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

2. Timetable

3. 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…

4. 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…

5. Fundamental Breach
Ignite demo

6. 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

7. 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.

8. 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.

9. 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.

10. 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!

11. Photo Production v Securicor 1980

12. Photo Production v Securicor 1980

13. Photo Production v Securicor 1980

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

15. 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

16. Photo Production v Securicor 1980
Judge MacKenna
“exclusions hold”

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

18. Photo Production v Securicor 1980
Lord Wilberforce

19. 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

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

21. 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.

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

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

24. 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?

25. 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

26. Ignite format… comments?

27. Recap…

28. What was the principle of fundamental breach?

29. What was the legal precedent for fundamental breach?

30. What case first challenged this principle?

31. What case laid fundamental breach to rest?

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

33. 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?

34. 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…

35. Contract A/B in tendering
Principle?
Precedents?

36. 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

37. 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

38. 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).

39. Implied terms
Principle?
Precedents?

40. 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?).

41. 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

42. 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

43. Tests continued
Equitable estoppel
3 points
Implied terms
1 pt

44. 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

45. 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

46. 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

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

48. 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)

49. 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)