, but it hadn’t, and there was still a bunch of debris blocking the way.
The court decided that BC Hydro knew before the tenders closed that the right of way hadn’t been
cleared. BC Hydro had a duty to tell the bidders that the right of way hadn’t been cleared, so it was
found negligent and liable in both tort and contract.
  In another case, a contractor was building something for a train tunnel. The contract expressly stated that
the work must be done with reasonable skill, care, and diligence. It was expected that any subcontractors
would do work with the same standard of care. The subcontractors didn’t do any tests, so the tunnel
failed. They were found liable for breach of contract and tort, and had to pay the owner to fix it.

Chapter 23 – The Duty of Honesty

 The duty to act honestly is included in an engineer’s standard of care.

 In the case of fraud, the contract can be repudiated and the fraudulent party can be sued for damages and
deceit. You can also go to jail for up to 10 years.
 If you take secret commissions (being paid under the table), you can go to jail.
 If you work for the government, you can’t take a gift from someone (and vice versa). That’s bribery.

Chapter 24 – Construction Contracts

 The engineer isn’t usually a party to a construction contract (they usually have their own separate
contract with the owner)
 The engineer may administer the contract between the owner and the contractor
 As administrator, the engineer can decide the rights and obligations of the owner and contractor
 Ex: the engineer can interpret the contract or judge the performance of the contracting parties
 The engineer can act as an agent to the owner and a certifier of payment between parties
 If the engineer is acting both as an agent to the owner and a certifier, he has to be objective and not
biased towards the owner
 If the engineer is acting as certifier, and is negligent, he’ll be liable for damages
 Arbitrators have immunity (can’t be held liable for any losses)

Certificates Fraudulently Prepared

 A drilling contractor and engineer tried to overstate rock quantities. The certificate was denied.

Inspection Services
 Engineers often act as inspectors in construction projects
 In a past case, an engineer was inspecting the construction on a house. He saw that a metal chimney was
being placed too close to a wooden beam, and he told the contractor to change it. The contractor didn’t
change it, and covered it with drywall, so when the engineer came back, he couldn’t tell if it had been
fixed or not. The engineer should have removed some of the drywall to check. Later, the house burned
down and the engineer was held liable.

The Engineer’s Advice to the Contractor

 The engineer only inspects the contractor’s work, he doesn’t supervise it. Contractors have full control
over their work, without the constant input of the engineer.
 The engineer has a duty of care, however, if the contractor specifically asks for advice and relies on the
engineer
 A contractor was building a bridge under the guidance of an engineer. The contractor didn’t use enough
vertical supports, and the bridge collapsed. The engineer was found 50% liable, because by saying
 nothing about the danger of not using enough vertical supports (he knew the contractor wasn’t doing it
right), he implicitly approved the way the contractor was doing it.

Contract Administration
 The engineer should ensure that a contract is carried out according to its terms
 Often, contracts go against their terms (ie: payments are made late, or timeline is extended)
 To avoid associated problems, the contract should just be followed as it’s laid out
 The engineer should keep detailed records (journal) of meeting minutes and new developments, in case
he later needs to recall facts for a liability claim case

Drawings and Specifications

 one of the most important services provided by an engineer is conceptual drawings and specifications
 the contractor will base his work on the plans, and they will determine the cost of the project
 during construction, disputes often arise as a result of incomplete or ambiguous plans/specifications
 ex: while plans would include door locks, it wouldn’t give a specific type or manufacturer to use. The
contractor could use a shitty lock to save money, and the owner wouldn’t be happy with it.

The Tendering Process

 as the owner’s agent, the engineer is often involved in preparing the tendering documents
 the information to tenderers package should be tailored to the specific project and include all important
information. It will often state that the lowest bidder won’t necessarily be chosen.
 A tender is a contractor’s offer to complete construction as described in the bid submission

Types and Forms of Construction Contracts

 There are some standard forms of contracts, but you should make sure they fit the project before you
choose a standard form. You can make some changes with the help of a lawyer to suit the project.
 There are many different types of construction contracts:

Stipulated-Price or Lump-Sum Contracts

 Owner gives the contractor one lump sum at the beginning of construction. This gives the owner the
benefit of knowing exactly how much the project will cost (give or take any agreed-upon additions).
 Detailed plans/specifications are needed to accurately set the price
 This could be bad for the contractor, because if something unforeseeable were to pop up and cost
money, they might not get more money from the owner

Unit-Price Contract
 Used when you can’t determine variables in advance
 Ex: in an excavation project, you don’t know what the subsurface is like, so the price will depend on that
 Bids are submitted on the basis of price per unit of item

Cost-Plus Contracts
1) Cost Plus Percentage
 Pays contractor for his services and materials used, plus a percentage of the construction cost for
some profit
  Often used for large-scale projects, when there isn’t enough time to finalize sufficient plans
 Because the contractor is getting paid more, he’ll be less likely to use crappy materials to save
money
2) Cost Plus Lump-Sum Fee
 Same idea as cost plus percentage, but instead of receiving an additional percentage, the
contractor is paid an additional lump sum
 The contractor has no incentive to reduce the cost of building, because he’s getting paid anyway.
This might make the owner spend more money.
3) Cost Plus Lump-Sum Fee Plus Bonus
 This time, the contractor is given incentive to reduce costs
 For every dollar saved, the contractor will receive an agreed-upon percentage of the savings
 The engineer must make sure that the contractor isn’t giving an estimate that’s too high (if he
says it’ll cost a ton, then he’ll look like he’s saving a lot of money when it ends up costing less)

Guaranteed Maximum Price Plus Bonus

 Contractor receives a fixed payment, plus a percentage of the savings
 Based on the specifications, the contractor gives the owner a maximum price that he won’t exceed

Design-Build Contracts
 The contractor, instead of the owner, gets the plans in order
 Construction often starts, and the plans are finalized later
 The engineer is the agent of the contractor, not the owner
 The owner might get his own engineer to double-check the plans and ensure construction proceeds as
agreed

Project Management
 Design-Build contracts are often used for projects that are organized on a project-management basis
 The owner hires a project manager who acts as their agent, makes the plans, and hires the contractors
 The project manager gets paid for the design and contracting, and also a fee on top of that
 The project manager simplifies the construction process for the owner

Prime/Head Contract and Subcontracts

 When an owner hires a contractor, they have a privity of contract (legal relationship)
 When a contractor hires a subcontractor, they also have a privity of contract
 No privity of contract exists between the owner and the subcontractor
 The contract between the owner and the contractor should be the same idea as the contract between the
contractor and the subcontractor, to ensure that their work is up to the owner’s standards

Delay and Interference Claims

 Contractors can make claims against the owner for damages resulting from delays and interference
caused by the owner’s representative
 If a contractor asks the owner what kind of doorknobs they want, and they don’t get back to him for a
long time, that’s a delay
  If the work isn’t organized or coordinated, subcontractors’ work could overlap, causing interference
with the construction

Compliance with Notice Provisions

 To get a time extension or more money for unforeseeable problems or excusable delays, the contractor
must give a written notice of delay within a specified period of time
 A contractor was hired by an owner to build something, but was severely delayed because he wasn’t
given access to the site, and then when he was allowed, his access was obstructed by other things going
on at the same time. The contractor told the owner several times that he needed the site to himself, and
that as a result of the obstruction, he’d need more time. This was shown in the meeting minutes. The
court ruled in favour of the contractor, because he told the owner about it many times.
 This shows that the notice being “written” isn’t the governing factor, it’s whether the plaintiff gave the
defendant sufficient warning and facts to back up their claim.

Departures from Traditional Contracting Approaches

 Fast-track construction projects (one part is built while the plans for another part are being made) can’t
use the traditional contract method of determining a price beforehand, so they need a specially-drafted
contract
 another non-traditional contract approach is to have multiple prime contracts (contract with many
contractors at once).

Chapter 25 - Risks in Construction

 Construction is a high-risk industry. If contracting parties acknowledge risk and how to deal with it
before they enter into a contract, the overall project costs will be lower (when people are aggressive and
nasty when risk leads to a problem, like claiming “no liability for delay”, it costs more money)

 Partnerships are encouraged for construction projects. More co-operation will lead to a more successful
project.

 BOT: Build, own, transfer projects. A private party (contractor/owner) builds a project, and is entitled to
keep any profits it gains during a certain period of time (to help them make their money back). At the
end of the time period, the project is transferred to the government for ownership. (ex: bridge, mall).

Project Structuring

 2 Types:
1) Traditional Project Structure (owner enters into contract with consultant and contractor)
2) Hybrid Structure Construction Management (Multi-Primes) – owner enters into contract with
many engineers, architect, contractor, subcontractors, etc.

 In the Hybrid Structure, the lead contractor may act as a construction manager, and subcontractors do all
the work. This means that the lead contractor isn’t liable for the actual construction work (the
subcontractors are).

Contract Forms
 Type of contract form will help owners choose which project structure to use
  Canadian Construction Document Committee (CCDC) makes standard forms
 CCDC contracts are between the owner and contractor. An engineer is contract administrator.
 CCDC contracts are based on the Traditional Project Structure
 These contracts contain provisions to accommodate different circumstances

Allocation of Risk in CCDC Contracts

Project Financing Risk

 falls mainly on owner to ensure bills can be paid and unexpected costs can be covered. Owner makes
sure General Contractor has the financial resources to build, GC makes sure owner has enough money to
pay him for work.

Risks of Concealed or Unknown Conditions

 a change order can be issued if concealed or unknown conditions are discovered
 ex: soil conditions. Contaminated soil must be shared between the owner and contractor upon discovery
and the necessary amendments (time, money) can be made to the contract

Risk of Delay
 The contractor is entitled to reimbursement and extension of time if an error/omission is caused by the
owner. Force majeure provisions allow for an extension of timeline for events that are out of the
contractors control (labour disputes, fire, unavoidable casualties), but they won’t get paid extra because
the event was out of the control of both parties.

Risk of Toxic and Hazardous Substances and Materials

 Owner must assume the risk of toxic chemicals at the work site before the contractor starts work
 If toxic materials are uncovered at the site, the owner has to deal with it

Risk of Changes in Governing Regulations

 If taxes increase/decrease during a project, that will change the contractor’s wage accordingly

Construction Safety Risks

 Contractor is responsible for safety at the workplace

Dispute Resolution Risks

 Provides a sequential approach to negotiation, mediation, and arbitration, to avoid long time delays and
litigation

Risk of Proceeding with Changes without Final Agreement on Price and Time Adjustments
 Protects contractor from risk of proceeding without owner agreement on changes (to save time)
 A change directive form will be enough for the contractor to keep working without the owner’s
agreement to changing contract price or time

Security for Risks

 You can’t control all aspects of risk, so you should implement some security measures to protect
yourself during a project
 Ex: liability insurance, property insurance, performance bonds, etc.

Risk of Unenforceability of Clauses Limiting Liability

  If the limited liability clause is ambiguous, the judge will rule against the party who wrote it (contra
proferentum)

Risks Relating to Limitation Periods

 The warranty for the work is one year after the work is completed
 As soon as the contractor is given his final payment, the owner can no longer charge him for negligence
stemming from any defect in the work, except if it’s within 6 years of the completion of the work, and
the notice is given in writing.

Alliancing Agreement
 Alliancing motivates project performance through a cooperative approach among owners, contractors,
etc. The parties must be transparent (not hide things from each other), and have open-book accounting.

Chapter 28 - Arbitration and Alternative Dispute Resolution (ADR)

- Arbitration makes sense for cases that are technical in nature because an arbitrator can be chosen that is
more familiar with the topic than a judge.

Appointment of Arbitrator
- Some contracts describe the manner in which an arbitrator is to be appointed and detail the general
procedure that will govern the arbitration.

Arbitration Statutes
- The Arbitration Act of Ontario (1991) deals with appointment of arbitrator(s), and sets out a set of rules
to govern conduct. Rules to govern conduct include time and place of arbitration, and exchanging of
pleadings. The AAoO mitigates costs, delays, gamesmanship, and uncertainty. Parties to an arbitration
can always agree to vary the rules set forth in the Arbitration Act.
- The Arbitration Act limits the circumstances in which the courts may interfere. Appeals or judicial
reviews, which prolong the dispute and delay payment, are only allowed under special circumstances.
- The Arbitration Act provides that arbitrators have the same jurisdiction to award prejudgement and
postjudgement interest as courts have. Arbitrators also have the power to grant equitable remedies such
as injunction and specific performance.

New Approaches to Respond To Dispute Resolution Difficulties on Construction Projects (ADR)

- Include: Partnering, Dispute Resolution Boards and Project Neutrals, and Mediation

Partnering on Infrastructure and Construction Projects

- Aimed to promote co-operation, educate all participants on mutual benefits of working together.
- A partnering workshop is conducted subsequent to the award of the contract. Participants focus on good
communication, team spirit, and mutual project goals.

Dispute Resolution Boards and Project Neutrals

- Engage knowledgeable, independent, and unbiased individuals to assist in dispute resolution. These
ADR are particularly useful for technical disputes such as interpreting technical specifications,
scheduling extensions, the value of change orders, and technical deficiencies in the work.

Mediation
 - A mediator is not a judge or arbitrator, but is there to provide guidance to facilitate the settlement
process. There is no binding ruling in mediation, rather it is up to the parties to work out their
differences.

Chapter 30 – Lien Legislation

- A “lien” is a security interest granted for a material item/property to secure payment for it (you can hold
onto something until you get paid)

Persons Entitled to Lien Rights

- Anyone who provides services or materials to someone for an “improvement” is entitled to a lien

Rights Against Owner Where No Contract Exists

- there is no contract between an owner and a subcontractor, but the subcontractor still has lien rights
- lien rights are meant to protect those who don’t have privity of contract with the owner

Effect of Lien
- when given notice of a lien, the owner must retain the holdback amount, and the amount of the lien
claim

The Ontario Construction Lien Act

The Holdback Amount

- 10% of the cost of the services or materials provided
- The first, or basic, holdback is for work performed before it is certified that the contract is substantially
completed
- The second, or finishing, holdback is for when the work is finished, and is designed to give the finishing
trades a claim against 10% of the value of the remainder of the contract for the services provided from
the date of substantial performance to the date the contract is completed

Release of Holdback
- Holdback can be released when all liens are satisfied, expired, or discharged

Certification of Substantial Performance

- A contract is substantially performed when work is done (or enough is done to start using the building)
- The certification must be published in a construction newspaper

Damages for Non-Certification

- If an engineer doesn’t certify the project as completed (or takes too long to do it), he can be sued for
damages

Who May Lien

- Anyone who supplies services, materials, drawings, specifications, etc. for an “improvement” project

Prohibition Against Waiver of Lien Rights

- Nobody can waive their lien rights. If they do, it’s void under the Act.

Limits on Amount of Lien Claim

- A lien can only be claimed for the price of services or materials provided prior to the claim
- This is to reduce exaggerated lien claims
 - If you make a false claim, you’re liable to the other party for damages

Preservation of Lien Claims

- You can make a claim for up to 45 days after the work is certified as done, or the contract is completed
or abandoned.

Priority of Mortgages
- Lien claimants are given higher priority than building mortgages taken out at the start of the project
(long before any lien could happen)
- Owners can register a financial-guarantee bond, so that any lien claims will expire if they sell the
property. The claimant then can sue the surety for the lien.

The Trust Fund

- When a contractor is promised payment from the owner upon receipt of a certificate from the engineer,
the owner and contractor have a “trust fund”
- The money can’t be used for anything else until the parties have been paid

Engineers’ Right to Lien Claims

- See page 258 for a past case

Chapter 31 – The Competition Act

- The competition act is designed to encourage business competition in Canada, and to promote the
economy and international opportunities
- The Act describes offences and penalties (white collar crime)

Misleading Advertising
- The competition act prohibits misleading advertising that is conducted knowingly
- You can’t falsely portray a product to sway a customer into buying it
- You can’t lie about a product’s performance, price, or warranty

Bid-Rigging
- when the owner knows who they’re going to choose before they even call for bids. To make it look fair,
they call for bids and once everyone has submitted their bids, they pick that person anyway.

Conspiracy
- conspiring to cause injury to another party in some way (messing with materials, manufacturing, etc.)

Price Fixing
- agreement between all parties on the same side of the market to sell items at a fixed price
- the goal is often to drive the price as high as possible, so they make lots of money

Trade Associations
- businesses can come together for certain reasons (to exchange statistics, define product standards,
cooperate on research and development, etc.)
- they must not talk about the price of anything
- they can’t do anything that would lessen competition or prevent anyone from entering into the industry

Chapter 32 – Regulatory Aspects and Ethics

  Canada has enacted legislation to govern the practice of professional engineering

Purpose of Legislation
 To regulate the practice of engineering and protect public interest.
 Establishes a standard of care and ethics that must be upheld

Definition of Professional Engineering

 Any act of designing, composing, evaluating, advising, reporting, directing, or supervising wherein the
safeguarding of life, health, property, or the public welfare is concerned and that requires the application
of engineering principles, but does not include practising as a natural scientist.

Professional Engineer’s Seal

 Required to stamp drawings and specifications
 Indicates the engineer is a P.Eng.
 If you seal a set of plans that you didn’t check, you’re in trouble

Partnerships and Corporations

 A corporation or partnership can perform engineering duties as long as its supervised by a P.Eng.

Disciplinary Hearings
 If you’re negligent, you can get suspended, fined, or lose your license

Penalties
 If you practice engineering without being licensed, you’ll be fined $25,000 for the first offence, and
$50,000 every time after that.

Certificates of Authorization
 In Ontario, just because you have a professional engineering membership, you can’t just practice
engineering. You also have to have a Certificate of Authorization.
 If you hold a C of A, you have to have professional liability insurance

Overlapping in the Scope of Engineering and Architectural Practices

 if you’re a P.Eng, you can’t do architectural work.
 Nothing in the legislation lays it out effectively, but they still frown upon it.

Background to Changes in Ontario Legislation

 To make it more clear what job is meant for a P.Eng, and which one is for an architect, the Professional
Engineers Act specifies which projects are meant for which practice.

Litigation vs. Disciplinary Matters

 To be held liable for damages, the engineer’s negligence must have caused the damage
 Disciplinary hearings occur when there are allegations of misconduct or incompetence
 Damages aren’t a prerequisite for disciplinary hearings
 If an engineer negligently prepared drawings, he can be held liable for misconduct even if the building
hasn’t been built yet

The Code of Ethics

 Lays out the duty of care the engineer must provide to the public
  An engineer must disclose a conflict of interest immediately, and prove full disclosure, before:
o Accepting compensation for a service
o Submitting a bid as a contractor when you’re the engineer on the project too
o Supplying material or equipment
o Working for another party
o Making a statement or saying your opinion on pending matters (ie: if you’re the engineer of a
project in a certain area, don’t make claims on behalf of the community)
 An engineer must not be a douche bag (don’t belittle or ruin anyone’s reputation)
 If an engineer checks another’s work, that engineer must be notified of the revision

Chapter 33 - Intellectual Property

 Intellectual property rights relate to patents, copyright, trademarks, etc.

Patents of Invention
 Invention is any new or useful art, process, machine, manufacture, or composition of matter or
improvement of the above items
 A patent gives the owner exclusive rights to make, construct, use, and sell the invention
 An idea alone is not patentable (it has to be something physical).
 To be patentable, it must have utility and novelty
 You can’t get a patent if you alter an existing invention to get a different result
 Patents are good for 20 years from registered date (Copyright is life plus 50 years)
 Patent rights (in whole or part) can be assigned to others in writing
 Patents may also be licensed (allow a 3rd party to use it, but often royalties are paid)
 If an employee invents something using the employer’s materials and resources, the patent still belongs
to the employee. But, if the employee is hired as an inventor, then the employer owns the patent.
 Infringement results in damages being paid to patent owner
 The Queen owns the rights to inventions made by government employees

Trademark
 A mark used to distinguish wares or services from similar products
 Could be a name or shape or colour or packaging
 Can license a trademark (allow a 3rd party to use it)
 A trademark has to be distinctive (set apart one company’s services from another). If it ceases to be
distinctive, it’ll be cancelled.
 Registration is effective for 15 years; may be renewed for unlimited periods of 15 years each
 Infringement may lead a person to be liable for damages by using the exact or a confusion-causing mark
 Stopping an unauthorized use is called an injunction. Infringement is a criminal offence.
 The owner of an unregistered trademark can sue someone who uses the same or similar mark in passing
off (customers mean to buy from the original company, but the other trademark is so similar, they
accidentally buy their stuff).

Copyright
 Applies to original literary, dramatic, musical, artistic work
 The right to use, reproduce, perform, make copies of, sell, and benefit from
  Valid for 50 years after the author’s death
 Advisable to register the copyright to prove you are the author (not necessary if you can prove you are
the author)
 First owner of copyright is the author of the work, unless hired by the employer to write the work.
 The employer will be the first owner of a piece of work made during the course of a contract service or
apprenticeship unless there is an agreement to the contrary.

Industrial Designs
 Refers to any features of shape, configuration, pattern, or ornament that are applied to finished articles
and appeal to the eye where articles are multiplied by an industrial process.
 Exclusive right to use the design for a term of 10 years from registration
 Rights to a design go to an employer.

Trade Secrets
 Protect a company’s processes that are un-patentable (also, patents are public, and trade secrets are
private)
 List of clients, marketing/sales techniques, recipes , chemical formulas, are trade secrets
 To sue for unauthorized disclosure:
1) Plaintiff must show the disclosed information was a secret
2) Secret was communicated in circumstances that implied a duty of confidence.
 To determine whether certain information possess the requisite degree of secrecy:
1) Extent of information known outside the company
2) Extent of measures taken to guard the secrecy of information
3) The value of the leaked information to other competitors.
4) The amount of effort and money used to develop the secret
 Employers can restrain employees from making improper use of trade secrets
 Employees have a duty of confidence to not blab the trade secrets, even after they go to work for another
company

Chapter 36 - Laws Relating to Employment

Federal Employment Laws

Canada Labour Code

 Setting minimum employment standards
o Hours of work, overtime pay, minimum wages, holidays, vacations, terminations, etc
 Safety of employees
o The right to refuse work that is unsafe to health and safety
 Relations between trade unions and employers
o Unfair labour practice, illegal strikes, lawful strikes, lockouts

Canada Pension Plan

 Every employee must have a percentage of the employee’s earning deducted and remitted to the federal
government, together with an amount contributed by the employer.

Employment Insurance
  Optional insurance where employer contributes 1.4x the employee’s contributions. The employee may
collect a different amount based on longevity of contribution, salary, etc.

Employment Equity Legislation

 Hiring visible minorities and women without discrimination. Federal contract bidders must practice
employment equity. Any employer with more than 100 employees must report annually on the fair and
equitable treatment of their employees.

Provincial Employment Laws

The Employment Standards Act (2000)

 Protect non-union employees: maximum hours of work, overtime, gender equality, benefits, leaves of
absence, termination
 Some cases, based on employee age, position, salary, availability of similar employment, and length of
service, award employees one year or longer for notice of termination.

The Workplace Safety and Insurance Act (1997)

 Every employer must have workers’ compensation insurance.
 Tort replacement: Workers compensation legislation replaces the tort system by removing or limiting
the ability of a worker to sue the employer and co-workers.
 No-fault insurance: WC legislation provides no-fault insurance that pays monetary awards for a worker
who is injured or disabled as a result of a work related accident or disease. This means the worker is
entitled to compensation without having to establish negligence.

The Health Insurance Act (Ontario Health Insurance Plan) (OHIP)

 Some heath issues are covered by the plan, but others (such as optometristn visits) are not

Smoke Free Ontario Act

 All enclosed workplaces in Ontario are smoke free, May 31, 2006.

The Human Rights Code

 General code that establishes that every person has the right to equal treatment.

The Occupational Health and Safety Act

 Set in place to protect workers
 Health and safety committee at workplaces

The Ontario Labour Relations Act

 Certifies unions for workers to join