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BG Checo International Ltd v British Columbia Hydro and Power Authority, [1993] 1 SCR 12 (Link)

Facts:

** BC Hydro and Power Authority (H) called for tenders to build transmission towers and string lines.
** BG Checo (C) inspected the area and noticed that clearing activity was in progress. C assumed that it would be cleared further prior to building. C then submitted a tender.
** C and H signed a contract. A contract clause stated that C would not be responsible for any clearing, but would be responsible for knowing what needed to be done (correctness and sufficiency).
** No further clearing was done, and C could not complete work.
** C sued H for negligent misrepresentation and breach of contract.

At trial: Court found that H had acted fraudulently and awarded damages for total loss suffered.
On appeal: Court rejected finding of fraud but found negligent misrepresentation that induced C to enter into contract.

Issue(s):

What remedy should be available for pre-contractual representations made during the tendering process?

Ratio:

Concurrency rule: If the tort duty is not contradicted by the contract, it remains intact and may be sued upon.

Analysis:

DISSENT (Iacobucci):
** This is a contract case, not a tort case
** From precedent in Central Trust Co v Rafuse, [1986] 2 SCR 147: If the parties to a contract choose to define a specific duty as an express term of the contract, then the consequences of a breach of that duty ought to be determined by the law of contract, not by tort law

MAJORITY (La Forest & McLachlin)
** Breach of contract, but ALSO tort issue
** A tort action can only be limited if expressly indicated in contract
*** It depends on how they deal with this specifically, not whether the general topic is mentioned in the contract
*** The rule is not that one cannot sue concurrently in contract and tort where the contract limits or contradicts the tort duty. It is rather that the tort duty, a general duty imputed by the law in all the relevant circumstances, must yield to the parties’ superior right to arrange their rights and duties in a different way. In so far as the tort duty is not contradicted by the contract, it remains intact and may be sued upon.
** Express-implied distinction
*** Can’t use this distinction. The law has always treated express and implied contract terms as being of equivalent effect -- it is also difficult to distinguish between them
*** Can’t apply contract concepts to tort: E.g. commercial context does not lead to presumption that the parties intended to oust tort duty and liability.

Holding:

Decision in favour of BG Checo.


Discussion

  1. Fiat Justitia Ruat Caelum 32

    Thanks!

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