The court held that a breach so fundamental that it goes to the root of the contract prevents the defaulting party from relying on any exemption clause. This originated the doctrine of fundamental breach as a rule of law.

SCC held that freedom of contract prevails. Limitation clauses should be given their natural meaning. Fundamental breach as a rule of law was rejected — replaced with 'true construction' of the contract.

SCC definitively buried fundamental breach as a rule of law. The analysis is now purely contractual — apply the clause unless unconscionable at the time of signing or contrary to public policy.

SCC created the two-contract framework. A sealed bid is irrevocable once submitted — it forms Contract A. The deposit is forfeitable if the bidder fails to execute Contract B.

The court held that an unsealed bid lacks consideration. Without a seal (the traditional substitute for consideration), no binding Contract A is formed, and the bidder can withdraw.

SCC implied a term into Contract A that limits the owner's discretion to accepting only bids that comply with the tendering documents. Breach of this implied term entitles compliant bidders to damages.

SCC held that sharing material information with one bidder but not others during negotiations breaches the duty of good faith implied in Contract A, entitling damaged bidders to compensation.

SCC held that where tendering documents give the owner discretion to accept non-compliant bids, the MJB implied term does not automatically apply. The answer depends on careful reading of the tender documents.

Denning J. held the landlord was estopped from claiming full rent for the war period because the tenant had relied on the promise. The promise, once acted upon, became binding in equity.

SCC held that where a party has by a course of conduct led the other party to believe strict enforcement will not occur, equity requires notice before reverting to strict terms.

SCC held the optionor was estopped from refusing to honour the promise. The optionee would not have incurred the expense of incorporation if the promise had not been made — the promise was the cause of the act.

The court held that a gratuitous promise which induces non-performance (as well as performance) can found an estoppel. The inducing party cannot revert to strict terms without reasonable notice.

The court held the tenant liable for all rent. By entering the contract without reservation, the tenant took the absolute risk of all supervening events. Contracts are binding regardless of circumstance.

The House of Lords recognized for the first time that negligent (not just fraudulent) misstatements can found a tort claim. However, the defendant's disclaimer negated the duty of care here, so no liability arose.

SCC extended Hedley Byrne to Canada and confirmed that a professional owes a duty of care in tort to any person in a class that the professional knows will rely on their work.

SCC held that pre-contractual misrepresentations made negligently, even in the absence of a final contract, can found a tort action where the misrepresentation is relied upon to the plaintiff's detriment.

The court held that the disclaimer in the audit report was effective. The third party had no basis for a tort claim because the disclaimer communicated clearly that no duty of care was assumed to anyone other than the original client.

House of Lords established the general duty of care in negligence. The manufacturer owed a duty to the ultimate consumer even without a contract. This is the foundation of all negligence law.

House of Lords established the Anns two-stage test: proximity creates a prima facie duty; policy reasons can negate or limit it. This test was later adopted and modified in Canada.

SCC adopted the Anns test with modifications. The two-stage analysis applies in Canada: stage one asks about proximity and foreseeability; stage two considers residual policy concerns.

The court held the engineering firm liable. Engineers, by sealing their work, represent to all who will rely on it (clients, municipalities, building users) that it has been prepared with professional care.

SCC allowed recovery for pure economic loss where the relationship between parties was sufficiently proximate. The manufacturer's knowledge of the defect and silence created the proximity.

SCC held that a contractor is liable to subsequent owners for the cost of remedying dangerous defects, even absent a contract. The dangerous condition creates sufficient proximity to ground a tort duty.

The court confirmed concurrent tortfeasor liability: architect, engineer, and contractor were each held proportionately liable in tort. Using out-of-date standards constitutes negligence.

The court held the consulting firm liable. A professional obligation exists to conduct adequate independent investigation. Simply using what the client provides, without checking its sufficiency, does not meet the standard of care.

SCC confirmed that limitation periods in tort are subject to the discoverability principle. Time does not run against a plaintiff who could not reasonably have known of the damage.

The court held that lost profits were too remote because the carrier did not know the mill had no spare shaft. Only foreseeable losses — those a reasonable person would contemplate at contract formation — are recoverable.

SCC confirmed that professional negligence gives rise to concurrent liability in contract and tort. A plaintiff is not limited to contract simply because a contractual relationship exists — the tort claim survives independently.

The court held the contract was frustrated by the destruction of the hall. The fire made performance impossible without fault of either party. Both parties were discharged from their obligations.

The House of Lords rejected the frustration claim. A labour shortage that made the contract more expensive and time-consuming did not make performance 'radically different.' The contractor bore the risk of the fixed price.

The court held the contract was frustrated. The shared purpose (watching the coronation) was destroyed by cancellation. The rooms still existed and could be used, but the commercial basis of the contract was gone.

Under Tercon, fundamental breach is dead. Apply Hunter's true construction approach. The system recovered 5% (not 0%), so this is unlikely to be fundamental breach — the limitation clause is enforced. HESI claims $600,000 in direct damages (the cap). HESI absorbs the $200,000 excess. ERRS may claim quantum meruit for work performed above what was paid.

Jim Neophyte breached his duty of care by approving unsuitable material under pressure without investigation. Swift was negligent in proposing the material. The engineering firm is vicariously liable. Damages include remedial costs and delay costs (subject to liquidated damages review). Architect may also be a concurrent tortfeasor.

(a) Employees are protected from harassment based on race, ancestry, sex, and other grounds. (b) Patents: 20 years; Trademarks: 15 years renewable; Copyright: 50 years after death; Industrial Design: 10 years. (c) Engineer must act judicially and in good faith — fraud or bad faith voids the engineer's authority. (d) Limitations Act 2002: 2-year basic period (from discovery) and 15-year ultimate period.

A court would apply a three-part reasonableness test: (1) Is a 5-year, city-wide restriction reasonable given the engineer's role? — likely too broad; (2) Does the firm have a legitimate protectable interest (client relationships, confidential know-how)? — yes, if the engineer had direct client contact; (3) Is it contrary to public interest? — overly broad restrictions on professional engineers may be. Likely partially or fully unenforceable as overbroad.

Following Conwest v. Letain: the verbal extension was a gratuitous promise (no consideration). However, if it can be shown that the optionee performed solely because of the promise, the optionor will be equitably estopped from reverting to strict terms. The critical question is whether the optionee's performance was caused by the promise — if so, estoppel applies.

Part 1: If the bid was sealed, Contract A was formed and BIDCO cannot withdraw without breaching it — deposit forfeited. If unsealed, no Contract A (Belle River) and BIDCO can withdraw. Part 2: The disclaimer in ENGCO's report (similar to Wolverine v. Noranda) effectively negates the duty of care to the third party. The tort claim would fail.

Under Tercon/Hunter, the clause is enforced: 70% performance is not zero, so no fundamental breach. Pulverized can claim $950,000 in DIRECT damages (cost of replacement system). The $60,000 fine and lost profits are CONSEQUENTIAL damages excluded by the clause. Clearwater may claim quantum meruit for the $80,000 overpayment gap.

The verbal extension was a gratuitous promise. Under John Burrows and equitable estoppel principles, NEWCO is estopped from strictly enforcing the original deadline because the firm relied on the promise to its detriment. The court may award damages for lost profits or declare NEWCO's second contract with another firm illegal.

The engineering graduate was negligent in not thoroughly reading the NFPA standards. The supervising P.Eng. was negligent in not performing a detailed check. The engineering firm is vicariously liable. NATIONAL can sue the architect (who contracted the firm) and the engineering firm as concurrent tortfeasors. Damages: store repair, lost inventory, lost profits.

The engineer was negligent in using obsolete tables inappropriate for the specified purpose. The architecture firm is also a concurrent tortfeasor (retained the negligent firm). The contractor may also be liable for building what was clearly wrong for the purpose. Damages: plant shutdown costs + remedial slab cost. All three are concurrent tortfeasors sharing liability.

If the tender was sealed: Contract A was formed (Ron Engineering). XYZ cannot withdraw — deposit of $200,000 is forfeited. XYZ is NOT liable for the $300,000 difference between bids (that only arises if Contract B was signed and then breached). The owner's damages are limited to the deposit.

ABC's verbal promise constituted a gratuitous promise that induced the accounting firm's inaction (not paying on time). Under Owen Sound, ABC is equitably estopped from enforcing the strict 30-day term. However, the accounting firm should have followed up in writing and noted non-compliance at the due date. ABC's termination was premature and likely invalid.

Manuco is equitably estopped on two grounds: (1) course of conduct (accepting 20-day late payments created an expectation) per John Burrows; (2) gratuitous verbal promise to wait up to 30 days. Manuco cannot suddenly revert to the strict 10-day term without reasonable advance notice to Paperco. Termination was premature and invalid.

The liquidated damages clause is enforceable (based on genuine pre-estimate of loss). The subcontractor owes $36M but the cap limits liability to $30M. Under Tercon, the limitation clause is applied as written. Any inducing conduct by the owner or contractor (Owen Sound) must also be considered — if they contributed to the delay, proportionate reduction may apply.

Ever Works was negligent in not requesting or reviewing the underlying reports and in not gathering its own data. A professional engineer must independently verify conditions — reliance solely on what the client provides is insufficient (B.C. Rail). Live Rail also failed to provide the reports and to supervise Ever Works. Both are concurrent tortfeasors liable to the municipality.

Four parties were negligent: (1) Roofing subcontractor — proposed an unsuitable product; (2) Contractor — experienced contractor should have recognized the difference; (3) Architect — accepted recommendation without verification; (4) Engineer — accepted recommendation despite structural responsibility. All four are concurrent tortfeasors. Courts apportion liability — no single party bears 100%.

Under Tercon, apply the clause as written. The facility operated (at 25% capacity) — it was not wholly inoperative, so fundamental breach arguments are weak. The $4M liquidated damages apply within the $5M cap. Pulpco cannot claim the additional $15M because the clause excluded all other damages. Pulpco absorbs $11M.

Under Tercon, the limitation clause of $1,000,000 is enforced. The contractor's combined liability for LD + cable damage is $1,800,000 but the cap limits recovery to $1,000,000. The telecom company absorbs the $800,000 balance. The work was not wholly unsuitable — no fundamental breach argument survives Tercon.

Without a disclaimer (unlike Hedley Byrne and Wolverine where disclaimers negated duty), the IT firm owed a duty of care to foreseeable users of the software. The inadequate warnings constituted a negligent misstatement. The IT firm is vicariously liable for the employee's negligence. Both the IT firm (misstatement) and the structural engineering firm (using software outside its validated scope) may be concurrent tortfeasors.

The consultant must refuse. Yielding would breach: (1) Contract A — by awarding to a non-lowest compliant bidder in violation of MJB's implied term; (2) Professional duty — s.72(2)(a) professional misconduct (failure to maintain prudent standards). The rejected low bidder could sue the municipality for bid preparation costs and lost profits. The engineer faces professional misconduct allegations.

Following Wolverine v. Noranda: the disclaimer clearly negated E Inc.'s duty of care to any third party. Acquisitions Inc. cannot succeed in tort — the disclaimer was effective. Without the disclaimer, E Inc. would have owed Acquisitions a duty of care under Hedley Byrne (Haig v. Bamford: known class of prospective purchasers).

Under Tercon, the limitation clause is applied as written. While 17% is very poor performance, the equipment did operate (not wholly inoperative). Fundamental breach arguments are weak under Hunter/Tercon. The limitation clause of $400,000 is enforced. ACE absorbs the $100,000 excess over the cap.

Applying Tercon: the limitation clause of $200,000 is enforced — 60% removal is partial performance, not zero. Red Fire Mines can claim $200,000 (the cap) in direct damages from Supercleen. The threat of fines and shutdown are consequential damages — only recoverable if not excluded by the contract. Supercleen had been paid $180,000, so the net additional amount owed is $20,000 (to reach the cap). Red Fire Mines absorbs the $75,000 balance of replacement cost over the cap.

The Contractor's verbal promise to obtain the seal constituted a gratuitous promise that induced the Owner to withhold payment pending the information. Under Owen Sound, the Contractor is equitably estopped from terminating on the basis of the payment default it induced. The termination was premature and invalid. The Owner should send written notice that payment is withheld pending the seal and give reasonable time to comply.

Acme and the dealer were negligent in: (1) selling a product they knew was structurally defective; (2) failing to warn Unjammers of the known defect after Movemore's crane collapsed. Under Rivtow Marine, a manufacturer who knows of a dangerous defect in a product has a duty to warn owners of that product. Unjammers can recover the economic loss (lost profits during forced repair) from both Acme and the dealer as concurrent tortfeasors.

Smith breached his fiduciary duty as a director. He had a duty to: (1) disclose his 50% interest in Skyhooks before the board vote; (2) abstain from voting on the acquisition. His failure to do so, and his casting the deciding vote, constitutes a breach of fiduciary duty. The board and shareholders can seek: (1) rescission of the transaction; (2) an account of profits; (3) damages for the overpayment. The acquisition may be set aside or Smith required to compensate Skylift for the inflated price.

A court would examine whether the government engineer assumed a duty of care. Key factors: (1) The engineer was employed to assist farmers and contractors with plans — this was within the scope of his role; (2) The comment 'Good set of plans' was a representation made to someone the engineer knew would rely on it; (3) The engineer's position and prior assistance relationship created proximity. Despite no payment, the duty of care likely exists — similar to Hedley Byrne (no contract needed for tort duty). However, the engineer's defence is that he communicated he 'hadn't carefully reviewed' the plans and 'just looked through them' — this may negate the reasonable reliance element.

Q1: 2-year basic + 15-year ultimate (Limitations Act 2002, Ontario). Q2: Engineer must act judicially — fraud/bad faith voids authority. Q3: Engineer should NOT instruct work methods — doing so may create liability for safety and results. Q4: Liquidated damages clauses are enforceable if they are a genuine pre-estimate of loss; penalty clauses (punitive) are not. Q5: Same as Q4 — genuine pre-estimate = enforceable. Q6: Damages under Hadley v. Baxendale: (1) natural consequence of breach, or (2) within reasonable contemplation at contract formation. Duty to mitigate. Q7: Same as Q2 — judicially, in good faith; bad faith challengeable. Q8: Yes — gratuitous professional services can found liability if a duty of care is established (Hedley Byrne). Q9: Offer, acceptance, consideration, intention to create legal relations, capacity, legality. Q10: No — labour shortage does not frustrate. Under Davis Contractors: harder/more expensive ≠ radically different. The contractor bore the risk in a fixed-price contract.

The engineer was negligent in: (1) proceeding with an inadequate soils investigation; (2) failing to disclose to the owner that deeper testing had been recommended and refused. The engineer had a professional duty to ensure the owner knew of the limitation so the owner could make an informed decision. The architect is a concurrent tortfeasor for rejecting the recommendation without justification. Damages include all remedial foundation costs.

Applying the discoverability principle (Kamloops): the limitation period runs from when the owner discovered or ought to have discovered the damage — the 1985 collapse. The owner sued in 1986, within one year of discovery. Under the Limitations Act 2002 (Ontario), the 2-year period runs from discovery (1985 collapse). The suit was timely. However, the 15-year ultimate period (which runs from the act or omission, not discovery) would bar claims for acts before 1971 if the ultimate period applies retroactively. Courts must determine which limitation framework applies to pre-2002 construction.

The mechanical engineer was negligent in making significant calculation errors — this fell below the standard of care of a reasonable and prudent mechanical engineer. The architect, who was contractually responsible for all design aspects, is also liable as the mechanical firm was the architect's sub-consultant. Both are concurrent tortfeasors. Damages include: cost of design modifications + equipment alterations + delay costs. The equipment supplier is not liable (they complied with specifications).

The new owner (Acquisitions Inc. in 1987) acquired the building with the latent defect. Under Winnipeg Condominium (subsequent owners can sue contractors for dangerous defects), the new owner has a tort claim against the original contractor. The 2-year limitation period runs from discovery — September 1988. The action must be commenced by September 1990 at the latest. The 15-year ultimate period runs from the 1980 negligent act — expiring in 1995. Both windows are open at the time of discovery in 1988.

Acme Underground was negligent in: (1) drilling insufficient test holes; (2) giving a negligently optimistic soils report relied upon by Sharp and the municipality. Under Haig v. Bamford, Acme owed a duty of care to Sharp (the known recipient) and to the municipality (the known class that would rely on the report). Jason Sharp is potentially also a concurrent tortfeasor if he failed to exercise independent judgment in accepting Acme's report without questioning its sufficiency. Damages: $350,000 extra construction costs.

CREW was negligent in not collecting independent field data (B.C. Rail applied directly). A professional engineer designing for tunnel conditions has an independent duty to verify environmental conditions — not just use what is handed over. TEDI was negligent in not providing the underlying data to CREW and in not supervising CREW's data collection. Both CREW and TEDI are concurrent tortfeasors liable to Rocky Rail. Damages: full cost of redesigning and rewiring the overhead contact system.

Under Tercon, the three-step analysis: (1) Does the clause apply? Yes — the design errors are within the scope of design services. (2) Was it unconscionable at formation? Unlikely — both parties were sophisticated and the owner agreed (reluctantly) with full knowledge and received consideration (the only available specialist). (3) Is it against public policy? No clear public policy violation. The $1M cap is enforced. Owner recovers $1M. The $2M delay cost and $500K excess repair are absorbed by the owner.

Omega is guilty of: (1) Negligence s.72(2)(a) — did not inspect interior; (2) Failure to safeguard life s.72(2)(b) — report may have prevented corrective action; (3) Possible C of A violation s.72(2)(g) if practising without authorization; (4) Possible incompetence s.72(2)(h) if outside area of specialization; (5) Failure to co-operate s.77.6. A C of A is required to provide engineering services directly to the public.

M. Ployee has a professional duty to address unsafe conditions even if: (a) the work is outside TurbCo's direct scope; (b) MechCon has contractual safety responsibility. The Code of Ethics and O.Reg. s.77.2 make public welfare paramount regardless of contractual scope. M. Ployee must raise the safety concerns with MechCon and if not addressed, with PowerGen. Failure to act is professional misconduct under s.72(2)(b) and s.72(2)(c).

Alpha must: (1) Immediately approach the company to confirm findings and recommend action; (2) If public is immediately endangered (s.72(2)(c)), recommend reporting to government; (3) If not immediately endangered, set a compliance timeline (s.72(2)(d)); (4) Economic impact (potential mine closure and job losses) does NOT override duty to public safety. Alpha must never make public announcements — report to the Office of the Registrar of PEO if company refuses to act. Regarding the consulting firm that knew — Alpha must determine if they reported, and if not, must report them (s.77.8).

Omega has a duty of confidence to Universal under: (1) s.77.3 — confidential technical information must be protected even after employment ends; (2) Common law — trade secrets cannot be used even for non-competing applications if the modification reveals the underlying process. If the modification is small enough that the original process could be reconstructed from it, Omega is in breach. Omega should have approached Universal for a licence before implementing. Now that the change was made, Omega must disclose to the candy factory and mitigate by approaching Universal for retroactive agreement.

Part 1 (Overseer): Overseer is guilty of harassment s.72(2)(n) and breach of Ontario Human Rights Code. Prodigy should: inform Overseer citing specific statutes; escalate to HR; file complaint with PEO Complaints Committee if unresolved. Part 2 (Moonlighting): Prodigy must comply with s.77.5 — disclose to both employers in writing; ensure work at EngCo doesn't conflict with MajorEng; disclose shared interests. A C of A may be required if Prodigy provides direct engineering services to EngCo's clients independently.

You must refuse to conduct a secret review. Under s.77.7.ii, reviewing a colleague's work for the same employer without the colleague's knowledge is unethical. You must: (1) Tell Beta the review must be conducted with Alpha's knowledge; (2) Suggest Beta discuss concerns with Alpha directly; (3) Note that an unconventional design that unnecessarily increases client costs may itself be professional misconduct s.72(2)(b). Alpha's refusal to discuss alternatives with BigGuy is also a breach of s.77.1 (fairness to client).

Omega committed professional misconduct on two occasions: (1) Sealing without personal verification — s.72(2)(e); (2) Negligence s.72(2)(a) — a reasonable engineer would verify fire safety installations personally; (3) Failure to safeguard life s.72(2)(b) — a fire protection system is life safety. The first lapse may be professional misconduct; the second, after deficiencies were already found, almost certainly constitutes negligence. Theta also breached duties s.77.7.i (good faith) and s.72(2)(d) for providing false compliance assurances.

Part 1 (Unsafe conditions): Juno must address MechCo's unsafe practices regardless of scope or MechCo's contractual safety responsibility — s.72(2)(b)(c)(d). Part 2 (Test procedure/output): Juno had a duty to report that tests were not conducted per procedures regardless of whether TurbCo would face liquidated damages — s.77.1.iii professional integrity and s.77.1.i fairness to client (PowerGen). Concealing the deficient testing to protect TurbCo from liquidated damages is a breach of professional duty. Juno must report the improper testing to all relevant parties.

The conflict must be immediately disclosed to EngInc: prior connection to the WorldEng-designed plant creates an interest that could be construed as prejudicial (s.72(2)(i)). Depending on EngInc's size, a voluntary leave may be needed during the inspection. A C of A is required if the engineer provides engineering services to EngInc's clients independently (not as a full-time employee of EngInc). The engineer must also inform WorldEng of the EngInc employment.

A P.Eng. licence alone is insufficient if the engineer is providing services directly to the public (not as a full-time employee of EngInc). Under s.12(2) of the Professional Engineers Act, a Certificate of Authorization is required to offer engineering services to the public independently — including part-time, moonlighting, or volunteer work. If EngInc's P.Eng. takes full responsibility for the work and the engineer works under that supervision as an employee of EngInc, no C of A is required.

Multiple ethics failures: (1) Cooper refused peer review in 1903, prioritizing ego over safety; (2) The site engineer's deflection warnings were minimized; (3) The telegram to stop work was ignored by the site foreman; (4) The design firm appointed an unqualified site engineer (Hoare). Connection to Iron Ring: the collapse directly inspired the Ritual of the Calling of an Engineer (1925) — the Iron Ring symbolizes humility and the engineer's obligation to 'not suffer or pass Bad Workmanship or Faulty Material.'

Engineering ethics failures: (1) Disposing of hazardous waste in an unsafe manner; (2) Selling contaminated land without ensuring the disclosed risk was properly acted upon; (3) Allowing development to proceed knowing the risks. Engineers involved had a duty to: disclose fully to regulators and the public; not facilitate development on contaminated land; report when 80%+ certainty exists of health risk (waiting for 95% certainty is unacceptable when public health is at stake). Note: This is a US case — applicable as an ethics teaching case, not Ontario law.

Engineers at these firms faced the same dilemma as Alpha in the gold mine ethics scenario: employer interest vs. public duty. The 'dilution is the solution to pollution' philosophy was an engineering decision with multi-decade consequences. O.Reg. 941 s.72(2)(d) requires compliance with applicable statutes. Engineers who became aware of non-compliant discharges had a duty to report to the Registrar of PEO if the company refused to act. The regreening success (Sudbury is now a model of restoration) shows that engineering can also be part of the solution.

Multiple engineering ethics failures: (1) Engineers aware of prior MIC leaks at sister plant had a duty to report and rectify — s.72(2)(c) equivalent; (2) Disabling safety systems during wind-down is the most serious breach — s.72(2)(b); (3) Storing MIC above safety limits was a known violation; (4) Financial pressure (plant to be sold) cannot override safety duty; (5) Exporting hazardous processes to jurisdictions with weaker regulation without equivalent safety standards is itself an ethical failure. Settlement: $470M USD (1989).

Engineering ethics failures: (1) Knowingly discharging mercury into a river system used by downstream communities; (2) Government engineers and regulators who knew of contamination and did not enforce cessation; (3) The long-tail nature — contamination discovered in 1970s but effects continue 50+ years later — illustrates the permanent duty to disclose and remediate. Engineers in any capacity (private company or government) who were aware of the contamination had a duty under s.72(2)(c) and s.72(2)(d) to report and recommend cessation. This is a distinctly Canadian case with direct Ontario connection.

KEY DISTINCTIONS: Force Majeure — (1) Must be expressly written in the contract; (2) Does NOT exist at common law in Canada; (3) Effect: suspend/extend performance, not terminate; (4) Threshold: lower — defined by the clause. Frustration — (1) Common law doctrine, applies when no FM clause exists; (2) Requires performance to be 'radically different' from what was undertaken (Davis Contractors standard); (3) Effect: terminates the contract entirely; (4) Threshold: very high. CCDC 2 Note: Standard CCDC 2 contracts do not expressly include 'force majeure' language but provide contractor time relief for events beyond the contractor's control. Ontario Frustrated Contracts Act: provides for recovery of pre-frustration benefits paid. Rule: Cannot rely on BOTH force majeure AND frustration simultaneously — courts apply one or the other.