Contract Law
What is a contract?
A contract is an enforceable voluntary agreement between two or more parties
Name 5 elements of a binding and enforceable contract
Offer and Acceptance; Mutual Intent Consideration; Legal Capacity; Lawful Purpose
False statement made knowingly to induce a contract
Fraud
What is the Breach of Contract?
Failure by one party to perform their obligations
Steps during tendering process
Plan; Advertise; Request Formal Proposals; Evaluate Vendor Proposals; Sign Contracts
In which forms can a contract be legally made?
Written or Oral; Explicit or Implied. (except sale/transfer of land, sale > $500, activities longer than 1 year )
What document indicates parties' intentions to enter a contract
Letter of Intent (non binding)
This common contract clause allows parties to be excused from obligations when unforeseeable events, like floods or earthquakes, prevent performance.
Force Majeure clause (Frustration - circumstance to void the contract when an unforeseen event makes the performance of the contract either impossible or of no value)
A plant shutdown resulting from a contractor failing to perform services would be an example of
Indirect damages - "consequential" to the breach
What contracts are involved in tendering process?
A - when bid is submitted; B - when bid is accepted, actual contract that addresses the substance of work and services
Who has the legal right to enforce a contract under the doctrine of privity
Only parties to the contract (privy to the contract) can enforce a contract
T or F: A contract is enforceable if one party is a minor
False. Contract my be enforceable by the minor but unenforceable by the other party (Legal capacity)
When contract provisions agreed but documented inaccurately, a court may issue this
A common mistake may be corrected by an order of rectification
A contractor delivers a bridge slightly later than agreed but the bridge is safe and functional. What type of breach is this?
"Simple" Breach; does not allow the innocent party to terminate the contract or stop their performance.
What can an owner do if all submitted bids exceed the budgeted price?
Reject all bids, revise the scope and start a new bidding process
What is fiduciary duty?
Duty to prioritize the interests of another party above one's personal interests
Provide an example of consideration given by the client and the consultant
Client - pay the consultant's fees and expenses; Consultant - perform the design work
A contractor demands that the client amends the contract or else face a long delay. What legal doctrine can a client use?
Duress - improper threat, pressure or intimidation used as a means of persuading a party to enter into a contract
When the principle of "quantum meruit" applies?
Applied when a party deserves payment for work done despite no valid or complete contract
What is a guarantee provided by a contractor to assure the owner that the contractor will enter into the contract if selected?
Bid Bond (issued by surety company)
What is an important contractual duty and also a Central Rule of Law in Canada?
Honesty
During tendering, how does an owner ensure a contractor's bid cannot be withdrawn?
Through Irrevocable Offer, which mean offer cannot be changed or withdrawn for a specified period
An engineer allows a contractor to submit a late report without penalty. Later, the engineer tries to enforce strict deadlines for that same contractor. What principle prevents this?
Equitable Estoppel (prevents a party from asserting a legal right or fact contrary to their past conduct)
What occurs when one party clearly indicates they do not intend to perform their obligations
Repudiation
What is bid shopping?
Disclosing a submitted bid to competing contractors as a negotiating tool