LE/ENG 3000 Professional Engineering Practice Franz Newland (PSE 134)

Timetable

Feedback from Friday’s lecture Bibliography will be online tonight Questionnaire will be available – fill it out after the NEXT lecture from Ken… Thoughts / comments? We will revisit IP protection in class later in the semester…

Case studies / histories Start contacting me now with teams and suggestions for topics. Teams of 3-5 people Deadline – end of reading half-week (Oct 27th) Your team and topic are not “approved” until I reply to you with a confirmation IGNITE DEMO next…

Fundamental Breach Ignite demo

Doctrine of fundamental breach In case of a fundamental breach, [i.e.] a breach of such a nature as to go to the very root of the contract, an exemption clause … does not afford protection

Harbutt’s plasticine Ltd. V. Wayne Tank and Pump Co. Ltd. 1970 Contract for design and construction of stearine wax storage tanks. Plastic pipeline to carry the wax wrapped with a heating element to allow it to flow in a liquid state. Liabilities limited to GB£2,300.

Harbutt’s plasticine Ltd. V. Wayne Tank and Pump Co. Ltd. 1970 The pipe warped, cracked and ruptured. Wax spilled on the floor and ignited. The resulting fire destroyed the factory.

Harbutt’s plasticine Ltd. V. Wayne Tank and Pump Co. Ltd. 1970 The judge ruled the design so unsuitable that the contract was breached - the liability limit did not apply.

Harbutt’s plasticine Ltd. V. Wayne Tank and Pump Co. Ltd. 1970 The damages awarded were GB£170,000. Almost 74-times the original liability limitation!

Photo Production v Securicor 1980

Photo Production v Securicor 1980

Photo Production v Securicor 1980

Photo Production v Securicor 1980 GB£615,000 of damage

Photo Production v Securicor 1980 Securicor contract had specific exclusion: “Under no circumstances shall [Securicor] be responsible for any injurious act … by any employee unless such act … could have been foreseen and avoided by the exercise of due diligence on the part of [Securicor]” Securicor also had a limitation of liability in case they were not entirely exempt as a result of the first exclusion

Photo Production v Securicor 1980 Judge MacKenna “exclusions hold”

Photo Production v Securicor 1980 Judge MacKenna “exclusions hold” Lord Denning: “fundamental breach applies”

Photo Production v Securicor 1980 Lord Wilberforce

Photo Production v Securicor 1980 Rule of Construction: Fundamental breach can only be found through examining the reasonable intentions of the parties at the time of the contract Lord Wilberforce

Fundamental Breach laid to rest Hunter engineering v Syncrude Canada 1989 Syncrude ordered gearboxes from Hunter Canada.

Fundamental Breach laid to rest Limitation clause: faulty gear boxes were not liable for their poor design. Chief Justice Dickson: limitation clause valid. An exemption clause is to be given full force and effect if the language is drafted sufficiently clear.

The last word (maybe): Tercon Contractors v British Columbia 2010

The last word (maybe): Tercon Contractors v British Columbia 2010 Revisited

The last word (maybe): Tercon Contractors v British Columbia 2010 Tercon test now replaces Fundamental breach: Does the exclusion clause apply to the breach? Is the exclusion clause unconscionable, therefore invalid at the time of contract? If valid, should the exclusion clause still be refused as harm to the public is incontestable?

The last word (maybe): Tercon Contractors v British Columbia 2010 Tercon won, as the exclusion did not apply to awarding a contract to a non-compliant bidder

Ignite format… comments?

Recap…

What was the principle of fundamental breach?

What was the legal precedent for fundamental breach?

What case first challenged this principle?

What case laid fundamental breach to rest?

What is the new test? What case established this test? Name the test points

Fundamental breach - summary Harbutts – Doctrine of fundamental breach: exemptions do not apply if the very root of the contract is impacted Photo production – many U-turns; House of Lords ultimately determines that the reasonable intention at the time of contract matters Hunter engineering – exclusions, if worded clearly, should be upheld Tercon – “Tercon test” – does the exclusion apply to the breach? Was it “unconscionable?” If valid, is there nonetheless an issue of overriding public policy?

Fundamental Breach - recap Doctrine of fundamental breach was used to determine if an exemption clause should afford protection The doctrine of fundamental breach has been overturned by subsequent case precedents Photo Production, Hunter Engineering Tercon v BC moves things forwards somewhat with the Tercon test If there is no exemption clause, then there is no protection from such a clause that may need to be overturned…

Contract A/B in tendering Principle? Precedents?

Contract A, B Contract A – the tendering process Offer = request for proposals Acceptance = submission of irrevocable proposal Contract B – the contract in the tender that was accepted Contract A errors: offeror or tenderer If RFP terms change, tenderers may sue offeror – offeror may have to ignore offers from tenderers who are non-compliant to original RFP

Contract law Contract A: Unilateral mistake Generally “tough luck” – but Pre-tender opening, no contract exists Post-tender opening, pre-decision, Principle of contract A

Contract A Tenderer makes a mistake: Basic principle Belle river You are responsible for your own mistakes (you will have to pay for them) BUT: Belle river If you realize your mistake immediately and try to pull out your bid before tenders are opened, you are not liable for the cost of the bid (the bid was not the intended offer) Ron Engineering If you realize the error after the bids are opened, you are only liable for the bid deposit, not the cost of the work to be contracted too (the origin of the contract A concept).

Implied terms Principle? Precedents?

Implied terms Hunter engineering v Syncrude Moorcock Gearboxes not fit for purpose, but limitation of liability was in contract Strict interpretation should only be questioned when there is a matter of contractual unconscionability such as where parties have unequal bargaining power This is unlikely in the case of business contracts Moorcock By accepting to moor a ship at the wharf, it was implied the mooring would be safe for the ship. The contract for mooring the ship at the wharf without the term would not make business sense (who would moor their ship where it would get damaged?).

Recap on law tests to date Contract law: 5 points needed for a contract 6 ways to discharge a contract Legality of purpose: 3 points Misrepresentation: Fraudulent if: 5 points

Tests Contract law: Legality of purpose: 5 points needed for a contract 6 ways to discharge a contract Legality of purpose: Employer must have proprietary interest worth protecting, clause must be reasonable with regard to geographic restriction and duration, and there must be sufficient justification to restrict competition instead of just solicitation Misrepresentation: Fraudulent if: A false representation or statement made by the defendant; Which was knowingly false; Which was made with the intention to deceive the plaintiff; And which materially induced the plaintiff to act; and Which caused the plaintiff damage

Tests continued Equitable estoppel 3 points Implied terms 1 pt

Tests continued Equitable estoppel Implied terms If both parties deviate from the original contract, as shown through their acts or deeds And one party is relying on the deviation If the other party then tries to re-impose the original terms, they can be estopped Implied terms If the contract would not make any business sense without implied terms, those terms can be implied

Tests continued Limitations of liability (fundamental breach -> Tercon) 3 points Unilateral mistake in tendering You are responsible for your own mistakes, but The tendering process is a contractual process (contract A) Bidding error can result in loss of bidding deposit. If there is no bidding deposit, can result in damages up to the difference between bid and lowest non-erroneous bid Person issuing RFP also has contractual obligation under contract A

Tests continued Limitations of liability (fundamental breach -> Tercon) Does the limitation apply to the breach? Was the contract unconscionable? Is there an overriding public interest meaning the limitation should not be accepted? Unilateral mistake in tendering You are responsible for your own mistakes, but The tendering process is a contractual process (contract A) Bidding error can result in loss of bidding deposit. If there is no bidding deposit, can result in damages up to the difference between bid and lowest non-erroneous bid Person issuing RFP also has contractual obligation under contract A

Tests continued Tort (the only non-contract example here!) 3 points

Tests continued Tort (the only non-contract example here!) Duty of care owed Failure in the duty of care, in a way that was foreseeable Some loss/injury as a result (can be financial)

Professionalism LLL essays still being marked, however: Ontario now has a new voluntary reporting scheme for continuous professional development: PEAK (Practice Evaluation and Knowledge) This includes practice evaluation, continuing knowledge and ethics awareness Completion of PEAK annual reporting is a matter of public record (See PEO directory of practitioners)