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195 Cards in this Set
- Front
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How is the practice of architecture regulated differently from that of interior decorating? |
The practice of architecture is governed by statute and prohibits practice of the profession by anyone not properly registered. Chapter 2: Regulation of the Professions |
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Under the definition of the profession of geoscience adopted by the CCPG, which of the following does not fall within the bounds of professional practice? a) The sampling of a tailings pond b) The evaluation of assay samples c) The construction of a road into a mine d) None of the above |
c) The construction of a road into a mine Chapter 2: Regulation of the Professions |
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Which statement describes design of a portion of a building? a) It falls within the practice of architecture, but not engineering. b) It falls within the practice of engineering, but not architecture. c) It may be both architecture and engineering. d) None of the above |
c) It may be both architecture and engineering. Chapter 2: Regulation of the Professions |
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Describe what exclusive scope of practice means for a profession. |
An exclusive scope of practice means that only members of the profession can practice in certain specific areas. Chapter 2: Regulation of the Professions |
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An architect works from an office in Saskatchewan designing a project in Yukon and will have to inspect parts of the work as they are being constructed in Ontario. Where does he or she have to be registered? |
The architect should be registered in all three jurisdictions. Chapter 2: Regulation of the Professions |
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Describe the potential outcomes of a discipline process in which a geoscientist is found guilty of professional misconduct. |
The potential penalties for discipline actions include reprimands, suspensions, fines, termination of licences, educational requirements, and mentorship requirements. Chapter 2: Regulation of the Professions |
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Which statement is true about reciprocity agreements? a) They mean that a professional registered in one jurisdiction does not have to register in another jurisdiction. b) They make it easier to register in more than one jurisdiction. c) They make it harder to register in another jurisdiction. |
b) They make it easier to register in more than one jurisdiction. Chapter 2: Regulation of the Professions |
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Is a disciplinary hearing a criminal proceeding? |
No, it is a quasi-criminal proceeding. Chapter 2: Regulation of the Professions |
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What kind of definition is the Engineers Canada definition of professional engineering? a) A generic definition b) A specific definition c) Both a generic and a specific definition d) Neither generic nor specific |
a) A generic definition Chapter 2: Regulation of the Professions |
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A graduate engineer has the following right: a) The right to use the title Professional Engineer b) The right to use the title Engineer-In-Training c) No right to use any title, based simply on an engineering degree |
c) No right to use any title, based simply on an engineering degree Chapter 2: Regulation of the Professions |
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A contractor has entered an agreement with an owner that contains a "no damages for delay" clause, precluding recovery by the owner for any delay, howsoever caused. The owner then causes an intentional delay, which results in severe financial consequences to the contractor. The contractor asserts a claim, reasonable in all the circumstances except for the no damages clause. The architect must evaluate the claim. How should the architect deal with it? |
The architect must evaluate the claim fairly, in accordance with the terms and conditions of the contract. Chapter 3: Ethical Considerations |
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A geoscientist is asked to provide assay results for a mining exploration company, which will be used in a public disclosure. The company offers to pay the geoscientist in shares of the company, rather than cash. What is the acceptable course of action for the geoscientist? a) He/she cannot accept payment in shares. b) He/she can only accept payment in shares if he/she agrees to provide an unbiased report. c) He/she can accept the shares under any circumstances. |
a) He/she cannot accept payment in shares. Chapter 3: Ethical Considerations |
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An architect is hired as the consultant under a CCDC 2 contract. The contractor claims that it was delayed by late approval of shop drawings. The architect should do the following: a) Reject the claim, because it might result in the architect being sued by the owner. b) Evaluate the claim on its merits. c) Approve the claim, so that it does not appear that the architect is biased. |
b) Evaluate the claim on its merits. Chapter 3: Ethical Considerations |
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Which of the following statements is true? a) Duty to the employer governs over the duty to the client in all cases. b) Duty to public safety governs over duty to the client in all cases. c) Duty to one's self governs over public interest in most cases. |
b) Duty to public safety governs over duty to the client in all cases. Chapter 3: Ethical Considerations |
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An engineer is hired as an expert witness in a lawsuit. In the course of investigating the facts, the engineer discovers a serious structural deficiency. After the lawsuit is settled, as part of the settlement, the parties enter into a confidentiality agreement. The client demands that the engineer keep confidential all facts learned during the investigation. To whom does the engineer owe duties? Which duty prevails? |
The engineer owes duties to the public, the profession, and the client. The duty to the client suggests that the engineer keep the problem confidential; but the engineer's duty to the public and the profession suggest that the engineer should disclose the problem. Since the duty to the public is higher than the duty to the owner, the engineer should disclose the problem. Chapter 3: Ethical Considerations |
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An engineer has designed formwork for a difficult concrete pour. The engineer submits the design to her superior, who suggests that smaller structural members can be used without violating the applicable code. The engineer rechecks her calculations, but remains unconvinced. What course of action should the engineer take? Does it make any difference if the superior is not a professional engineer? |
Public safety issues fall under the duty to the public. The duty to public safety demands that the engineer not reduce the size of the members and must re-evaluate the design with her superior. If the superior is also an engineer, than the junior engineer must also mention her professional requirement to disclose her concerns about her superior's failure to uphold the duty to the public. Chapter 3: Ethical Considerations |
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An engineer employee has invented a new product for use in building construction. The invention was made during the course of employment, but has not yet been disclosed to the employer or anyone else. The engineer decides to quit his job and patent the invention as his own. Is there a breach of any duty? Discuss the ethical issues involved. |
The engineer owes a duty of loyalty to his former employer. The invention is likely owned by the employer or held in constructive trust by the engineer for the benefit of the employer. Chapter 3: Ethical Considerations |
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Which statement is true for a person who is not an architect, engineer, or geoscientist? a) He/she owes no ethical duty to anyone. b) He/she is not bound by the codes of ethics for those professions. c) He/she always owes a duty to comply with the codes of ethics of those professions. |
b) He/she is not bound by the codes of ethics for those professions. Chapter 3: Ethical Considerations |
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During the course of employment, a geoscientist working for a mining company learns about a property rich in minerals. That geoscientist wants to quit her job and buy up some of the surrounding properties. In this situation which of the following statements is false? a) The geoscientist owes a duty to her employer even after leaving her job. b) The geoscientist can buy up properties, as long as the former employer agrees. c) The geoscientist owes no duty to the employer after quitting. |
c) The geoscientist owes no duty to the employer after quitting. Chapter 3: Ethical Considerations |
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Who owns an unpublished design drawing? a) The originator (i.e., design engineer) b) The party who makes the copy of the drawing c) The client who hired the engineer to do the design d) None of the above. |
a) The originator (i.e., design engineer) Chapter 4: Property Law |
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What is the difference between real property and personal property? |
Real property is land, or something affixed to land for the purpose of benefiting the land. Personal property is all other types of property. Chapter 4: Property Law |
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Why is it important to register property at land registries, land titles offices, and personal property registries as quickly as possible? |
The time for registration is important because it often determines the rights of parties. Chapter 4: Property Law |
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Which of the following is not an example of intangible property? a) Copyright b) Profit à prendre c) License d) Patent e) None of the above |
e) None of the above Chapter 4: Property Law |
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If a land owner wants to excavate the property, and such excavation requires rock anchors to be installed into the neighbour's property, it is necessary to obtain permission for this reason: a) Failure to do so would be a trespass. b) Without permission, there would be insufficient lateral support. c) It would violate the neighbour's air rights. |
a) Failure to do so would be a trespass. Chapter 4: Property Law |
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The owner in fee simple of a property has this or these rights: a) To sell it b) To mortgage it c) To mine it for gravel d) All of the above e) Only A and B |
d) All of the above Chapter 4: Property Law |
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If a holder of a fee simple interest in real property fails to properly support her neighbour's property, is she potentially liable? Why or why not? |
Yes. All property owners owe a duty to properly support their neighbour's property. Chapter 4: Property Law |
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Give an example of property that begins as a chattel and then becomes real property. |
A piece of drywall, once installed on a property, becomes part of the real property. Chapter 4: Property Law |
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Is it necessary to register at the Copyright Office to gain copyright protection? Describe the requirements to obtain copyright protection. |
No. In order to gain copyright protection, the work must be published with the © symbol together with the author's name and the year of publication. Chapter 4: Property Law |
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What is the purpose of a patent? a) To protect the idea that an inventor came up with b) To protect the expression of an idea c) To prevent a person from copying a drawing d) None of the above |
b) To protect the expression of an idea Chapter 4: Property Law |
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Which of the following is not a form of corporate organization? a) Partnership b) Corporation c) Sole proprietorship d) Construction association |
d) Construction association Chapter 5: Business Organizations |
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Officers and directors must always act with due diligence. Define due diligence, and provide an example. |
Due diligence means that all reasonable steps have been taken to satisfy statutory obligations. An example of due diligence is the creation of policies and procedures relating to protection of the environment. By creating these policies in response to environmental legislation, an officer or director is acting with due diligence. If an employee breaks these policies, or physical circumstances suddenly change to render the policies ineffective, the officer will not be held individually responsible because he or she had developed policies in due diligence. Chapter 5: Business Organizations |
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Define the roles of officers, directors, and shareholders. |
Directors are individuals who direct the business of the corporation. Officers, such as the president, vice-president, and corporate secretary, provide a closer operational direction for the business. Shareholders own the business and do not necessarily have a role in the business. Chapter 5: Business Organizations |
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Describe two steps that corporate officers and directors can take to reduce their risk of liability. |
They can obtain an indemnity from the company they will be working for, and they can purchase directors' and officers' liability insurance. Chapter 5: Business Organizations |
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Ted works for a high tech company and owns shares in the company. A few days after the company makes a public announcement about the failure of its key technology, Ted sells his shares. Is Ted guilty of insider trading? Why or why not? |
Not guilty. The information was made public prior to the shares being sold. Chapter 5: Business Organizations |
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Which statement is true about a limited partnership? a) It is essentially the same as a corporation. b) It must have at least one limited partner but does not require a general partner. c) It must have at least one general partner but does not require a limited partner. d) None of the above |
d) None of the above Chapter 5: Business Organizations |
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A corporation may not use one of the following as part of its name to designate that it is incorporated. a) Corporation, or Corp. b) Company, or Co. c) Limited, or Ltd. d) Incorporated, or Inc. |
b) Company, or Co. Chapter 5: Business Organizations |
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If one partner in a partnership is negligent, can the other partners be liable as well? |
If the negligence relates to the business of the partnership, the answer is yes. Chapter 5: Business Organizations |
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Directors may be personally liable for which of the following? a) Unpaid wages of the corporation b) Breach of trust committed by the corporation under a construction lien statute c) Unpaid rent for the corporation's offices d) Unpaid taxes of the corporation e) All of the above f) All of the above, except C |
f) All of the above, except C Chapter 5: Business Organizations |
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Conflict of interest rules can apply to which of the following? a) Officers and directors b) Partners c) Sole proprietor d) A and B only e) All of the above |
d) A and B only Chapter 5: Business Organizations |
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An engineer has not been paid the last instalment for his consulting work on Project A. The client says, "If you agree to give up your claim for the remaining fees, I will consider hiring you as the consultant for Project B." The engineer agrees. But Project B is ultimately awarded to another engineer. Is the agreement to forego the fees enforceable? Explain. |
The agreement to forego fees is the consideration flowing to the client. From that perspective, the agreement would be enforceable. However, the consideration flowing to the consultant is presumably that the client will "consider using" the consultant. This promise is likely too vague and uncertain to constitute consideration, and the agreement to forego fees is likely unenforceable for that reason. Chapter 6: Contracts |
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A contractor meets a prospective client at a party. The client says, "I'm looking for someone to build a 50 000 sq. ft warehouse with cast-in-place concrete walls on my property on the north side of the city." The contractor replies, "I can build those for $50 per square foot." The client sends a fixed-price contract to the contractor int he amount of $2.5 million The contractor refuses to sign it. But is there an enforceable agreement already in place? Explain. |
The elements of an enforceable contract include the following: - Offer and acceptance - Enforceability - Legal intent - Capacity to contract Legal intention to contract is an issue here. This problem illustrates the principle that a contract does not have to be in writing in order for it to be an enforceable agreement (although in this case there is no enforceable agreement because there is no offer and acceptance). Professionals find that clients seek advice in informal settings and must take care not to provide casual advice without proper deliberation. The fact that this hypothetical problem takes place in an informal setting should not distract the professional from the real issue, which is contract formation. Did the engineer in fact make an oral contract? On any objective standard, a third party is extremely unlikely to conclude that he did. The contractor's reply was: "I can build those for $50 per square foot." This is not an offer to do so, but rather a statement of capabilities. On this basis alone, a court would likely decide that there has been no offer, and therefore there can be no acceptance. Chapter 6: Contracts |
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A contract is said to be a "legally enforceable promise." However, a court will refuse to enforce a contract if the following is true: a) It is an obviously bad business deal for one of the parties. b) The purpose of the contract is illegal. c) Neither A nor B d) Both A and B |
b) The purpose of the contract is illegal. Chapter 6: Contracts |
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"Consideration" is best defined as the following: a) One party doing a favour for the other party. b) Money paid by one party to another party. c) Something of value that is exchanged or given by a party. d) The thought process that a party goes through in deciding to enter the contract. |
c) Something of value that is exchanged or given by a party. Chapter 6: Contracts |
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In which of the following ways may contracts be formed? a) Entirely oral b) Partly oral and partly written c) Entirely written d) All of the above |
d) All of the above Chapter 6: Contracts |
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If two parties reach an agreement orally, but make a mistake in documenting their agreement in writing, then what happens? a) No contract exists because a mistake was made. b) A contract exists as set out in the written document. c) A contract exists according to the oral agreement because the parties did not intend to change the contract when they put it in writing. |
c) A contract exists according to the oral agreement because the parties did not intend to change the contract when they put it in writing. Chapter 6: Contracts |
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A geoscientist's client has failed to make a significant progress payment when it is due. The geoscientist delivers a letter that states: "Unless we receive payment by noon tomorrow, we will consider your failure to pay a fundamental breach and the contract at an end." The owner replies: "We will pay you tomorrow at 4:00 p.m. We hope that is acceptable." The geoscientist replies that it is unacceptable. At 4:00 p.m., the client presents payment, but the geoscientist has abandoned the site and sues for fundamental breach. Discuss the legal issues, and who should prevail in the lawsuit. |
Failure to pay under a contract is almost always a fundamental breach. Given that the payment was "significant," the client likely committed a fundamental breach of the contract. The geoscientist then waived the failure by not immediately terminating. This created a new condition whereby payment was required by noon on a day set by the geoscientist. The question then is whether the failure to pay by noon was a significant breach. Given that the payment was made four hours later, unless there were specific circumstances such as the last flight for a week leaving from a remote location was leaving at 2:00 p.m., a court would likely find that the four-hour delay was not a fundamental breach. Chapter 7: Breach of Contract |
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If a party to a contract breaches the contract, the innocent party may obtain damages. what is the purpose in awarding damages? a) To punish the breaching party b) To deter further breaches by the breaching party or other parties c) To place the innocent party in the same position he would have been in had the guilty party properly performed the contract d) To place the innocent party int he same position he would have been in had the contract never been entered into |
c) To place the innocent party in the same position he would have been in had the guilty party properly performed the contract Chapter 7: Breach of Contract |
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A contractor has entered into an agreement with an owner with payment to be based on hours worked at specific labour rates. While performing the work, the contractor's level of efficiency is lower than expected. The owner refuses to pay the full amount of the contractor's costs. What legal issues are involved? What other facts are needed in order to resolve the dispute? |
The principal issue is whether productivity is a term of the contract. If the owner has agreed to pay on an hourly basis, with no reference to productivity, the owner will likely have to pay on that basis. However, there may be either an express or implied term that the contractor will perform at a level of competence and productivity that is standard in the industry. If the contractor's performance falls below such level, the owner may be entitled to pay a lesser amount. Chapter 7: Breach of Contract |
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Which of the following event(s) entitles a party to be released from its obligations under an existing contract? a) Fundamental breach of contract b) Destruction of the contract documents c) The parties cannot agree on an amendment d) Party forgetting to sign the contract documents, prepared after work has started |
a) Fundamental breach of contract Chapter 7: Breach of Contract |
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If there is a conflict between the literal interpretation of a clause and the intention of the parties, which governs? |
The intent of the parties governs. Chapter 8: Interpreting and Drafting Contracts |
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Give an example of a situation in which expert evidence may be required in order to interpret a clause. |
Where there is a customary or special meaning, as often occurs with technical documents in construction contracts, an expert may be needed to help interpret the contract. Chapter 8: Interpreting and Drafting Contracts |
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An architect asks a contractor to add some concrete foundation walls at substantial additional cost. The work is urgent and must be started before a price can be agreed upon. Following performance, the contractor submits a price containing impact costs. The architect rejects the price but is prepared to agree if the impact consts are deleted. The architect threatens to delay the approval process unless the contractor agrees. Reluctantly, the contractor agrees. After the project is complete, the contractor claims for those impact costs. Is the contractor entitled to such costs? |
This is a difficult scenario. On one hand, the contractor represented to the architect that the impact claim was being withdrawn and the architect relied on such withdrawal in issuing the change. On the other hand, the contractor was under duress (although likely not enough to void the agreement) when the withdrawal was made. On balance, if the contractor had wanted to maintain the claim, a dispute should have been raised at the time. It is now too late for the contractor to make the claim, despite the duress. Chapter 9: Selected Contract Issues |
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An agreement between an owner and contractor states that the engineer can approve change orders with a value of less than $10 000. However, the owner instructs the engineer not to approve changes with value greater than $5000. The engineer approves a change, without the owner's permission, with a value of $8000. The owner is informed after the fact and refuses to pay for the change. Is the owner bound by the change order? Why or why not? |
The owner may be bound by the change order if the owner did not make the contractor aware of the monetary limit of the engineer's authority. If the owner did make the contractor aware that the engineer had limited authority, then the owner would not be bound by the change order. Chapter 9: Selected Contract Issues |
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A contractor indemnifies an owner "for any and all losses, including pure economic loss, attributable in whole or in part to the negligence of the contractor." The contract is subject to the law in a jurisdiction that has not abolished joint and several liability. Due to a combination of design error and construction error, the owner suffers a $100 000 loss. The architect is 50 percent at fault. What is the maximum possible liability of the contractor? Why? |
The contractor could potentially be liable for the entire $100 000 loss because of the language of the indemnity. Chapter 9: Selected Contract Issues |
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An owner developing a warehouse project hires a general contractor, who in turn subcontracts the concrete work to a subcontractor. The subcontractor hires a sub-subcontractor for some of the work. Can the sub-subcontractor claim against a standard form Canadian payment bond taken out by the owner? Explain. |
A standard form Canadian payment bond is a one-tier bond, meaning that only subcontractors, and not the subcontractor's subcontractors and suppliers, can claim against the bond. Chapter 9: Selected Contract Issues |
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Which of the following must inspectors do? a) Ensure absolutely that all work complies with the contract documents b) Refrain from interpreting the contract c) Ensure that they act within their authority |
c) Ensure that they act within their authority Chapter 9: Selected Contract Issues |
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Explain why a performance specification should not describe the detailed components of the work. |
A performance specification is intended to define the intended outcome of the work, rather than the details of what is to go into the work. Therefore, the details should not be included. Chapter 9: Selected Contract Issues |
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Under which circumstances is a subcontractor bound by the terms of the prime contract? a) Only if he or she has read that prime contract before bidding b) Whether or not he or she has read it before bidding if the subcontract clearly states that the subcontractor is bound by the prime contract c) Only if the prime contract is reasonable |
b) Whether or not he or she has read it before bidding if the subcontract clearly states that the subcontractor is bound by the prime contract Chapter 9: Selected Contract Issues |
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To what extent are pay-if-paid clauses enforceable? a) Under all circumstances b) Under no circumstance c) In some cases |
c) In some cases Chapter 9: Selected Contract Issues |
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Explain the difference between actual authority and apparent authority. |
Actual authority means a party has authority by contract, whereas apparent authority means a party has been held out by the principal as having authority. Chapter 9: Selected Contract Issues |
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The number of inspections is always directly proportional to the amount of the fee. True or False? Explain. |
The consultant's contractual obligation is limited by what is in the consulting contract. However, the consultant's tort obligation is based solely on what a reasonable professional consultant would have inspected int he circumstances. While the amount of payment for those services may be a factor in the court's determination of the appropriate number of reviews, it is certainly not determinative. Chapter 9: Selected Contract Issues |
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Which of the following actions can a buyer in a tendering situation do without risking legal liability? a) It can accept bids that do not comply with a material requirement of the call for tenders b) It can negotiate with the bidders after tenders close c) It can use criteria other than price in deciding on the successful bidder, as long as the criteria are disclosed d) It can use undisclosed criteria in deciding on the successful bidder |
c) It can use criteria other than price in deciding on the successful bidder, as long as the criteria are disclosed Chapter 10: Getting to a Contract |
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Describe the buyer's advantages and disadvantages of using a familiar procurement process. |
The buyer's familiarity enables him or her to be comfortable with the chosen delivery system and, hopefully, to understand it. On the negative side, using the same system without evaluating its appropriateness may lead to use of an inappropriate or less appropriate system. Chapter 10: Getting to a Contract |
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When preparing contract documents for tender purposes what should an engineer include? a) Only that information which the engineer personally believes should be necessary for a competent contractor b) All relevant information which may assist a contractor in preparing a bid c) Only that information which the buyer, his client, agrees that the engineer should include and disclose |
b) All relevant information which may assist a contractor in preparing a bid Chapter 10: Getting to a Contract |
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Discuss the statement: "It is always best to hire consultants who have the lowest price." |
Price is only one factor in making any choice to purchase goods or services. The quality of the service provider, especially for a professional service, is crucial to the success of a project. Chapter 10: Getting to a Contract |
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If tender documents state that submitted bids are irrevocable until a specified date, what does this mean? a) A bidder can never withdraw his bid. b) A bidder can withdraw his bid before tenders close, but not after. c) A bidder can withdraw his bid any time before the specified date. |
b) A bidder can withdraw his bid before tenders close, but not after. Chapter 10: Getting to a Contract |
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Describe the nature and effect of the privilege clause. |
The privilege clause permits an owner to accept or reject all of the bids, but it does not permit an owner to utilize undisclosed criteria in awarding a bid. Chapter 10: Getting to a Contract |
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If an engineer who is supervising a contract tender receives inquiries form prospective bidders before the close of bids, which of the following actions should he take? a) Refuse to answer any questions, because the bidders must base their bid only on the written tender documents b) Answer questions as fully and fairly as possible, keeping a written record of his advice in case a future controversy develops c) Answer the question fully and fairly and pass on to all other bidders the same information by issuing an addendum |
c) Answer the question fully and fairly and pass on to all other bidders the same information by issuing an addendum Chapter 10: Getting to a Contract |
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Describe the impact of international treaties on government tendering practices. |
International treaties can impose additional requirements on government to follow certain rules or not include criteria, such as local preferences, in a tender call. Chapter 10: Getting to a Contract |
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List and discuss the advantages and disadvantages of the design-build contract model. |
One advantage is that design-build is becoming increasingly well known, so that contractors and professionals are sued to working with it. In addition, this method allows the buyer to have one-stop shopping. As well, because the designer and builder are integrated, this method fosters cooperation. However, there are concerns about the level of permissible buyer intervention in the design. In addition, there are concerns about the integrity of the inspection process. Finally, the design-build method creates a potential conflict of interest on the part of the consultant, since the consultant is paid by the contractor whose work is being reviewed. Chapter 10: Getting to a Contract |
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During the tender period, if the engineer discovers deficiencies or errors in the tender documents, which of the following actions should he take? a) Immediately notify the buyer and all tenderers of the potential difficulty, providing amending information by way of addenda, where possible b) Say nothing and deal with any problems which may arise by way of change orders after the contract is awarded c) Cancel the entire bid and re-tender the project after correcting the errors and deficiencies |
a) Immediately notify the buyer and all tenderers of the potential difficulty, providing amending information by way of addenda, where possible Chapter 10: Getting to a Contract |
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Which statement best describes a standard form contract? a) It is perfect for every situation. b) It represents the best practices for an industry. c) It is a useful starting point. d) It is completely balanced. |
b) It is a useful starting point. Chapter 11: Specific Contracts and Clauses |
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A contractor enters into a fixed-price contract with an owner based on a well-defined scope of work. Midway into the contract, the contractor determines that its estimating department miss portions of the work. Is the contractor entitled to seek extra compensation? Why or why not? |
The contractor is not entitled to additional compensation because the contract is a fixed-price contract. Chapter 11: Specific Contracts and Clauses |
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Is a cost-plus contractor at risk for the cost of the work? Why or why not? |
A cost-plus contractor is not at risk for the cost of the work because the inherent risk allocation of such a contract is for the owner to pay all of the costs (as defined in the contract). Chapter 11: Specific Contracts and Clauses |
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Describe the circumstances under which a contractor is able to seek increase unit prices. |
The contractor can seek increased unit prices where there is a significant change in quantities from the estimate provided by the owner. Chapter 11: Specific Contracts and Clauses |
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Why is it not advisable to have construction managers perform construction work? |
When construction managers perform some of the construction work, they are in a conflict of interest, in that the construction manager is supposed to oversee the work of contractors on the project. This means that the construction manager is left to manage his or her own work on the owner's behalf. However, the owner may agree to this arrangement, assuming that the owner understands the implications. Chapter 11: Specific Contracts and Clauses |
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Define a P3 contract. |
A P3 (public-private partnership) is a partnership between the public and private sectors where the parties share risk, responsibility, and reward, and where there is a net benefit to the public. Chapter 11: Specific Contracts and Clauses |
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Describe why professionals should not guarantee the work of other parties. |
Professionals should not guarantee the work of other parties because it is physically impossible to provide an absolute assurance that every piece of that other party's work is perfect. Chapter 11: Specific Contracts and Clauses |
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Can liquidated damages be assessed against a party if the contract does not contain a bonus clause? |
Yes Chapter 11: Specific Contracts and Clauses |
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An architect negotiates a term into her contract with the owner that states: "The architect shall not be liable to third parties for damage caused by error in design." Later, an error in the architect's design causes a parapet to collapse, injuring a pedestrian. The pedestrian sues the architect in negligence. Is the architect liable? Explain. |
The pedestrian is not a party to the contract in which the limiting term is found. Therefore, the limitation does not protect the architect from claims by third parties. Chapter 12: Torts |
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While conducting a periodic inspection required by the contract, the architect advises that contractor to change the design of the falsework and shoring below the formwork in preparation for an impending concrete pour. The contractor complies, and an accident occurs. A piece of formwork falls to the street and injures a pedestrian, who sues the architect and contractor. The architect argues that the contractor is responsible for means and methods of construction. Who should prevail? Why? |
The architect would be unlikely to succeed in that argument. By instructing the contractor as to means and methods, the architect has assumed some of the liability. The problem should be broken down into two parts: the claim against the contractor, and the claim against the architect. In the claim against the contractor, the plaintiff would have to establish three elements referred to above: duty of care, breach, and damage. Duty of care and damage would be easy to establish. The contractor's defence, if any, would likely be on the basis of breach of duty. The contractor could show that he met the standard that would normally be expected of a reasonably competent and prudent contractor in those circumstances. If the evidence at trial established that there was a breach of that standard, the contractor would be liable. The architect could assert the same defence as the contractor - that there was no breach of the duty of care. In addition, she could argue that a duty of care was not owed. Means and methods and techniques of construction are traditionally outside the scope of the architect's duties, and the contract documents reflect that fact. However, the facts in this case indicate that the architect voluntarily assumed responsibility by recommending methods of construction. Even though the architect was not obliged to offer this advice, she chose to do so. It is therefore likely that the architect would be found to owe a duty of care, and that the architect would be held liable in negligence. Chapter 12: Torts |
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A professional engineer contractually responsible for structural design of a building hires an engineer-in-training (EIT) to do the calculations for a column. The engineer checks the calculations but fails to catch an error. A collapse results. Ignore any issues of contractual liability. Is the engineer liable in negligence? Is the EIT liable in negligence? Draft an argument presenting the basic principles to be used in each of their defences. |
The defence of the EIT in this case would be based on whether there was a breach of duty; that is, did the engineer-in-training meet the standard of care that would be provided by an average engineer-in-training exercising reasonable prudence and competence? Even in the case of a fully qualified and experienced professional engineer, a standard of perfection is not expected. As long as the engineer exercises an average degree of competence and care, the claim in negligence fails. In the case of an engineer-in-training, the amount of care expected might be the same as that of a fully qualified professional engineer; but the level of skill expected would be lower. Furthermore, the engineer-in-training expects a supervisor to check his work, which was in fact done in this case. In summary, the engineer-in-training performed to the level of skill and care that was required, and the mere existence of an error is not sufficient grounds for establishing negligence. If the plaintiff is unable to prove the EIT's lack of skill or care, then the claim in negligence is defeated. Chapter 12: Torts |
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An architect has prepared plans for a new office tower. The municipal building authority approves the plans, subject to changes to the emergency egress and fire suppression systems. These changes will cost $30 000. The owner is annoyed and wants to know why the architect did not design these systems according to municipal requirements. The architect responds that the municipal authorities have very recently changed their requirements. What defences would be available to the architect if sued in negligence? |
The architect could argue that the design met the standard of care in existence at the time that the plans were first created. Chapter 12: Torts |
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An engineer designing the boiler for an industrial installation determines that a particular design complies with all applicable codes and standards, but just barely. Based on experience and knowledge, the contractor suggests minor enhancements that would increase the safety factor by a significant margin at modest cost. The engineer declines to act on the suggestion. The boiler fails, and the owner sues the engineer. What defences, if any, are available to the engineer? Describe the strengths or weaknesses of those defences. |
Compliance with applicable codes and standards is always a strong defence. The weakness occurs if the defendant is, or should be, aware that the standard is inadequate. A professional who is aware of problems or possible problems with the codes and standards has a duty of care to go beyond the codes and standards. In the Ford Pinto cases, which involved several fatal accidents due to explosions from minor collisions, the designers involved needed to move the gas tank forward to improve the vehicle's ability to withstand rear impact. The fact that this design had met existing codes and standards did not exonerate Ford from negligence in causing injury and death. Ford designers knew or should have known that the placement of the gas tank was risky. Chapter 12: Torts |
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What is the difference between the remedies for a claim in negligence and a claim in negligent misrepresentation? |
A claim in innocent misrepresentation can only result in rescission of the contract, whereas a claim for fraudulent misrepresentation can result in an award of damages. Chapter 12: Torts |
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What is a key difference between the remedies available for a claim in negligence and a claim in negligent misrepresentation? |
In a claim for negligent misrepresentation, claims for pure economic loss are allowed. In a claim for negligence, claims for pure economic loss are barred unless they fall within a recognized exception. Chapter 12: Torts |
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An owner carrying out construction activity on his own property mistakenly believes that his property line is one foot west of where it actually lies. Because of that mistake assumption, he puts up a fence that sits on his neighbour's property. Does that constitute trespass, or is mistake a defence.? |
Mistake is not a defence. Chapter 12: Torts |
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A geoscientist obtains conflicting results in a geophysical mineral survey. The geoscientist knows that her report will be used by prospective purchasers of the company that she is working for; so she chooses only to disclose the positive aspects of her results. Is she potentially liable to the prospective purchasers? Why or why not? What if she chose just to disclose the negative results? |
The geoscientist's failure to fully disclose the results could well result in claims both by her own company, if she chooses to only disclose the negative results, and the purchaser, if she chooses to only disclose the positive results. Chapter 12: Torts |
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To what level of standard of care do courts hold professionals? a) Perfection b) A reasonably competent professional practicing in the same field c) The professional with the lowest competence practicing in the same field |
b) A reasonably competent professional practicing in the same field Chapter 12: Torts |
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Assume that it is common practice for an architect to certify progress payments on a construction project. Also assume that legislation in the province requires that the project owner hold back 10 percent from each progress draw until a specified period after substantial completion of the project. Finally, assume that the architect's contract with the owner requires the architect to follow all applicable legislation; but that neither that contract nor the owner's contract with the builder specifically indicates that there must be a 10 percent holdback. Does the architect have an obligation either to advise the owner of the 10 percent holdback requirement or to ensure that the holdback is maintained? Why or why not? If so, can the architect be sued for failing to do so? Why or why not? |
This issue can be complex. In part, the answer depends on whether it is standard practice for architects to provide advice on holdbacks. As well, if the architect is aware that the client is unsophisticated and unaware of the holdback requirements, the likelihood that such a duty is owed increases. Hence, the answer to the question depends on the specific circumstances in which the architect is placed. Chapter 13: Common Issues in Contract and Tort |
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A geoscientist relies negligently on information from his or her client in preparing a prospectus, and both are found to be liable to a purchaser of shares who relied on the prospectus. But the client is bankrupt. In most provinces, who bears the client's portion of the liability - the geoscientist or the share purchaser? Why? |
The geoscientist would bear the bankrupt client's portion of responsibility because of joint and several liability. Chapter 13: Common Issues in Contract and Tort |
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Which statement best describes an employer regarding vicarious liability? a) The employer is never liable for the actions of its employees. b) The employer is liable to others for the actions of its employees while the employee is acting in the course and scope of his or her employment. c) The employer is not bound by labour legislation. d) The employer is unable to sue its employees or former employees. |
b) The employer is liable to others for the actions of its employees while the employee is acting in the course and scope of his or her employment. Chapter 13: Common Issues in Contract and Tort |
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In most provinces, when does the limitation period in a negligence case against an engineer about an engineer's negligence begin to run? a) When the engineer's work is substantially complete b) When the contractor's work begins to run c) When the aggrieved party discovers or ought to have discovered the negligence d) At the end of the month following the engineer's birthday |
c) When the aggrieved party discovers or ought to have discovered the negligence Chapter 13: Common Issues in Contract and Tort |
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An environmental engineer becomes aware that the environmental code is being developed by an organization that he believes is insufficiently experienced to be competent. Is it sufficient defence in court if the engineer follows that code? What steps, if any, should the engineer take when he uses the environmental code? |
Codes are minimum standards, rather than maximum standards. If the codes is insufficient, the engineer must design to the standard that he believes is appropriate. He must also make the client aware of the problem with the code and the rational for designing to the higher standard. Chapter 13: Common Issues in Contract and Tort |
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Which of the following is not at all a voluntary process? a) Litigation b) Arbitration c) Mediation d) Negotiation |
a) Litigation Chapter 14: Dispute Resolution and Expert Evidence |
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Are photographs and videos considered to be documents for the purpose of document production in a lawsuit? |
Yes Chapter 14: Dispute Resolution and Expert Evidence |
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Which of the following is not a pleading? a) A reply b) A statement of defence c) Discovery of documents d) Interrogatories |
c) Discovery of documents Chapter 14: Dispute Resolution and Expert Evidence |
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Why should a third party claim be decided at the same time as the main lawsuit under which it was filed? |
By definition, a third party claim is a claim by one of the defendants in a litigation that another party is at fault. If the third party is not part of the litigation, a second lawsuit will have to result, based on the results of the first one. But in the second lawsuit, a different judge may find a different set of facts and may decide the case differently. For this reason, third parties named in third party claims should be incorporated into the original litigation. Chapter 14: Dispute Resolution and Expert Evidence |
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Lawyers can be paid a fee on a contingent basis. Why is an expert witness not entitled to be paid this way? |
A lawyer is an advocate for one party in the dispute, whereas an expert witness is supposed to be impartial and unbiased. Chapter 14: Dispute Resolution and Expert Evidence |
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Which of the following are not allowed to speak privately with one of the parties in a dispute? a) The judge b) The arbitrator c) The mediator d) A and B |
d) A and B Chapter 14: Dispute Resolution and Expert Evidence |
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Does the successful party in a lawsuit recover all its legal fees? |
No Chapter 14: Dispute Resolution and Expert Evidence |
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What documents do judges examine prior to the commencement of a lawsuit? a) The statement of claim b) Correspondence between the parties c) Photographs d) Settlement offers |
a) The statement of claim Chapter 14: Dispute Resolution and Expert Evidence |
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If disputing parties attempt mediation and exchange settlement offers but are unable to reach a final settlement, are the amounts of the offers admissible in subsequent litigation? |
No Chapter 14: Dispute Resolution and Expert Evidence |
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What is usually the most expensive dispute resolution method? a) Settlement conferences b) Mediation c) Litigation d) Arbitration |
c) Litigation Chapter 14: Dispute Resolution and Expert Evidence |
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Which of the following is not a contractual risk allocation provision? a) An insurance clause b) An "unforeseen conditions" clause c) An indemnity clause d) A pay-when-paid clause e) None of the above |
e) None of the above Chapter 15: Risk, Responsibility, and Dispute Avoidance |
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If an architect makes a mistake in a design, is that architect liable in negligence? |
Not in every case. The mere fact that a mistake has been made does not automatically mean that there has been negligence. The plaintiff must still prove all of the elements of a negligence claim. Chapter 15: Risk, Responsibility, and Dispute Avoidance |
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Do warranties always have to be expressly stated in writing in a contract? |
No. Implied warranties may exist. Courts often imply warranties of fitness for purpose in cases involving new products such as cars and houses. Chapter 15: Risk, Responsibility, and Dispute Avoidance |
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Are disclaimers always enforceable? If not, under what circumstances might a disclaimer be unenforceable? |
No. If a disclaimer is too broad, a court may find it to be unenforceable. Chapter 15: Risk, Responsibility, and Dispute Avoidance |
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How may the authenticity of a document be proven in court? |
The author of the document can take the witness stand and testify when the document was created. Chapter 15: Risk, Responsibility, and Dispute Avoidance |
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A contractor procures a policy of property insurance covering the equipment of his competitor. Later, a loss occurs. Can the insurer deny coverage? If so, on what grounds? |
Yes. The insurer can deny coverage on the grounds that the contractor had no insurable interest. Chapter 16: Insurance |
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Which of the following is not a potential defence available to an insurer to a claim under professional liability insurance policy? a) The professional failed to disclose an unrelated claim in the initial application for insurance. b) The professional failed to give timely notice of the claim. c) The professional agreed that he or she was liable for the claim. d) The professional agreed to a contract for services without obtaining specific approval of the insurer. |
d) The professional agreed to a contract for services without obtaining specific approval of the insurer. Chapter 16: Insurance |
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A claim is made against a geoscientist in negligence. The geoscientist has an errors and omissions policy in place. But part of the geoscientist's work involving mathematical modelling was subcontracted to an independent consultant. The negligence was in fact caused by an error of the subconsultant. The geoscientist decides to discuss the matter with the subconsultant, who has few assets and no insurance; and the geoscientist agrees to release the subconsultant from liability in exchange for $10 000. The geoscientist then reports the claim to the insurer. Can the insurer deny coverage? Explain? |
Yes. The insurer can take the position that it has been prejudiced by the geoscientist's release of its subconsultant. Chapter 16: Insurance |
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"It is inappropriate for professionals to make themselves judgement-proof." Discuss this statement. |
Professionals can legally arrange their affairs, including distribution of their assets, in any way they want before they receive notice of a potential claim. But after receipt of notice of a potential claim, the professional is prohibited from transferring his or her assets to place them out of the reach of creditors. Chapter 16: Insurance |
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A contractor is constructing the concrete core of a high-rise tower. A blockout is left at each floor to allow electrical conduit to pass through in an enclosed duct. Due to design error, a fire erupts in the conduit, damaging not only the conduit and wiring but also the finishes in the room that the conduit passes through. The policy in place is a builder's risk policy. Discuss the coverage issues. |
The facts of this problem are taken from the case of Sayers & Associates Ltd. v. Insurance Corp. of Ireland Ltd. (1981), 126 D.L.R. (3d) 681 (Ont. C.A.). In that case, the insurers argued that the appellant's loss was excluded under the terms of the insurance policy: "This policy does not cover: cost of making good faulty or defective workmanship, material, construction or design, but this exclusion shall not apply to damage resulting from such faulty or defective workmanship, material, construction or design." As a result, the Court ruled: In the present case, the "fault" that underlay the "faulty workmanship" was the failure of the Appellant to take protective measures; by the terms of its contract its 'work' was to install electrical equipment and to keep it dry and clean until the contract was completed. It would be taking too narrow a view of the case to isolate one part of the work from the total contractual obligation. The damage to the equipment was the product of the failure to take protective measures, so that fault rendered the Appellant's performance of its contractual obligations "faulty workmanship." The damage to the ducts and the switch gear was not, therefore, "damage resulting from such faulty workmanship," so as to come within the exception to the exclusion. Even when a loss is excluded under the "faulty design, materials, and workmanship" exclusion, portions of the claim may in fact e covered. That is because the exclusion clauses typically contain an exception, which provides for coverage to other property that may be damaged. For example. if two towers are being constructed side by side and one of them is under-designed and as a result collapses into the second tower, damage to the second tower may be covered even if damage to the first is not. The court in the Sayers case did not consider the surrounding work to be other property. It is sometimes difficult to predict whether a court will draw a distinction between the component of the building or project that contains the fault, and surrounding work which is damaged as a result. Recently, courts have tended to consider all of the work to be integrated so as to exclude coverage in total. Chapter 16: Insurance |
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What is a waiver of subrogation? a) It permits the insurer to seek compensation from others as if the insurer were the insured. b) It eliminates an insurer's obligation to provide indemnities to the insured. c) It eliminates the insurer's right to seek compensation from others as if the insurer were the insured. |
c) It eliminates the insurer's right to seek compensation from others as if the insurer were the insured. Chapter 16: Insurance |
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An individual purchases property insurance covering the perils of fire and theft. A theft occurs, and the insurer denies coverage, arguing that the insured failed to disclose the fact that he was a foreigner (i.e., a landed immigrant), not a citizen, and that the insurer would not have accepted the risk of insuring an alien. Was this non-disclosure material? Why or why not? |
The denial was wrong because the immigration status of the individual was irrelevant to the policy that was purchased. Chapter 16: Insurance |
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What types of claims does a claims-made policy cover? a) Those made during the currency of the policy b) Those arising from facts that occurred during the currency of the policy c) Those for damage to property on the insured's office premises |
a) Those made during the currency of the policy Chapter 16: Insurance |
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A wall under construction collapses due to an error in design, destroying not only the wall itself, but also an electrical switchgear on the ground and a sports car parked next to the jobsite. The contractor and owner have used a standard form CCDC 2 contract and have procured the required insurance. Are the losses (the wall, the switchgear, the car) covered? Which policies cover what losses? |
The contract requires the contractor to obtain liability insurance and the owner to purchase property insurance. Liability insurance, typically in a CGL form, does not cover work that is in the control of the insured. In other words, the project under construction is not covered by the liability policy. Therefore, the wall itself will not be covered under the liability policy; and it is uncertain whether the electrical switch gear will be covered by that policy either. The sports car, on the other hand, would not fall within that exclusion and, assuming that a claim is made by the owner of the car against the contractor or the owner, or both, the liability policy should afford coverage. Meanwhile, the contract requires the property insurance purchased by the owner to be in an all-risk form. Virtually all policies of this form contain an exclusion clause with respect to faulty or defective workmanship, material, and design. The wall itself would also most certainly be excluded from coverage, given the facts stated in the problem description (i.e., the collapse was due to an error in design). The switch gear, on the other hand, may fall within the exception to the exclusion, which provides for coverage to other property that may be damaged. Therefore, in summary, damage to the wall is probably not covered by either policy; damage to the car would be covered under the liability policy; and damage to the switch gear would be covered under the all-risk property policy. Chapter 16: Insurance |
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Which statement(s) is/are true of builder's risk insurance policies? a) They always cover all claims of any nature arising from construction. b) They often exclude coverage for repairing the contractor's own work product. c) They continue to cover a building for the life of the building. |
b) They often exclude coverage for repairing the contractor's own work product. Chapter 16: Insurance |
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A surety has provided a performance bond to the owner, guaranteeing performance of the contractor. The contractor in default has been paid $400 000 on a $1 million contract but has completed 50 percent of the work. The surety solicits bids, and the lowest acceptable bid is $550 000 to complete the project. How much money will the indemnitors have to reimburse the surety? |
To get the surety to complete the work, the owner has to pay to the surety the remaining $600 000 owing on the contract. Of that amount, $550 000 goes to the completion contractor. The indemnitors do not have to reimburse the surety at all. Chapter 17: Bonds |
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A surety has provided a labour and material payment bond. A subcontractor makes a claim against that bond in the amount of $10 000. The general contractor advises the surety that the subcontractor is owed only $5000. What should the surety do? Explain. |
The surety should conduct its own investigation to determine whether the contractor is correct. If the surety simply takes its contractor's word as truth, it may overpay the claimant, in which case it would not have any recourse against the indemnitors for the overpayment. Chapter 17: Bonds |
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An owner receives irrevocable bids, each accompanied by a bid bond in an amount equal to 10 percent of the respective bid. The lowest bid of $90 000, is accepted. But the contractor refuses to enter into a contract for no excusable reason. The next lowest bid is $95 000. However, that bidder also refuses to enter into a contract. The third bid of $100 000 is accepted, and a contract is signed. What is the liability of the surety for the lowest bidder? Why? What is the liability of the surety for the second lowest bidder? |
The liability of the surety for the lowest bidder is at most the face value of the bond, which is $9000 (10 percent of the bid price). That amount is lower than the difference between the bid of the principal and the bid accepted by the owner. The same analysis applies to the second-lowest bidder. However, in the second case, the difference in bids is $5000, which is lower than the face value of the bond ($9500). Therefore, the second surety does not face exposure greater than $5000. Note that the courts would not allow the owner double recovery. Chapter 17: Bonds |
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What is the difference between a bond and an insurance policy? a) Only a bond includes a right of subrogation. b) A person purchasing a bond must pay a premium. c) A surety, but not an insurer, obtains indemnities. d) All of the above |
c) A surety, but not an insurer, obtains indemnities. Chapter 17: Bonds |
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When a claim is made under a performance bond, which of the following is an option for a surety? a) Wait and see b) Pay the face value of the bond c) Defend the claim d) Only A and B e) All of the above |
e) All of the above Chapter 17: Bonds |
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Can a sub-subcontractor qualify as a claimant under a standard form CCDC labour and material payment bond? |
No, this form is a one-tier bond. Chapter 17: Bonds |
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Why would a surety want to avoid being characterized as a volunteer? |
If a surety pays money as a volunteer, without a legal obligation to pay, it would be unable to recover this amount from its indemnitors. Chapter 17: Bonds |
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If a surety against whom a claim has been made on a performance bond decides to wait and see if the principal is liable, is the surety liable for delay damages resulting from its decision to wait and see? |
While some courts in Canada have held sureties liable for delay damages, the weight of authority seems to be that delay damages are not covered by a performance bond. Chapter 17: Bonds |
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Which of the following parties cannot be an obligee under a payment bond? a) An owner b) A general contractor c) A subcontractor d) None of the above |
d) None of the above Chapter 17: Bonds |
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Which of the following cannot qualify as a defence under a performance bond? a) The owner has failed to pay the contractor. b) The owner has overpaid the contractor. c) The owner has added a large number of changes to the work. d) None of the above |
d) None of the above Chapter 17: Bonds |
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If a claim is asserted against a surety under a performance bond, which of the following statements is true? a) The surety cannot rely on the defences available to the principal, if those defences appear weak. b) The limitation periods available to the contractor may not be available to the surety. c) The limitation periods available to the surety may not be available to the principal. d) None of the above |
c) The limitation periods available to the surety may not be available to the principal. Chapter 17: Bonds |
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A general contractor contracts with a subcontract for final cleanup. But the cleaning subcontractor does not begin work on site until substantial completion of the project. Meanwhile, the statute requires liens to be filed within 30 days of completion of the prime contract. "Completion" in this jurisdiction is defined as substantial rather than total completion. What effect, if any, might this definition have on the cleaning subcontractor's lien rights? |
The cleaning subcontractor may not have any lien rights. As unfair as it may seem, the subcontractor is not entitled to a lien unless it is filed within 30 days of substantial completion of the prime contract. If the subcontractor files late, the lien would be invalid. Chapter 18: Construction Liens |
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Which of the following may a lien claimant recover? a) More than the holdback amount b) Less than the full amount of the holdback c) Only the exact amount of the holdback |
b) Less than the full amount of the holdback Chapter 18: Construction Liens |
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Which statement is true about the amount of money available to a claimant under a breach of trust claim? a) It is always less than under a lien claim. b) It is never less than under a lien claim. c) It is sometimes less than under a lien claim. |
c) It is sometimes less than under a lien claim. Chapter 18: Construction Liens |
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An owner, ABC Development, hires a contractor, DEF Contracting Ltd., to construct a building for the contract price of $10 million in a province with a 10 percent holdback requirement and a multiple holdback system. DEF subcontracts the mechanical work to a subcontractor, S1 Ltd., for the subcontract price of $1.5 million. DEF also subcontracts the electrical work to a subcontractor, S2 Ltd., for the price of $800 000. However, S1 Ltd. fails to pay its suppliers, M1 and M2; and each of those suppliers files a lien. M1's lien is in the amount of $200 000, and M2's lien is for $200 000. Moreover, S2 fails to pay two of its suppliers, E1 and E2; and each of those suppliers files a lien. E1's lien is in the amount of $50 000, and E2's lien is for $150 000. What is the holdback available to the lien claimants? |
M1 and M2 will jointly pursue (and share pro rata) the holdback of $150 000, which is 10 percent of hte contract between DEF and M1. E1 and E2 will share in the holdback of $80 000. Chapter 18: Construction Liens |
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An owner, ABC Development, hires a contractor, DEF Contracting Ltd., to construct a building for the contract price of $10 million in a province with a 10 percent holdback requirement and a multiple holdback system. DEF subcontracts the mechanical work to a subcontractor, S1 Ltd., for the subcontract price of $1.5 million. DEF also subcontracts the electrical work to a subcontractor, S2 Ltd., for the price of $800 000. However, S1 Ltd. fails to pay its suppliers, M1 and M2; and each of those suppliers files a lien. M1's lien is in the amount of $200 000, and M2's lien is for $200 000. Moreover, S2 fails to pay two of its suppliers, E1 and E2; and each of those suppliers files a lien. E1's lien is in the amount of $50 000, and E2's lien is for $150 000. How much should each claimant recover on account of their lien? |
M1 and M2 have liens of equal value, so they will each receive one half of $150 000 ($75 000). E1's lien is one quarter of the value of the total liens filed under this chain of subcontracts, so E1 will recover $20 000, and E2 will recover $60 000. Chapter 18: Construction Liens |
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An owner, ABC Development, hires a contractor, DEF Contracting Ltd., to construct a building for the contract price of $10 million in a province with a 10 percent holdback requirement and a multiple holdback system. DEF subcontracts the mechanical work to a subcontractor, S1 Ltd., for the subcontract price of $1.5 million. DEF also subcontracts the electrical work to a subcontractor, S2 Ltd., for the price of $800 000. However, S1 Ltd. fails to pay its suppliers, M1 and M2; and each of those suppliers files a lien. M1's lien is in the amount of $200 000, and M2's lien is for $200 000. Moreover, S2 fails to pay two of its suppliers, E1 and E2; and each of those suppliers files a lien. E1's lien is in the amount of $50 000, and E2's lien is for $150 000. What remedies might the claimants pursue, in addition to their liens against the land? |
Potential remedies include breach of trust, a claim against the holdback, breach of contract, and a claim against a labour and material bond (if one had been put in place). Chapter 18: Construction Liens |
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What is the purpose of a lien bond? a) To guarantee the performance of the contractor b) To ensure that no liens are filed c) To replace the land as security for a claim of lien |
c) To replace the land as security for a claim of lien Chapter 18: Construction Liens |
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Which parties may be potentially liable for a breach of trust under a Construction Lien Act? a) A contractor b) A worker c) A material supplier d) A subcontractor e) A and D only |
e) A and D only Chapter 18: Construction Liens |
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What is the difference between a multiple holdback system and a single holdback system? a) The amount of holdback available to a claimant b) The number of parties who are required to retain the holdback c) The percentage of money that must be held back d) A and B only |
d) A and B only Chapter 18: Construction Liens |
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If a general contractor pays a subcontractor in full, and that subcontractor fails to pay one of its suppliers, is the general contractor potentially liable to that supplier for breach of trust? |
In those provinces that follow the MacKenzie Redi-Mix case, the general contractor would not be liable. Chapter 18: Construction Liens |
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What is the difference between security posted for a lien and security for costs? |
Security posted for a lien will be cash, or a letter of credit, or a bond, in an amount that is either equal to the amount of the lien or, in some jurisdictions, an amount that the court believes is sufficient to protect the lien claimant. Security for costs, on the other hand, is an amount that is meant to cover some of the legal costs that may be incurred in commencing and pursuing legal proceedings to prove the claim of lien, and is typically a small fraction of the lien security. Chapter 18: Construction Liens |
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What is one reason why it is important to include a right of set-off (the right to deduct) in a contract between the owner and its prime contractor? |
Without the right of set-off, if the prime contractor defaults in its payment obligations to its subcontractors as well as its obligations to CRA, the owner might have to pay the holdback amount twice: once to CRA and once to the unpaid claimants. Chapter 18: Construction Liens |
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The network diagram for construction of an office tower shows two critical paths: one involving completion of the mechanical room, and the other the completion of the elevators. During the project, the elevator subcontractor causes a delay of two weeks. Meanwhile, the mechanical subcontractor causes a concurrent delay of one week. The owner sues the general contractor for the two-week delay, and the general contractor names the two subcontractors as third parties. The mechanical subcontractor's defence is that its delay did not cause any loss because the delay to the elevators took the mechanical room off the critical path. Should that argument succeed? Explain. |
The argument would likely not succeed. Both parties contributed to the delay. The delays were concurrent. Both subcontractors could offer the same argument; and if one were to succeed, then both would succeed, and neither party would be liable, which is obviously an incorrect result. Chapter 19: Delay and Impact Claims |
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An owner and contractor enter into a contract that states: "The contractor is entitled to an extension but no compensation for delays caused by the owner." Later, the owner suspends work on the site for a period of two months because the delay is advantageous to the owner in its dealings with prospective tenants. The contractor claims compensation. Should the clause be enforceable? Explain. |
This is an example of an intentional delay, caused by an owner. Keep in mind the principle that one party should not be put at the mercy of another, as well as the principle that a party should not intentionally hinder the progress of the other party. A court would likely interpret the clause so that it would not apply to deliberate delays. Chapter 19: Delay and Impact Claims |
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What is the measured mile approach for? a) To measure head office overhead b) To measure filed office overhead c) To calculate loss of productivity |
c) To calculate loss of productivity Chapter 19: Delay and Impact Claims |
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Which statement is true of constructive acceleration? a) It only applies to construction projects. b) It occurs when the own acknowledges a delay and directs the contractor to make up lost time. c) It occurs when the owner does not acknowledge any delay but directs the contractor to meet the original completion date. |
c) It occurs when the owner does not acknowledge any delay but directs the contractor to meet the original completion date. Chapter 19: Delay and Impact Claims |
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In the Doyle Construction case, why did the Court refuse to allow the contractor's claims for impact costs? |
The contractor did not give notice of the claim in advance. The owner believed that when it approved each of the extras, the quoted costs were all-inclusive. Chapter 19: Delay and Impact Claims |
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Which statement is true of a delay to a non-critical path activity? a) It never results in additional compensation. b) It never results in a schedule extension. c) It typically results in a schedule extension. d) It sometimes results in additional compensation. |
d) It sometimes results in additional compensation. Chapter 19: Delay and Impact Claims |
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Explain why neither party is usually able to recover damages for a concurrent delay. |
In a concurrent delay, each party can successfully argue lack of causation. The delay would have taken place "but for" their own fault; therefore, they did not cause it. This situation is not identical to the case where two subcontractors have each caused delay to another party who is claiming against both. The critical difference is that in that case, the delay was caused by two parties who are not asserting a delay claim of their own; whereas in a concurrent delay, each party would be asserting its own claim against each other. Chapter 19: Delay and Impact Claims |
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Which of the following statements is true in a standard CCDC 2 contract? a) A compensable delay is not excusable. b) A contractor-caused delay is compensable. c) An excusable delay is always compensable. d) A contractor-caused delay is not excusable. |
d) A contractor-caused delay is not excusable. Chapter 19: Delay and Impact Claims |
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Under a CCDC 2 contract, what are force majeure delays? a) Contractor-caused delays b) Compensable delays c) Excusable delays |
c) Excusable delays Chapter 19: Delay and Impact Claims |
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What term describes activities that have no float? |
They are critical path activities. Chapter 19: Delay and Impact Claims |
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Which of the following is not an unfair labour practice? a) A threat to fire someone who is organizing the employees b) An offer to promote someone who is organizing the employees c) A threat to close the business if the union is certified d) Closing the business |
d) Closing the business Chapter 20: Labour Law |
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Why is it necessary for several trade unions in the construction industry to bargain at the same time? |
If each union were to bargain separately, then each union would have the ability to shut down all construction sites. It is not in the interests of either tradespeople or employers to have a small number of employees going on strike one after the other. For example, on a building construction site, there may be only five or six elevator installation workers, but the project cannot proceed without the elevators. If those workers were to shut down a site (or the entire industry) until they obtained the wages they were looking for, the next union whose agreement is up for renegotiation (e.g., the electricians) would do the same. Under such circumstances, construction projects would shut down frequently. Chapter 20: Labour Law |
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What is the difference between successor employers and common employers? |
A successor employer is one who buys a business or a substantial part of a business. A common employer is one who carries on business at the same time as another business, with common direction or control over both businesses. In some jurisdictions, both common direction and control may be necessary to establish common employer status. Chapter 20: Labour Law |
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A group of dump truck drivers have decided to organize in order to bargain for increased compensation. They each own their own truck and have been hired by the same excavation contractor. They are currently being paid $45 per hour, which is intended to cover their truck maintenance and operating costs as well as their wages or profit. They receive direction from the contractor's dispatcher each morning and at each project site by the contractor's superintendents. How would you classify these people? Are they employees or independent contractors? |
In most provinces, case law distinguishes employees from independent contractors based on several factors, including the level of control that the employee has over the methods of work. An independent contractor usually determines the means and methods to be used to achieve a result. In contract, an employee does not usually determine the means and methods. If these were the only two options, the drivers would most likely be considered employees. However, if the category of "dependent contractor" is available, that is the one that most closely fits. Chapter 20: Labour Law |
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Which statement is true of an employer under a typical collective agreement? a) The employer cannot terminate an employee under any circumstances. b) The employer can only terminate an employee if he gives reasonable notice. c) The employer cannot lay off an employee because of a downturn in business. d) None of the above |
d) None of the above Chapter 20: Labour Law |
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Which of the following does not require all employees to pay union dues? a) Open shop b) Closed shop c) Rand formula d) Union shop |
a) Open shop Chapter 20: Labour Law |
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Assume that there is a collective agreement in place with one month until expiry. Is the employer allowed to lock out its employees in order to put more pressure on them during the negotiations? |
No. As long as the collective agreement is in force, strikes and lockouts are illegal. Chapter 20: Labour Law |
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Under a typical collective agreement, if a union employee is late for work, can the employer lay off or terminate that employee? |
No. A warning would be required before serious disciplinary action can be taken. Moreover, after repeated offences, employers may have other options available, including termination for cause. But layoff is not usually one of those options. Chapter 20: Labour Law |
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Which statement is true of crossing a picket line? a) It is illegal for a member of a union. b) It is only legal if the picket line itself is unlawful. c) It is legally permissible for a member of the public. |
c) It is legally permissible for a member of the public. Chapter 20: Labour Law |
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What is a jurisdictional dispute? a) A dispute over which union should represent the employees b) A dispute over which union's members should perform work c) A dispute over whether a dispute should be heard by a court or by an arbitrator d) None of the above |
b) A dispute over which union's members should perform work Chapter 20: Labour Law |
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Which of the following is not a factor in determining the appropriate notice period for termination of employment? a) Age b) Skin colour c) Length of service |
b) Skin colour Chapter 21: Employment Law |
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Which of the following is not a prohibited ground of discrimination under most provincial human rights statutes? a) Religion b) Skin colour c) Length of service |
c) Length of service Chapter 21: Employment Law |
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A geologist is hired by a mining exploration company. As a condition of employment, the employer demands that the geologist sign a contract of employment that contains a clause stipulating that the geologist, upon leaving the company, will not work for another mining company in the same province for a period of 20 years. Is such a clause enforceable? |
The clause is extremely broad, in terms of length of time and scope of work; therefore, a court will likely find it unenforceable. Chapter 21: Employment Law |
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If an architect is found guilty of driving while intoxicated, is the architect's employer justified in dismissing the architect for cause? a) Only if the architect was arrested during working hours b) No, under any circumstances c) Yes |
a) Only if the architect was arrested during working hours Chapter 21: Employment Law |
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Can an employer refuse to hire a site inspector on the grounds that the candidate is hard of hearing? What if the site inspector uses a wheelchair? |
The employer could discriminate on either account, but only if the employer can prove that the impairment or disability would make performing the work impossible for the candidate. Moreover, there would also have to be no reasonable possibility of making accommodation for the impairment or disability. Chapter 21: Employment Law |
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A geoscientist works for only one company, 40 hours per week, under a written agreement that says the geoscientist is an independent contractor. Is the company required to withhold income tax deductions? |
Yes. This is really a contract of employment, even though it purports to be a contract with an independent contractor. Chapter 21: Employment Law |
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A company has a mandatory retirement policy. Is that an infringement of the employees' rights under the Charter of Rights? |
No. The Charter does not apply to private companies. Chapter 21: Employment Law |
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A software engineer has worked as an employee for five years while developing a product. The company patents and successfully markets the product. The software engineer then leaves the company to set up her own company. The software engineer uses her knowledge to write new software for a competing product. Is this a breach of confidentiality? |
This situation would be breach if the employee is using confidential information. Nothing prevents an employee from using his or her skills, regardless where they were obtained. But an employee cannot use confidential knowledge of the former employer's product to compete with the former employer. Chapter 21: Employment Law |
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A firm of architects runs out of work and can no longer afford to employ its draftsman. The firm tells the draftsman, "We are laying you off. As soon as we have more work, we'll call you back." The draftsman sues for wrongful dismissal. What is the likely result of the lawsuit? |
The draftsman would likely succeed. Lack of work is not just cause for dismissal. Chapter 21: Employment Law |
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An employee engineer makes a mistake in her calculations, causing loss to the client. Who may be liable to whom? a) The employer may be liable to the client under the doctrine of vicarious liability. b) The employee may be liable to her employer. c) All of the above d) None of the above |
c) All of the above Chapter 21: Employment Law |
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Zoe is a software engineer and is driving from her office to a client's office. Zoe's car is hit from behind by a police car. Who can Zoe successfully sue? a) Her employer b) The police officer's employer c) The police officer d) None of the above |
d) None of the above Because Zoe is employed and is injured while she is employed, she is covered by the Workers Compensation Act and is therefore unable to sue her employer, another employer, or another employee. She will be compensated by the Workers' Compensation Board rather than through a private lawsuit. Chapter 22: Health and Safety Law |
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If an owner designates two contractors as the prime contractor or constructor simultaneously, what is the potential consequence to the owner? |
The owner could become responsible for any breaches of the OH&S requirements, since by designating two prime contractors, the owner ends up being considered the prime contractor. Chapter 22: Health and Safety Law |
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Can an owner contractually require safety measures that are more costly than OH&S requirements? |
Yes. Chapter 22: Health and Safety Law |
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An employer asks a mining engineer to inspect a shaft. But the engineer believes the shaft is unsafe and does not want to go down. The employer threatens to fire the engineer for insubordination if the engineer refuses to follow the employer's orders. Which of the following statements is true? a) The engineer can refuse to carry out the order. b) The employer has no right to fire the engineer for refusing the order. c) The engineer can report the safety concern to the OH&S authorities. d) Only A and B e) A, B, and C |
e) A, B, and C Chapter 22: Health and Safety Law |
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If an employer is in full compliance with OH&S requirements, is it still necessary to comply with other legislation that contains health or safety requirements? a) No b) Yes c) Only if the other legislation is inconsistent with the OH&S requirements |
b) Yes Chapter 22: Health and Safety Law |
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What is the "historic trade-off" that underlies workers' compensation schemes? |
The trade-off is between the entitlement of employees to share compensation from the workers' compensation fund in exchange for the protection of owners against lawsuits by employees injured during work. Chapter 22: Health and Safety Law |
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Describe the three types of environmental site assessments. At which phase is intrusive testing used? |
A phase I ESA is a fact-gathering process. A Phase II ESA is a physical sampling of the property. A Phase III ESA is a detailed delineation of the chemicals on the site. Intrusive testing begins at Phase II. Chapter 23: Environmental Law |
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Describe the difference between an environmental site assessment and an environmental audit. Describe the benefits of conducting an environmental audit. |
An ESA is a program to determine the contamination of a site, whereas an environmental audit is a broader review of the systems that a corporation has in place to control environmental factors. Chapter 23: Environmental Law |
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LMN Co. used Assurance Realty Service to purchase a piece of land. Assurance had previously been involved in the sale of the property 20 years ago when it was still a gas station. The seller had noticed odd smells emanating from the basement of the building built on the property 15 years ago but had said nothing about it to his realtor. LMN did not do an ESA before purchasing the property. LMN later finds that the property has significant environmental contamination. Describe the potential legal actions. |
Assurance may be sued for its prior knowledge of the historical use of the site as a gas station. The seller may be sued for not providing full disclosure. Chapter 23: Environmental Law |
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What levels of government may enact environmental laws? a) Only the federal government b) Both the federal and the provincial governments c) All levels (federal, provincial, local) |
c) All levels (federal, provincial, local) Chapter 23: Environmental Law |
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Can a prior landowner be found to be liable for environmental cleanup costs? |
Yes Chapter 23: Environmental Law |
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If a company causes contamination, who may be liable? a) The company itself b) The directors c) The previous landowner d) All of the above e) A and B |
e) A and B Chapter 23: Environmental Law |
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What is nuisance? a) The cost of performing an environmental audit b) The interference with a neighbour's use or enjoyment of land c) The bother of having to exercise due diligence |
b) The interference with a neighbour's use or enjoyment of land Chapter 23: Environmental Law |
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Where a consulting contract contains a confidentiality clause, the environmental assessor has these obligations: a) He or she cannot speak to anyone about his or her findings, without the client's consent. b)He or she may be required to report findings if the environmental statute requires such disclosure. c) He or she has an ethical obligation if he or she is a professional engineer. d) B and C |
d) B and C Chapter 23: Environmental Law |
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If a project is planned such that it will have a potential impact on an Aboriginal group with a land claim, under what circumstances should the Aboriginal group be consulted? |
Governments are required to consult with Aboriginal peoples affected by a governmental project. However, it is prudent to consult with impacted Aboriginal peoples even for private projects. Chapter 24: Aboriginal Law |
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Can a lien be filed against reserve lands? A mortgage? A lease? |
Real property charges cannot generally be registered against reserve land. Chapter 24: Aboriginal Law |
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Name on advantage and one disadvantage of Aboriginal contractors that are located on reserves. |
Aboriginal contractors located on reserve land are generally tax-exempt, but they experience difficulty getting bonded because reserve lands are not mortgageable. Chapter 24: Aboriginal Law |
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Do material disclosure requirements end with the filing of a prospectus? Why or why not? |
They do not. Material disclosure is an ongoing obligation. Continuing disclosure must be made of all material changes. Chapter 25: Securities Law |
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What is the impact of the CSA's National Instruments on the liability of architects, geoscientists, and engineers? |
If a professional prepared a technical report negligently, including not writing it in accordance with recognized guidelines, such as NI 43-101 and NI 51-101, the company and its investors will likely have a right of action against that professional. Chapter 25: Securities Law |
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Can a consulting firm share information about an individual client with other clients of the firm? |
The firm cannot share information without consent from the client. Chapter 26: Privacy Law |
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Can information be disclosed where the personal safety of the individual is in serious jeopardy? |
Yes. Chapter 26: Privacy Law |
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Describe three problems associated with email. |
Email is typically casual, conversational, and spontaneous, and tends to be created with less care than more formal communications. For this reason, emails often contain ill-considered and potentially damaging statements. Email can be effortlessly reproduced, distributed, and redistributed to innumerable recipients inside and outside an organization at virtually no cost. Thus damaging communication can spread quickly. A click of the wrong button can result in immediate and irretrievable distribution of email to numerous unintended recipients. Thus, potentially damaging or embarrassing material can end up in the wrong person's inbox. Email can also be forwarded to unintended recipients. Chapter 27: Internet Law |
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Is a person who makes a defamatory statement on a website liable for defamation? |
Yes Chapter 27: Internet Law |
