The starting point for any discussion about construction contracts in Ontario should now be the Construction Act. Contract terms can and should be used to manage the risks associated with the new legislation. Payment provisions should be brought in line with prompt payment requirements and contractual processes can be established to make it easier for parties to meet their statutory obligations. Also, certain adjudication processes can, and should, be agreed upon in the contract documents.
In addition, the Ontario Court of Appeal has established, in a number of recent cases, that sophisticated parties will generally be expected to abide by the contracts they enter into. This has presented both opportunities and concerns for participants at every rung of the construction ladder. The limits of notice provisions, approval requirements, conditions precedent to payment, claim waivers, insurance requirements and indemnity clauses are all being tested in the marketplace. So are clauses that transfer the risk of unforeseen conditions, delay, sequence changes and other impacts. In addition, "flow through" and "liquidation" clauses which tie a subcontractor's recovery for changes to the contractor's ability to recover from the owner are becoming increasingly popular.
We help with the negotiation, drafting and review of contracts and subcontracts, helping our clients to be prepared for the new Construction Act and to better manage, assess and transfer their risks under a contract or subcontract.
As regards procurement, it used to be that the low bidder got the job. Now, the law of compliant bids, disclosed criteria, fairness and good faith must be considered and applied in the context of each procurement circumstance. We regularly assist clients to manage the risks associated with these processes. We also have a great deal of tendering claims experience.