View
16
Download
0
Category
Preview:
DESCRIPTION
Engineering Law
Citation preview
2014-01-05
1
LAW AND ETHICS IN ENGINEERING PRACTICE
Nov 2010
(CEN 800)
FACULTY OF ENGINEERING AND APPLIED SCIENCE
RYERSON UNIVERSITY
A2G: 1196343v7
HOW IS THE LAW APPLICABLE TO ME?
Gas Fired Power Project Gas Fired Power Project Project Management Civil Electrical Mechanical
Computer Computer Aerospace Industrial
Complex Contractual Arrangements
2014-01-05
2
COURSE OUTLINE Canadian Legal System Business Organizations Torts Torts Contracts Security for Payment Bonds and Performance Guarantee Lien Legislation Consulting/Construction Agreementsg g Insurance Intellectual Property Alternate Dispute Resolutions
2014-01-05
3
CANADIAN LEGAL SYSTEMB d E li h C L Based on English Common Law Equity Common Law
Theory of Precedent Basis of Predictability Apply Legal Principles Established in Previous
Court Decisions Factual Distinctions and Equitable Relief Provide
for Flexibility
CATEGORIES OF LAW Common Law Common Law
Judge Made Legislative
Government-Made codification of existing common law or enactment of new law
Federal Federal Provincial Municipal
Statutes are Supplemented by Regulations Theory of Precedent
2014-01-05
4
JURISDICTION BETWEEN FEDERAL AND PROVINCIAL
GOVERNMENTS Parliamentary Supremacy
British North America Act 1867 S#91 Federal Jurisdiction S#92 Provincial Jurisdiction
Ultra Vires
JURISDICTION BETWEEN FEDERAL AND PROVINCIAL
GOVERNMENTS (contd)( ) Constitution Act, 1982 and Charter of Rights
and Freedoms Guarantees Fundamental Freedoms Constitution is Supreme Law Reduced Effect of Parliamentary Supremacy
Reasonable Limits S#33 Override
2014-01-05
5
COURT SYSTEMHOUSE OF
LORDSOther - 1949SUPREME COURT
OF CANADA LEAVE REQUIRED
Criminal - 1933
B.C. ONTARIO COURT OF APPEALALBERTA
FEDERAL COURTOF APPEAL
DIVISIONALCOURT
FEDERALCOURT
-PATENTS-TRADEMARKS-COPYRIGHT COURT
OF ONTARIOSUPERIOR COURT OF JUSTICE ONTARIO COURT OF JUSTICE
SMALL CLAIMS COURT
COPYRIGHT
-maximum of $25,000
(6 Peopleon Jury) Criminal Family(12 People on Jury) Provincial Offences
COURT PARTICIPANTS Original Trial Original Trial
Plaintiff Defendant
Appeals Appellantpp Respondent
2014-01-05
6
CIVIL COURT CASE PROCESS Issue Statement of Claim (Plaintiff) Issue Statement of Claim (Plaintiff) Respond with Statement of Defence
(Defendant) Discoveries
DocumentsDocuments Oral
Trial
BUSINESS ORGANIZATIONS Corporation Corporation
Share Capital Non-Share Capital
Partnership General Limited Liability
Sole Proprietorship Unlimited Liability Company
2014-01-05
7
SALOMON V SALOMON & CO. LTD.1897 HOUSE OF LORDS
MR. SALOMON MRS. SALOMON SON SALOMON
SALOMON & CO. LTD.LOAN
SECURED
MATERIAL SUPPLIER
MATERIAL SUPPLIER
UNSECURED CREDITORS
Issue: Did Mr. Salomon rank before the Unsecured Creditors by virtue of being a secured Debenture Holder?House of Lords recognized Salomons Corporation as a separate and distinct entity from himself there was no evidence of intent by Salomon to deceive or defraud.
FERN BRAND WAXES LTD. V PEARL1972 ONTARIO COURT OF APPEAL
PEARL (DIRECTOR OFFICER &(DIRECTOR, OFFICER &ACCOUNTANT OF FERN)
CO#1 CO#2
- Pearl transferred unauthorized funds to 2 companies controlled by him by loaning them monies from Fern Brand.
- Some of the funds were used to purchase shares in Fern Brand Waxes Ltd.
FERN BRAND WAXES LTD.
- Court stated that the Defendant should not be allowed to profit from his breach of trust.
2014-01-05
8
LIMITED PARTNERSHIPPARTNER #1 PARTNER #2
GENERAL PARTNER
CORPORATION
SHAREHOLDERS
1%PARTNERSLIMITED
PARTNERSHIP
49.5% 49.5%1%
NON DISTINCT TYPES OF BUSINESS ORGANIZATIONS
Joint Venture Joint Venture Consortium
2014-01-05
9
CONSIDERATIONS IN SELECTING A BUSINESS ORGANIZATION
Duration Duration Simplicity/Complexity Taxes
Canadian Controlled Private Corporation (CCPC)( )
Liability Separate Identity
CONSIDERATIONS IN SELECTING A BUSINESS ORGANIZATION
(contd)(cont d) Personal Guarantees Property Ownership Registrations
2014-01-05
10
CORPORATIONS Articles of Incorporation/Letters Patent Articles of Incorporation/Letters Patent Jurisdiction of Incorporation Objects By-laws
R l ti Resolutions Public vs. Private
CORPORATIONS (contd) Participants Participants
Shareholders Directors Officers Employees
2014-01-05
11
DIRECTORS AND OFFICERS DUTIES
Manage the Corporation Manage the Corporation Act honestly and in good faith In best interests of corporation Exercise the care, diligence and skill that a
reasonably prudent person would exercise in a comparable circumstance
GLOBAL CONSIDERATIONS Form of Business Organization Form of Business Organization Political Risks Foreign Legal Systems Licensing Requirements
Fi i l Ri k Financial Risks Contract Forms
2014-01-05
12
SECURITY OF PAYMENT AND PERFORMANCE
Bonds Bonds Letters of Credit Guarantees Subcontractor Default Insurance
Bonds guarantee by a surety that contractor will guarantee by a surety that contractor will
perform obligations not insurance bonding company will seek compensation
from contractor Contractors shareholders usually provide
guarantees
2014-01-05
13
Types of Bonds Bid Bond Bid Bond
forfeited if Contractor fails to enter contract Performance Bond
guarantees to owner that contract will be performed
L b d M t i l P t B d Labour and Material Payment Bond guarantees payment to subcontractors and
suppliers
BONDING RELATIONSHIPOWNER
EQUIPMENTSUPPLIER
SURETY(BONDING
CO )AGREEMENTINDEMNITY
BOND
CO.)SUB-
SUPPLIER
2014-01-05
14
Letters of Credit More common outside of Canada More common outside of Canada May be close to a blank cheque Usually affect contractors credit capacity Often referred to as Performance
Guarantees in international workGuarantees in international work
LETTER OF CREDIT
LETTER OF CREDIT
OWNER
EQUIPMENTSUPPLIER
AGREEMENT
BANK SUB-SUPPLIER
AGREEMENT
2014-01-05
15
GUARANTEE
GUARANTEEOWNER
EQUIPMENTSUPPLIER
PARENTCOMPANY
SUB-SUPPLIER
CONSTRUCTION LIEN ACT Lien Lien Holdback -10% Trust Provisions Priority of Mortgages
2014-01-05
16
$
Time SubstantialPerformance
Substantial Performance Two Part Test Two Part Test
1. the work must be ready for the purpose intended (the Qualitative Test)
2. the cost of completing incomplete items and rectifying known defects must be less than an amount calculated as:
) 3% f h fi $500 000 f C P i la) 3% of the first $500,000 of Contract Price, plusb) 2% of the next $500,000 of Contract Price, plusc) 1% of the remainder of the Contract Price
(the Quantitative Test)
2014-01-05
17
EXAMPLEContract Price = $3 500 000Contract Price = $3,500,000
Quantitative Calculation:3% of $500,000 = $15,0002% f $500 000 $10 0002% of $500,000 = $10,0001% of 2,500,000 = $25,000
$50,000
$
Sub Perf. Publication of the Certificate of Sub Perf.
45 days
TIME
2014-01-05
18
$
Sub Perf.TIME Completion
COMPLETIONThe completion of incomplete items andThe completion of incomplete items and rectification of known defects is less than the lesser of:
1) $1,0002) 1% of the Contract Price) % C
2014-01-05
19
$
CompletionSub Perf
TIME
45 days
Owners Questions How much input does the owner wish to
have in the design of the project? Is the owner interested in a unique design or
one that will be relatively generic? Is the completion date of the project critical
h ?to the owner? Is overall cost critical to the owner?
2014-01-05
20
Owners Questions (contd) How experienced is the owner? How risk adverse is the owner? Does the owner have its own in-house
administrative staff? Are there performance guarantees that are
important to the owner?important to the owner? How is the project being financed? Is there any equipment that has a long lead
time for delivery?
Owners Questions (contd) Are there particular designers, equipment
suppliers or trade contractors that the owner wishes to utilize?
How much construction experience does the owners consultant have?Will h i i Will the owners expectations require unique construction experience?
2014-01-05
21
Project Structures Traditional project structure Construction management project structure Contractor/construction manager project
structure Multi-designers project structure Engineering, procurement and construction
management (EPCM) project structure Design/build project structure
TRADITIONALOwner Consultant
Contractor Sub Consult Sub Consultant
Sub #1 Sub #2
2014-01-05
22
Advantages of the Traditional Project Structure
Single point responsibility of the Single point responsibility of the consultant and contractor
The owner can keep its involvement fairly limited
Easier to acquire a fixed price from the t tcontractor
Cooperative relationship between the owner and the consultant
Advantages of the Traditional Project Structure (contd)
The number of contractor initiated change The number of contractor initiated change orders which affect the price should be relatively limited
The consultant and the contractor bear any risks of non-performance of the subconsultants and the subcontractors, respectively
2014-01-05
23
Disadvantages of the Traditional Project Structure
Not conducive to fast-trackingg Until prices are received from contractors
pursuant to the tendering procedure, the owner is not fully aware of its final costs
Not conducive to having input from the contractor during the designcontractor during the design
If the project fails to perform in accordance with the owners expectations, it is necessary to assess responsibility between the consultant and the contractor
CONSTRUCTION MANAGEMENT
C lt t O Construction Consultant Owner Manager
Trade #1 Civil Trade #2 Mech Trade #3 Elec
2014-01-05
24
Advantages of the Construction Management Project Structure
Very conducive to fast-trackingy g Because the construction manager is not taking
on any direct liability for the trade contractors, the construction managers fee does not need to incorporate any risk with respect to the particular trade contractorsp
The construction manager can be retained early in the design development process and provide very advantageous construction advice during the design.
Disadvantages of the Construction Management Project Structure
Because the construction manager does not have Because the construction manager does not have privity of contract with the trade contractors, not only does the owner not have the advantage of looking to the contractor as the party with single point responsibility, but the construction manager does not have the same level of control over such trade contractors
2014-01-05
25
Disadvantages of the Construction Management Project Structure
(contd) The ultimate cost to be paid by the owner will The ultimate cost to be paid by the owner will
not be determined until such time as the last component of work is tendered for construction
Pursuant to the Occupational Health and Safety Act, once the owner enters into more than one contract for the construction of a project, the owner becomes the constructor
CONTRACTOR/CONSTRUCTION MANAGEMENT
Owner ConsultantOw e Co su
Contractor/ConstructionManager
Sub #1 Sub #2 Sub #3
2014-01-05
26
Advantages and Disadvantage of the Contractor/Construction
Management Project Structure Advantages
The contractor/construction manager becomes involved in the project very early in the design process
Conducive to fast-trackingConducive to fast tracking Disadvantage
It may not be possible to seek a fixed price at the time of retaining the contractor/construction manager
Diagram #4Multi-Designer Project Structure
Owner A hi
General Contractor
Architect
StructuralEngineer
MechanicalEngineer
ElectricalEngineer
2014-01-05
27
Advantage and Disadvantage of the Multi-Designer Project Structure
Advantage Advantage Since no one particular designer takes on the
responsibility or liability for all other designers, the cumulative fees payable to all designers should be lower than those payable to a single designer
Disadvantage Requires the owner to assume overall
coordination responsibilities
Diagram #5Engineering, Procurement and
Construction Manager StructureOwner Engineer/
ConstructionManager
Prime Contractor
Prime Contractor Supplier
2014-01-05
28
Advantage and Disadvantage of the Engineering, Procurement and Construction
Management Project Structure Advantage
One entity takes an active role in both the design and construction of the project
DisadvantageAs is the case in the construction management project As is the case in the construction management project structure, the EPCM party is usually only an agent of the owner and as such does not take on any direct liability for the trade contractors or equipment and material suppliers
Diagram #7Design/Build Project Structure
OwnersOwner s Consultant Owner
Design/Builder
Consultant
2014-01-05
29
Advantages of the Design/Build Project Structure
Where time of delivery performance or Where time of delivery, performance or output of the project is critical to the owner, single point of responsibility makes one person responsible for such matters
Conducive to fast-tracking
Advantages of the Design/Build Project Structure
The designer and the contractor work The designer and the contractor work together as a team
The single point of responsibility is important to lenders in project financing projects
2014-01-05
30
Disadvantages of the Design/Build Project Structure
It is very difficult to adequately and fully define th f th d i /b ild bli ti ithe scope of the design/builders obligations prior to the design being completed
Price for the design and construction of a project cannot realistically be determined with precision until the design is finalizeduntil the design is finalized
The designer will no longer have the same interest in satisfying the owners expectations if those expectations will result in additional construction costs to the design/builder.
Forms of Contract Stipulated Price Stipulated Price Unit Price Cost Plus
Cost Plus Percentage Cost Plus Fixed FeeCost Plus Fixed Fee Cost Plus Lump Sum Bonus
Guaranteed Maximum Price plus Share of Savings
2014-01-05
31
Unit Price often found in excavation and municipal often found in excavation and municipal
servicing contracts use where quantity of work is not well
defined defined method of measurement is essential
Cost - Plus more appropriate where design is not more appropriate where design is not
complete other situations where significant
uncertainties exist bonus arrangements may provide incentive g y p
to reduce costs
2014-01-05
32
Guaranteed Maximum Price Hybrid between Stipulated Price and Cost Hybrid between Stipulated Price and Cost
Plus plus Share of Savings adds incentive to
reduce costs design must be reasonably completeg y p
Insurance1) Property) ope ty2) Liability3) Errors & Omissions
Professional Liability- Cap of Limit- Deductibles- Exclusions (i.e., Liability excludes faulty workmanship and faulty design)
2014-01-05
33
Intellectual Property Patents of Invention Patents of Invention Trademark Passing Off Copyright
I d t i l D i Industrial Designs Trade Secrets
Patents of Invention Inventions must be
New and useful art, process, machine, manufacture or composition of matter
Novel Reduced to something physical/tangible
Term: 20 years from date of application Patent rights can be assigned to others or used
under a license agreement Exclusive right to use or license the invention Can be assigned
2014-01-05
34
Patents of Invention (contd) Is it the employers invention or the
l ?employees? Remedies
Damages sustained by patent holder Injunction Recovery of profits obtained by infringer
Trade-mark Used to distinguish wares or services manufactured,
sold, leased, hired, or performed by someone from those of others
Owner has exclusive right to use trade-mark Mark must be distinctive Registered trade-marks are effective for a period of
15 years: can be renewed for unlimited 15-year periodsCan be licensed Can be licensed
Remedies Restraint on future use Liable for damages
2014-01-05
35
Passing Off A type of legal action against someone who
t d k i il t d k tuses your trade-mark or a similar trade-mark to yours
Unregistered trade-mark You must show that customers purchase from
someone else because they mistakenly believe h h d li i hthat they are dealing with you
Remedies Restraint on future use Liable for damages
Copyright Subsists in original literary, dramatic, musical,
artistic work, communication signals, sound recordings, performances
Right to produce or reproduce something; perform and deliver it in public; publish
Term: life of the author + 50 years Includes engineering plansc udes e g ee g p a s Assignment must be in writing moral rights: right of identification as author,
integrity of the work (i.e., Eaton Centre art)
2014-01-05
36
Industrial Designs Designs (shape, pattern, ornament) that are
ornamental or aesthetic in nature Not mechanical construction or method of
manufacture Design must be novel and original Term: exclusive right to use design for 10 years g g y
from registration Assignment must be in writing
Trade Secrets Formula , pattern, device, compilation of info
used in ones business which gives advantageused in one s business, which gives advantage over competitors, i.e., formula for a chemical
Some rely on this as opposed to patents Legal action:
Show info was confidential Show secret information was communicated to the Show secret information was communicated to the
person at fault in circumstances implying a duty of confidence
Degree of secrecy Duty of confidence: employer and employee
2014-01-05
37
Dispute Resolution1. Partnering Dispute Avoidance. a t e g spute vo da ce2. Negotiation3. Dispute Review Boards4. Mediation5. Arbitration
a) Mandatoryb) Binding
6. Private Court7. Litigation
Mediation Independent third party attempts to bring Independent third party attempts to bring
parties together Very useful if all parties want to settle
2014-01-05
38
Characteristics of Arbitration Choose the tribunal may be expert if Choose the tribunal - may be expert if
desired May be quicker and cheaper Less public Usually binding Usually binding Parties must agree to participate and be
bound by decision
Arbitration Agreements usually a clause in a larger contract usually a clause in a larger contract may be a stand alone agreement agreement should define:
arbitrator(s) - number, identity, qualifications, how chosen
rules and procedure timing
2014-01-05
39
Arbitration Act Philosophy to encourage arbitration Philosophy to encourage arbitration Courts must almost always enforce
arbitration agreements Rights of appeal are limited prevents arbitration being simply a delaying prevents arbitration being simply a delaying
tactic
ADR on International Projects Arbitration Clauses usual Arbitration Clauses usual in Ontario the International Commercial
Arbitration Act applies provides even less flexibility to courts to
intervene Contracts encourage non-binding ADR
methods
Recommended