Good vs. Bad Contracts

Snow and Ice Maintenance Snow and Ice Maintenance Tenders and Tenders and

Contract Interpretation Contract Interpretation

Robert KennaleyRobert KennaleyMcLauchlin & AssociatesMcLauchlin & Associates

Understanding and Managing Risk under a Contract is important regardless of whose form of

Contract is proposed

Understanding the difference between a good contract and a bad contract is critical

Good vs. Bad ContractsGood vs. Bad Contracts

Historical Problems with Contracts:

Inadequate Descriptions of the Work

- vague, ambiguous, inconsistent and confusing descriptions of the work


Historical Problems with Contracts:

Contractors Assume Too Much Liability-

- Over-reaching “Hold Harmless” Clauses

- Over-reaching Scopes of Work


Liability Starts with the Occupier under the Occupier’s Liability Act

The Owner/Property Manager/Client will be an Occupier under the Act

The Contract and Scope of WorkThe Contract and Scope of Work

The Owner/Property Manager/Client can assign under a Contract some of its responsibilities under the Act

The Contractor becomes responsible to meet the obligations he assumed under the Contract


The Contractor is not responsible to do work, undertake tasks or assume risk unless he has, either expressly or by implication, agreed to do so under the Contract

It is accordingly critical that the Scope of Work be properly described in the Contract


To Properly Price the Work and Avoid Disputes the Contractor Needs to:

- understand the Scope of Work

- not assume any unreasonable obligations under the Contract

- avoid obligations he is not being paid to assume


To Properly Get a Good Price and Avoid Disputes, the Owner Needs to:

- provide a clear Scope of Work

- avoid unreasonable or impossible requirements (which are expensive to price)

(which can lead to disputes)


The Overreaching Scope of Work:

- Promising the Impossible

- Promising the Unknown

- The “open by” Undertaking

- The problem of the “Second Pass”



Contractual Terms can be Divided into Two Parts:

1. General Conditions– Generally apply to all projects

2. Specific Conditions / Schedules– Specifies work to be performed– Specifies price– Usually varies from project to project

1. General Conditions

– The Parties– Payment Provisions– Workplace Safety & Insurance Issues– Notice Provisions– Indemnification Provisions– Termination Provisions– Insurance Provisions


General Conditions Should be unique to Winter Maintenance Industry !!

Parked VehiclesImproperly Maintained PremisesSevere weather conditions?Stop work ordersStrikes, lock-outs, etc.


2. Specifications / Schedules / Site Plans

Should be made part of the Contract

These are More Important than the Legalese



2. Specifications / Schedules / Site Plans

Site Plans Should Be Used!!!

These Should be Made a Schedule

Particular Limitations / Issues Can and Should be Addressed in the Site Plans

The Site Plan Should Clearly and Accurately Describe:

– The work to be performed

– Any limitations on the scope of work

– Site conditions

– Special site features to be considered


Discretion to Use Ice MeltersDiscretion to Use Ice MeltersTo Avoid Disputes Contracts should clarify

the contractor’s obligation to use ice melting products

Contracts Should Clearly Specify who makes the decision about the application of ice melting products…

… either it is the Contractor or the Client

Liability for the Slip and FallLiability for the Slip and Fallthe Contractor Generally Avoids Liability:

– if he properly performs his contract;– if he is not otherwise Negligent;

– and so long as he has not assumed responsibility to do more than properly perform his work under the Contract

– this is often done through the over-reaching ‘Hold Harmless Clause’

Indemnification should only occur where the contractor breaches the contract

or is negligent in the performance of his work as specified

Indemnification should also be limited to damages for personal injury or property damage, and to the limits of the Contractor’s insurance

Hold-Harmless & IndemnificationHold-Harmless & Indemnification

What are the Options where less than clear, or less than preferred, contractual terms are put out to tender?

Don’t Counter Offer!Don’t Qualify or Clarify Your Bid!!

Contracts put out to TenderContracts put out to Tender

M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., [1999] 1 S.C.R. 619 – the low bidder had added a handwritten

note to the tender form, increasing its price in the event a certain pipe was to be used

– M.J.B. was the second low bidder


M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., [1999] 1 S.C.R. 619 – MJB objected that it should have been

awarded the Contract as the note was a qualification which:

rendered the low bid non-compliant; and rendered the low bid incapable of acceptance


M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., [1999] 1 S.C.R. 619 – The Owner relied on the privilege clause:

“The lowest or any tender not necessarily accepted”

– The Owner argued that the clause allowed it to award to even a non-compliant bidder


M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., [1999] 1 S.C.R. 619

– The Court:

found an implied term that only compliant bids would be considered

held that the privilege clause did not allow the Owner to award to non-compliant bidder


Bidding Contractors Who Qualify or Clarify their Bids run the risk that their Bids will be rejected out of hand as being non-compliant!

In fact, Tendering Authorities are now well versed in the Law of Tendering and will generally not consider non-compliant bids.


Contractors who are concerned about the terms of a Contract put out to Tender can:

- request a clarification from the Owner/Consultant in accordance with the terms of the Tender Package;

- (in which case the Owner/Consultant is to issue the response to all bidding contractors)



- request that the terms, perhaps be changed;

- (in which case the Owner/Consultant can issue an Addendum, if so inclined)



- price the risk assumption or refuse to bid the Contract.


Snow and Ice Maintenance Snow and Ice Maintenance Tenders and Tenders and

Contract Interpretation Contract Interpretation

Robert KennaleyRobert KennaleyMcLauchlin & AssociatesMcLauchlin & Associates

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Good vs. Bad Contracts