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Legal
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E&O Insurance: The Danger of the Switch
Professional liability insurance, or E&O insurance, is of course designed to protect the professional against claims alleging liability for damages arising out of an error, omission or negligent act in the performance of professional services for others. The professional buys the insurance for protection. But sometimes when the right procedures are not followed when replacing one insurer with another, the professional can end up with no protection.
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Staying in the Game
Typically, it is the owner who controls the tender process and prepares the tender documents, meaning it is the owner who sets the rules of the game. As it is the owner who sets the rules and controls the process, the courts have attempted to impose obligations on owners to ensure that the process is fair. To that end, the courts have taken the position that they will protect the integrity of the bidding process where under the law of contract it is possible so to do. There is, however, only so much that the law of contract can do to protect that process.
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Alberta Master: Security in Builders’ Lien
The recent Alberta Master’s decision in Zahmol Properties Ltd. v. Richardson Bros. (Olds) Ltd. is the first reported analysis of section 48 of the Alberta Builders’ Lien Act (BLA), which allows an owner to post security to discharge a lien from title. The case confirmed the requirement that any such security must represent an adequate replacement for the land itself. Most significantly, Master Laycock rejected the usual practice of fixing the costs portion of the security in a builders’ lien application at a further 10 per cent to 15 per cent of the sum to be posted and instead held that a “genuine calculation” of anticipated costs was required.
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Ambiguity – A Common Area of Construction Claims
A common issue which results in many construction claims is ambiguity in the construction contract. A well drafted construction contract will avoid ambiguity and contain provisions which address unintended ambiguities. By paying attention to ambiguities at the very outset of the drafting the contract, parties can avoid disputes during the project.
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Contractors' Risk
Contractors who carry out projects on a lump sum payment basis are in effect required to bet that they can perform the work profitably. A competent contractor will be able to factor in all known risks. However, while such a wager can result in healthy profit, it can also prove to be very costly, by reason of the operation of factors which are beyond the contractor's control. It has been said that most contractors are at all times only one problem project away from financial disaster. It is for this reason strongly recommended that a contractor closely assess the allocation of risk in every general contract and in particular the contractual provisions relating to entitlement to additional compensation for extra work or delays.
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Public Private Partnerships: A Paradigm Shift
Public Private Partnerships (“P3s”) are catching on in many parts of the world as the preferred way for building and delivering infrastructure projects. It has been a process for project delivery in the United Kingdom under the guidance of Partnerships UK for more than a decade. More than 900 P3 projects worth more than 70 billion pounds had been procured in that time. Closer to home, Partnerships BC has been responsible for management of more than 20 P3 projects, and more are on the way. The concept of P3s has also been widely endorsed and employed in Ontario and more recently, in Saskatchewan and Alberta. In the United States, considerable interest has been shown in P3 projects for rebuilding that country’s infrastructure, with some states already having legislated the P3 structure as an acceptable way of spending the public purse.
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Public Procurement
On February 12, 2010, the Supreme Court of Canada rendered its much anticipated decision in Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), a judgment that could have far-reaching implications for public procurement in the future. The central issue in the appeal was whether the Province of British Columbia could, by including in its tender documents a broad “exclusion of liability” clause, immunize itself from claims by an unsuccessful tenderer.
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