Practical Law of Architecture, Engineering, and Geoscience, 3rd Canadian Edition By Brian M. Samuels

TEST ITEM FILE Bill Woodhead

Practical Law of Architecture, Engineering, and Geoscience Third Canadian Edition

Brian M. Samuels Samuels & Co., Barristers and Solicitors

Doug R. Sanders Borden Ladner Gervais LLP

Toronto Copyright © 2016 Pearson Canada Inc.. Pearson Prentice Hall. All rights reserved. This work is protected

by Canadian copyright laws and is provided solely for the use of instructors in teaching their courses and assessing student learning. Dissemination or sale of any part of this work (including on the Internet) will destroy the integrity of the work and is not permitted. The copyright holder grants permission to instructors who have adopted Practical Law of Architecture, Engineering, and Geoscience, Third Canadian Edition,

by Brian M. Samuels and Doug R. Sanders, to post this material online only if the use of the website is restricted by access codes to students in the instructor’s class that is using the textbook and provided the reproduced material bears this copyright notice.

Contents Preface

2

3

Chapter 1

The Canadian Legal System

4

Chapter 2

Regulation of the Professions

5

Chapter 3

Ethical Considerations

6

Chapter 4

Property Law

7

Chapter 5

Business Organizations

10

Chapter 6

Contracts

12

Chapter 7

Breach of Contract

14

Chapter 8

Interpreting and Drafting Contracts

16

Chapter 9

Selected Contract Issues

17

Chapter 10

Getting to a Contract

20

Chapter 11

Specific Contracts and Clauses

24

Chapter 12

Torts

26

Chapter 13

Common Issues in Contract and Tort

28

Chapter 14

Dispute Resolution and Expert Evidence

30

Chapter 15

Risk, Responsibility, and Dispute Avoidance

32

Chapter 16

Insurance

33

Chapter 17

Bonds

36

Chapter 18

Construction Liens

38

Chapter 19

Delay and Impact Claims

40

Chapter 20

Labour Law

42

Chapter 21

Employment Law

44

Chapter 22

Health and Safety Law

46

Chapter 23

Environmental Law

47

Chapter 24

Aboriginal Law

49

Chapter 25

Securities Law

50

Chapter 26

Privacy Law

51

Chapter 27

Internet Law

52

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Preface Practical Law of Architecture, Engineering, and Geoscience was designed to serve a wide variety of courses. It is appropriate for students who are studying the legal aspects of any sector of the construction industry, or any other project-driven industry with a network of parties contractually related to one another.

This Test Item File provides sample questions and answers for each of the 27 chapters of Practical Law of Architecture, Engineering, and Geoscience. Four types of questions are used: True or False, Short Answer, Multiple Choice, and Essay.

Copyright © 2016 Pearson Canada Inc.

3

Chapter 1

The Canadian Legal System

TRUE FALSE 1. Civil litigants have an automatic right of appeal to the Supreme Court of Canada.

Answer: False

Page: 2

Difficulty: Moderate

Skill: Applied

SHORT ANSWER 2. What rule applies when federal and provincial legislation have a direct operational conflict?

Answer: The federal legislation trumps the provincial legislation to the extent of the contradiction. This is called the doctrine of paramountcy.

Page: 1

Difficulty: Moderate

Skill: Applied

MULTIPLE CHOICE 3. Which of the following is a federal power under the Canadian Constitution? a. b. c. d.

fisheries management of hospitals governance of the professions contracts

Answer: a Comment: The others are within provincial government jurisdiction.

Page: 1

4

Difficulty: Easy

Skill: Applied

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Chapter 2

Regulation of the Professions

TRUE FALSE 4. To be eligible for registration as a professional engineer in Canada, applicants must first sit an exam to evaluate their technical ability.

Answer: False

Page: 11

Difficulty: Moderate

Skill: Recall

Comment: Only applicants who are graduates of non-accredited universities need sit technical exams.

SHORT ANSWER 5. Explain what is meant by self-regulation.

Answer: Self-regulation is when a profession is given statutory authority to govern itself.

Page: 8

Difficulty: Easy

Skill: Recall

MULTIPLE CHOICE 6. Engineers Canada has professional-level reciprocity agreements with all of the following jurisdictions except? a. b. c. d.

Mexico United Kingdom France Texas

Answer: b Comment: Engineers Canada has only an educational-level reciprocity agreement with the United Kingdom.

Page: 11

Difficulty: Difficult

Skill: Recall

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5

Chapter 3

Ethical Considerations

TRUE FALSE 7. Codes of ethics have detailed lists of what professionals are prohibited from doing.

Answer: False

Page: 15

Difficulty: Difficult

Skill: Applied

Comment: Usually codes of ethics are written in general terms defining a vague threshold of acceptable behaviour. This is evident from the excerpts on page 15.

SHORT ANSWER 8. Name the four persons (or groups) professionals owe ethical duties to.

Answer: The public, client, employer, and profession.

Page: 16

Difficulty: Difficult

Skill: Recall

MULTIPLE CHOICE 9. What is the definition of a “facilitation payment” under the Corruption of Foreign Public Officials Act in Canada? a. b. c. d.

payments made to secure contracts payment for the acquisition of land rights small payments made to expedite processing of routine approvals vacation pay

Answer: c Comment: Facilitation payments are an exception to the rule against bribery of foreign public officials under the CFPOA. Page: 21

6

Difficulty: Medium

Skill: Recall

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Chapter 4

Property Law

TRUE FALSE 10. You have the legal right to prevent your neighbour from building a tall house that obstructs your view of the ocean.

Answer: False

Page: 27

Difficulty: Moderate

Skill: Applied

Comment: Property ownership does not include the right to a view over neighbouring land.

SHORT ANSWER 11. A mobile amusement ride is bolted to the ground so that it is stable during operation.

Is the ride real property or personal property?

Answer: Personal property. If the purpose of the fixing is to better enjoy the item fixed, the act of fixing does not make the item real property.

Page: 24

Difficulty: Moderate

Skill: Applied

MULTIPLE CHOICE 12. Your neighbour intends to dig a basement close to your property boundary. The neighbour wants to ensure lateral support to your land, and so installs ground anchors that extend under your land. Has the neighbour done anything wrong? a. no, the neighbour is complying with his duty to provide lateral support b. no, the neighbour is entitled to take reasonable steps to facilitate construction on his land c. yes, the neighbour’s anchors are trespassing onto your land because you did not agree to them being installed d. yes, ground anchors stretch as they take load, and so your land will settle as this occurs; the neighbour has compromised lateral support to your land Answer: c Comment: The right to place items on or under another person’s land must be established by contract.

Page: 26

Difficulty: Moderate

Skill: Applied

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7

13. Which of the following is not true about easements? a. b. c. d.

an easement permits the holder to harvest trees from the land easements can be created through historical use easements give others the right to use your property easements can be registered against title in the land title office

Answer: a Comment: Harvesting trees is done through a profit à prendre.

Page: 28

Difficulty: Moderate

Skill: Recall

14. Ideas can be protected using: a. b. c. d.

copyright law trademark law trade secrets industrial designs

Answer: c Comment: Trade secrets and other ideas can be preserved by well-drafted contracts.

Page: 29

Difficulty: Moderate

Skill: Applied

15. The term of patent protection in Canada is: a. b. c. d.

50 years from the date the application is filed 20 years from the date the patent is granted 20 years from the date the first invention is disclosed to the public 20 years from the date the application is filed

Answer: d Page: 31

8

Difficulty: Easy

Skill: Recall

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ESSAY 16. Discuss the importance of registration of patents, copyright, trademarks, and industrial designs respectively.

Answer: Registration is most important for patents and industrial designs. Without registration, there is no protection at all for patents or industrial designs. Patents must be registered in each jurisdiction where the inventor wants protection, and there are time limits by which this registration must be completed. For copyrights, registration is not required. However, registration is useful for copyright because it proves who the owner of the copyright is. Registration is also required to take advantage of copyright treaties.

Trademarks need not be registered, but if they are not, the trademark will only apply in the area the trademark is actually used. Registering a trademark gives the owner the exclusive right to use the trademark throughout Canada.

Pages: 29-32

Difficulty: Moderate

Skill: Applied

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9

Chapter 5

Business Organizations

TRUE FALSE 17. Filing requirements for partnerships are generally less onerous than for corporations.

Answer: True

Page: 36

Difficulty: Moderate

Skill: Recall

SHORT ANSWER 18. If you are setting up a business and are not concerned about liability, but expect to be very successful, what disadvantage is there to operating as a sole proprietor?

Answer: Sole proprietors pay tax on the profits of the business as personal income. For large incomes, the personal tax rate may be higher than the corporate tax rates, and so a sole proprietorship would not be efficient from a tax perspective.

Page: 36

Difficulty: Moderate

Skill: Applied

MULTIPLE CHOICE 19. Which is the odd one out? a. b. c. d.

articles of incorporation memoranda of association letters patent partnership agreement

Answer: d Comment: The other documents are used to incorporate a company.

Page: 39

10

Difficulty: Moderate

Skill: Applied

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20. A director is considering buying a car for the corporation from a car dealership that is owned by his brother. To be absolutely safe, what should the director do before making the purchase? a. nothing, the corporation will be paying full price for the car, and the brother is not making any concession for the director b. disclose the director’s relationship with the seller, and have the purchase approved by the shareholders c. disclose the director’s relationship with the seller, and have the purchase approved by the independent directors on the board d. have his brother make a statutory declaration that the car was sold at fair market value Answer: b Comment: Approval by the board of directors may be sufficient, but approval by an appropriate majority of shareholders is unassailable.

Page: 40

Difficulty: Difficult

Skill: Applied

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11

Chapter 6

Contracts

TRUE FALSE 21. When a contract is voidable, the non-breaching party has the option to continue with the contract.

Answer: True

Page: 46

Difficulty: Moderate

Skill: Applied

Comment: However, when a contract is void, there is no option to continue.

SHORT ANSWER 22. Why is it advisable to record contracts in writing?

Answer: A record in writing makes it easier to prove what was agreed to.

Page: 45

Difficulty: Easy

Skill: Recall

MULTIPLE CHOICE 23. When can a party revoke an offer? a. b. c. d.

only after a counter-offer is made only when a new offer is made as a substitution after it has been accepted any time before it is accepted

Answer: d Comment: Although, to be effective, the revocation must be communicated to the party the offer was made to.

Page: 46

12

Difficulty: Moderate

Skill: Applied

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24. Which of the following would be acceptable consideration in exchange for a contractor building a house? a. b. c. d.

$1 $60,000 the free market value of the house all of the above

Answer: d Comment: Generally, the law does not inquire into the adequacy of consideration.

Page: 48

Difficulty: Moderate

Skill: Applied

ESSAY 25. Explain why, in construction contracts, it is important for owners to ensure that the formalities specified for approving extras to the contract are complied with.

Answer: If a contract specifies a procedure for approving amendments or extras to the contract, but those procedures are not followed, then the court may rule that both parties adopted a relaxed approach to the contract and now neither party can require compliance with the procedures set out. Then, if the contractor performs extra work and claims that she was instructed to perform it, the court may award payment for such extra work even though no formal instruction was given. When a job is going well and relationships on site seem strong, strict compliance with paperwork requirements may seem unnecessary.

However, projects go awry and memories fade. Best practice is to comply with the approval process from the outset so the rights of all parties are clear.

Page: 55

Difficulty: Easy

Skill: Applied

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13

Chapter 7

Breach of Contract

TRUE FALSE 26. Because of the doctrine of remoteness, damages will only be awarded for breach of contract if the loss was caused by the breach.

Answer: False

Page: 61

Difficulty: Difficult

Skill: Applied

Comment: Remoteness requires that the damages be foreseeable. The doctrine of causation is the one that requires the loss be caused by the breach.

SHORT ANSWER 27. How relevant is inability to perform when considering whether a contract was breached?

Answer: Inability to perform is irrelevant to whether the contract was breached. Breach is determined by simply considering whether the work was done in accordance with the contract. Inability is merely the reason for the breach.

Page: 60

Difficulty: Moderate

Skill: Applied

MULTIPLE CHOICE 28. The owner insists that the contractor perform certain work that the contractor claims is not part of the contract. Which of the following is an appropriate course of action for the contractor? a. perform the disputed work hoping the owner will later agree to pay b. stop work on the entire project unless the owner agrees to pay for the disputed work c. perform all contractual obligations apart from the disputed work d. none of the above Answer: d Comment: A notice of protest must be filed immediately, so A is inappropriate. B is inappropriate because, regardless of the disputed work, the contractor must complete the work that is clearly within the contract. C is inappropriate because if the contractor was

14

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mistaken and the disputed work was actually part of the contract, the contractor will be liable for breach of contract. The contractor should complete all work, including the disputed work, but file a notice of protest immediately.

Page: 60

Difficulty: Difficult

Skill: Applied

29. Which is the most common remedy for breach of construction contracts? a. b. c. d.

specific performance damages declaratory order injunction

Answer: b Comment: Using the damages awarded, the innocent party can pay a replacement contractor to finish the project.

Page: 61

Difficulty: Difficult

Skill: Applied

ESSAY 30. A swimming pool contractor builds a pool with a deep end 11 ft deep, instead of the 12 ft specified in the contract. Would specific performance be ordered? If not, how would damages be calculated?

Answer: When ordering specific performance, the court orders the breaching party to comply with the terms of the contract. In this case, specific performance would require the contractor to rebuild the entire pool. The court would be reluctant to do this because of the large cost compared to the small benefit to be gained by rebuilding the entire pool.

However, if the owner demonstrated a special need for the extra foot of depth (such as a high-precision diving board), specific performance may be ordered, especially if the owner made this special need known to the contractor at the outset. Otherwise, the court would likely award damages to account for loss of enjoyment and diminution in value because of the shallower depth.

Pages: 61-63

Difficulty: Moderate

Skill: Applied

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15

Chapter 8

Interpreting and Drafting Contracts

TRUE FALSE 31. Where the intentions of the parties are clear from the written contract, a court will not consider additional evidence on the parties’ intentions.

Answer: True

Page: 69

Difficulty: Easy

Skill: Applied

SHORT ANSWER 32. When will courts prefer the customary or special meaning of a word over its ordinary meaning?

Answer: The customary or special meaning will be used when the context of the word in the document implies that the special meaning of the word was intended.

Page: 68

Difficulty: Moderate

Skill: Applied

MULTIPLE CHOICE 33. What is the name of the rule that generally excludes extrinsic evidence when interpreting a contract? a. b. c. d.

contra proferentem the contextual approach the parol evidence rule none of the above

Answer: c Comment: Exceptions to the parol evidence rule apply when necessary to prevent injustice.

Page: 69

16

Difficulty: Moderate

Skill: Recall

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Chapter 9

Selected Contract Issues

TRUE FALSE 34. A statement by an architect to a contractor may be sufficient to establish that the architect is the owner's agent.

Answer: False

Pages: 71-72 Difficulty: Difficult

Skill: Applied

Comment: No statement between an agent and a third party can create an agency. See the diagram on page 72.

35. A sub-subcontractor would be covered by a one-tier labour and material payment bond.

Answer: False

Page: 80

Difficulty: Easy

Skill: Applied

Comment: Only subcontractors to the main contractor would be covered by a one-tier bond.

SHORT ANSWER 36. What type of agency relationship may be established by representations the owner makes in the construction contract documents? Who is that agency relationship between?

Answer: Apparent agency. Representations in the contract between the owner and the contractor may imply that an architect is the agent of the owner. To the extent the owner states in the contract documents that the architect may act for the owner, the owner will be accountable if the contractor relies on the architect.

Page: 71

Difficulty: Moderate

Skill: Applied

37. What name is given to an agreement in which one party agrees to bear the financial loss of another party for a specified event?

Answer: An indemnity agreement.

Page: 73

Difficulty: Moderate

Skill: Applied

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17

MULTIPLE CHOICE 38. Under a pay-when-paid clause, if the owner never pays the main contractor, when must the main contractor pay the subcontractors? a. b. c. d.

on the date the owner was due to pay the main contractor a reasonable time after the payment was due when the subcontractor has completed work under the subcontract if the owner never pays, the main contractor is not required to pay the subcontractor

Answer: b Comment: Pay-when-paid clauses do not create a condition precedent to payment.

Page: 78

Difficulty: Moderate

Skill: Applied

39. Which of the following is true for pay-if-paid clauses between contractors and subcontractors where the contractor is unpaid by the owner? a. in the absence of default by a subcontractor, they create the only possible excuse for a contractor who has not paid a subcontractor b. they are never enforced by the courts c. the triggering event for a pay-if-paid clause is a breach of contract between the contractor and the subcontractor d. none of the above Answer: a Comment: A pay-if-paid clause may justify a contractor not paying a subcontractor even though that subcontractor completely performed the subcontract. Such clauses have been enforced by some courts, but generally courts avoid enforcing them if they can.

Page: 78

18

Difficulty: Difficult

Skill: Applied

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40. Terms from which contract are typically incorporated by reference into subcontracts? a. b. c. d.

a similar subcontract between the main contractor and another subcontractor the contract between the owner and the main contractor a contract between the main contractor and a supplier none of the above

Answer: b Comment: Incorporation by reference is a way for the main contractor to assign to a subcontractor the responsibilities he has to the owner. Therefore, reference is made to the contract between the owner and the main contractor.

Page: 79

Difficulty: Moderate

Skill: Applied

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19

Chapter 10

Getting to a Contract

TRUE FALSE 41. A request for quotation may be used as a preliminary step when negotiation is anticipated.

Answer: True

Page: 92

Difficulty: Moderate

Skill: Applied

42. Standing offers are typically open for a short period.

Answer: False

Page: 93

Difficulty: Moderate

Skill: Recall

Comment: Standing offers are used when the owner wants the option to call for specified services at an agreed price during a medium- to long-term time period.

SHORT ANSWER 43. What consequences result from tender documents that place risks on parties not well positioned to deal with those risks?

Answer: The prices submitted by tenderers will be disproportionately high compared to the risk they are required to bear. Potential bidders will be discouraged from submitting bids.

Page: 91

Difficulty: Difficult

Skill: Applied

44. If an owner wants to negotiate with bidders after bids have been submitted, what steps should be taken?

Answer: The owner should clearly explain in the call for tenders that she intends to negotiate after the bids are submitted.

Page: 101

20

Difficulty: Moderate

Skill: Applied

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MULTIPLE CHOICE 45. In which of the following project delivery models is the contractor most involved throughout the entire life of the project? a. b. c. d.

design-bid-build design-build design-build-operate-finance construction management

Answer: c Comment: In the design-build-operate-finance project delivery model, the contractor is involved in all stages except conceptualization.

Page: 112

Difficulty: Easy

Skill: Applied

46. An owner urgently wants to select a contractor. However, the project details have not been finalized. Therefore, the owner wants to have a few contractors give rough price estimates, and then enter into negotiations with one or more of them. What type of delivery system is most appropriate for this situation? a. b. c. d.

request for qualifications invitation to tender request for quotation request for standing offer

Answer: c Comment: A request for quotation is appropriate when the procurement requirements are somewhat defined but not accurately known, and when further negotiation is anticipated.

Page: 92

Difficulty: Easy

Skill: Applied

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21

47. A large private developer anticipates a complicated multi-stage residential development to be implemented over a six-year period. It is important that a good working relationship exist between the owner and the contractor because the owner wishes to have a single contractor for all stages. What type of delivery system is most appropriate for this situation? a. b. c. d.

request for qualifications invitation to tender request for quotation request for standing offer

Answer: a Comment: A request for qualifications will allow the owner to obtain a general impression from the applicants and then enter into negotiations.

Page: 92

Difficulty: Moderate

Skill: Applied

48. Which of the following is good practice for an owner awarding a contract? a. seeking clarity from a bidder regarding an ambiguity in a bid before awarding the contract b. awarding the contract based on criteria not stated in the invitation for tenders c. accepting a bid that does not comply with all the mandatory criteria stated in the invitation for tenders d. refusing to negotiate with any bidders Answer: d Comment: Negotiating with bidders is bad practice and exposes the owner to potential lawsuits by other bidders.

Page: 101

Difficulty: Easy

Skill: Applied

49. Which of the following models for project delivery would be inappropriate for a single residence project? a. b. c. d.

design-bid-build design-build design-build-operate construction management

Answer: c Comment: There is no significant operation phase for a single residence project.

Page: 112

22

Difficulty: Easy

Skill: Applied

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ESSAY 50. If a call for tenders specifically requires that certain work be subcontracted out, and that the names of subcontractors that the contractor intends to use be given in the tender, why might a contractor intentionally omit the name of the subcontractor? What are the risks of doing this?

Answer: A contractor may obtain quotes from the various subcontractors and then enter in a price for that item which is a bit lower than any of the quotes he has received from any of the subcontractors. This will increase the likelihood of the contractor winning the job.

Then, having obtained the job, the contractor is not bound to a particular subcontractor and can negotiate with the trades and get one of the subcontractors to meet the price he stated in the tender. The risk of doing this is that the contractor’s bid may be rejected by the owner as non-compliant. But if the owner uses a broad privilege clause, and is otherwise impressed by the contractor’s low price and overall bid, the omission may be viewed as a technical deficiency not amounting to non-compliance. However, if the owner awards the contract to the bid-shopping contractor, the owner runs the risk of being sued by other bidders who consider the owner to have accepted a non-compliant bid.

Pages: 106-107

Difficulty: Difficult

Skill: Applied

51. An owner wants to implement a project which requires synergy between many different mechanical systems. How suitable is the construction management model of project implementation for this situation?

Answer: Under the construction management model, the owner enters into separate contracts with the various trade contractors. Unlike with the design-bid-build model, where there is a single contractor who is ultimately responsible for all work done on site, in the construction management model, each trade contractor is independently responsible to the owner. In a project requiring synergy between different aspects of the project, it may be difficult to determine which trade contractor is responsible if the system fails to perform. Certainly, where more than one trade contractor is at fault (which is usually the case), they will point fingers at each other and the owner will be caught in the middle of the blame game that results. Unlike with the design-bid-build model, the owner will not be able to turn to a single contractor and say: “You are responsible, fix it!”

Therefore, the construction management model should not be used on innovative projects where operational synergies are required.

Pages: 112-113

Difficulty: Difficult

Skill: Applied

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23

Chapter 11

Specific Contracts and Clauses

TRUE FALSE 52. Owners can increase price certainty in fixed-cost contracts by requiring the contractor to bear more risk.

Answer: True

Page: 118

Difficulty: Moderate

Skill: Applied

Comment: However, the contractor will charge a premium for bearing the additional risk, and the owner may be required to pay a large premium in comparison to the risk.

SHORT ANSWER 53. Why is the name of fixed-price contracts somewhat misleading?

Answer: Under a fixed-price contract, the owner rarely pays just the fixed price.

Typically, design changes or contractor claims result in price increases.

Page: 119

Difficulty: Moderate

Skill: Applied

MULTIPLE CHOICE 54. The public-private partnership model is most similar to which other model? a. b. c. d.

cost-plus alliance design-bid-build construction management

Answer: b Comment: Alliances and public-private partnerships both involve a team effort to implement a successful project, and the parties share in the success or failure.

Page: 124

24

Difficulty: Easy

Skill: Applied

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55. Which of the following is false regarding the issue of time under a contract? a. typically, time is of the essence for both parties b. since the contractor will be liable for late completion, only he need be concerned with the feasibility of the construction schedule c. when scheduling, minor tasks should be given as much consideration as major tasks d. all of the above Answer: b Comment: The owner will be affected by late completion, and therefore also has an interest in ensuring a feasible construction schedule.

Page: 127

Difficulty: Difficult

Skill: Applied

56. Which is the typical sequence in which dispute resolution options are tried? a. b. c. d.

negotiation, mediation, arbitration mediation, negotiation, arbitration negotiation, arbitration, mediation arbitration, negotiation, mediation

Answer: a Comment: Parties normally try to resolve the dispute themselves, then ask someone to help them resolve it themselves, and finally have someone else resolve it for them.

Page: 132

Difficulty: Moderate

Skill: Applied

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25

Chapter 12

Torts

TRUE FALSE 57. A contractor who builds a house and then sells it to the first owner will generally not be contractually liable to the second owner of the property for defective construction.

Answer: True

Page: 136

Difficulty: Moderate

Skill: Applied

SHORT ANSWER 58. What is the key difference between obligations imposed under tort law compared to those imposed under contract law?

Answer: One cannot escape tort obligations, as they are imposed on all members of society. Contractual obligations, on the other hand, are entirely voluntary.

Pages: 139-140

Difficulty: Difficult

Skill: Applied

MULTIPLE CHOICE 59. Between which of the following parties is there clearly a duty of care for negligence? a. an architect and a contractor b. a geoscientist and an investor who inadvertently obtains a copy of the geoscientist's report c. a car manufacturer and the owner of the car d. none of the above Answer: c Page: 136

26

Difficulty: Difficult

Skill: Applied

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60. To establish causation, the plaintiff must show that: a. the defendant owed a duty to the plaintiff and breached that duty b. but for the breach of duty by the defendant, the loss would not have occurred, and that the defendant’s breach was the proximate cause of the loss c. the plaintiff took all reasonable steps to prevent the loss after the defendant breached his duty to the plaintiff, and that the defendant’s breach was the proximate cause of the loss d. none of the above Answer: b Comment: The “but for” test must be satisfied and the cause must be proximate.

Page: 142

Difficulty: Moderate

Skill: Applied

61. Which of the following is a strict liability tort? a. b. c. d.

breach of confidence nuisance negligence negligent misrepresentation

Answer: b Page: 148

Difficulty: Moderate

Skill: Applied

ESSAY 62. “A” mistakenly builds his farm boundary fence 5 cm beyond his property boundary such that it is on his neighbour’s property. His neighbour, “B”, sues for trespass. Will B’s claim succeed? What remedy will the court likely grant to B? (Hint: consider public policy) Answer: Because A built the fence over the property boundary, his fence trespasses on B’s property. Trespass occurs whenever a person places their personal property on the land of another person. The traditional remedy for trespass is a court order stating that the party committing the trespass (A) must cease doing so by a stated time. However, public policy requires that courts should not make orders that will be expensive to implement, but which result in little benefit. In this case, B owns a farm which is likely large in size. Ordering A to move his fence 5 cm will be of little benefit to B. Although mistake is not a defence to trespass, the court will consider it when deciding on what remedy to order. In this case, the court would likely order A to pay B some nominal amount for the encroachment on B’s land.

Page: 146

Difficulty: Difficult

Skill: Applied

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27

Chapter 13

Common Issues in Contract and Tort

TRUE FALSE 63. An employment contract could contain an exclusion clause that prevents the employer from recovering from the employee damages the employer has to pay under the doctrine of vicarious liability.

Answer: True

Page: 157

Difficulty: Difficult

Skill: Applied

SHORT ANSWER 64. What is the name of the limitation period that will bar a claim for a latent defect found 80 years after a building was constructed?

Answer: The ultimate limitation period.

Page: 155

Difficulty: Easy

Skill: Recall

MULTIPLE CHOICE 65. A patent defect is one which: a. would only be obvious to an expert b. could not be discovered until after the structure containing the defect had failed, at which point it would be obvious that there was a defect c. is an obvious defect that can be discovered upon a reasonable inspection d. none of the above Answer: c Page: 154

28

Difficulty: Difficult

Skill: Recall

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66. In which of the following relationships is there vicarious liability? a. b. c. d.

employer–employee owner–contractor owner–architect all of the above

Answer: a Comment: Owners do not have control over the work methods of their contractors and architects, and so there is no vicarious liability.

Page: 157

Difficulty: Moderate

Skill: Applied

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29

Chapter 14

Dispute Resolution and Expert Evidence

TRUE FALSE 67. Upon being issued a demand for documents, a party must produce all relevant documents.

Answer: False

Page: 164

Difficulty: Difficult

Skill: Applied

Comment: Privileged documents need not be produced.

SHORT ANSWER 68. What is the purpose of the pleadings in a lawsuit?

Answer: The pleadings define the issues to be decided by the court.

Page: 162

Difficulty: Difficult

Skill: Applied

MULTIPLE CHOICE 69. What name is given to the process whereby the parties agree to arbitrate after the dispute has arisen, and agree that the arbitrator will make a final decision? a. b. c. d.

mandatory binding arbitration voluntary binding arbitration mandatory non-binding arbitration voluntary non-binding arbitration

Answer: b Page: 166

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Difficulty: Easy

Skill: Recall

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70. Which of the following is not true regarding experts? a. b. c. d.

experts must remain neutral at all times experts cannot agree to payment contingent on the outcome of the litigation experts should insist that there is only one answer to every technical problem experts should decline to testify if they cannot honestly offer an opinion that supports the case of the party who hired them

Answer: c Comment: Experts must remain open minded, and agree to reasonable alternative explanations if presented with them.

Page: 169

Difficulty: Moderate

Skill: Applied

ESSAY 71. Explain the potential conflict of interest experts face when testifying at trial. What mechanisms are implemented to mitigate this conflict and ensure objective expert testimony?

Answer: When experts testify at trial, they are paid to do so by one of the parties. In other words, a litigant will present an expert because the litigant believes that the expert’s opinion will further the party’s case. The conflict of interest arises because the expert is ethically obliged to give a neutral opinion, but knows that they will not be paid to give an opinion at all unless it supports the case of the party who hired them. Thus, experts may be inclined to tailor an opinion to suit a particular viewpoint. In an attempt to control this conflict, expert witness compensation is not allowed to be contingent on the outcome of the case. However, there is no bar against agreeing to pay expert witnesses a substantial fee. In any case, if an expert does not give objective and reasonable evidence, this will be revealed through cross-examination and by conflicting expert testimony.

Page: 169

Difficulty: Moderate

Skill: Applied

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31

Chapter 15

Risk, Responsibility, and Dispute Avoidance

TRUE FALSE 72. Supervision connotes a greater degree of involvement during the construction process than inspection.

Answer: True

Page: 178

Difficulty: Moderate

Skill: Recall

SHORT ANSWER 73. In what circumstances might a professional be liable because her design is not perfect?

Answer: When the professional represented to the owner that her design would be perfect.

Page: 175

Difficulty: Moderate

Skill: Applied

MULTIPLE CHOICE 74. Which of the following is the most common cause of client dissatisfaction? a. projects being completed behind schedule b. technical challenges c. failure to establish realistic client expectations by effective and continuous communication d. unforeseen difficulties Answer: c Comment: Clients who do not perceive themselves as part of the team are more likely to be dissatisfied when problems occurred. Keeping clients informed and ensuring they understand the challenges of the project is the key to satisfaction.

Pages: 176-177

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Difficulty: Moderate

Skill: Applied

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Chapter 16

Insurance

TRUE FALSE 75. Operating though a corporation will not protect a professional against claims for personal negligence.

Answer: True

Page: 184

Difficulty: Moderate

Skill: Applied

76. All insurance policies impose on the insurer the duty to defend and the duty to indemnify when the claim is within coverage.

Answer: False

Page: 185

Difficulty: Moderate

Skill: Applied

Comment: Some insurance policies are designed to simply cover the costs of defending claims.

SHORT ANSWER 77. What is an insurance deductible?

Answer: The deductible is the minimum portion of the cost of the claim that the insured must pay before the insurer will cover the rest of the claim.

Page: 183

Difficulty: Easy

Skill: Applied

78. For what tactical reason may a professional choose to not have insurance?

Answer: If it is known that the professional is not insured, there is less chance that they will be sued.

Page: 184

Difficulty: Moderate

Skill: Applied

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MULTIPLE CHOICE 79. On a shopping mall construction project, which of the following best describes the extent of the subcontractor’s insurable interest? a. the subcontractor’s tools and other equipment b. the work performed by the subcontractor c. the work performed by the subcontractor and the contractor who employed the subcontractor d. the physical property of the entire site (i.e. the work done by all of the contractors and subcontractors) Answer: d Comment: The subcontractor has an insurable interest in the work of all of those who have joined in the common goal of completing the construction project.

Page: 186

Difficulty: Moderate

Skill: Applied

80. Which of the following is true regarding insurance contracts? a. b. c. d.

the scope of coverage clause defines what claims are covered by the policy exclusion clauses reduce the scope of coverage exception clauses reduce the scope of exclusion clauses all of the above

Answer: d Comment: See Figure 16-1 on page 192.

Page: 192

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Difficulty: Moderate

Skill: Applied

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ESSAY 81. In what sense are both the insured and the insurer under a duty of good faith in insurance contracts?

Answer: When the insurance contract is being entered into, the insured is under a duty of good faith to disclose all material information. This duty of good faith is imposed partly because the insured is in a position of power relative to the insurer (i.e. the insured has all the information and the insurer is the one who has to decide whether to provide coverage, and if so, at what premium). When a claim is made, the insurer is under a duty of good faith to defend the claim and compensate if the claim is within coverage. At this stage the insurer has a large amount of power because he understands better than the insured what the likelihood of success for the claim is. Furthermore, the insured is vulnerable because he likely has insufficient capital to cover the claim, and reputation is at stake if the claim is not paid.

Pages: 189-191

Difficulty: Difficult

Skill: Applied

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35

Chapter 17

Bonds

TRUE FALSE 82. Like labour and material payment bonds, lien bonds are put in place at the start of the contract.

Answer: False

Page: 206

Difficulty: Moderate

Skill: Recall

Comment: Lien bonds are only put in place after a lien is filed.

SHORT ANSWER 83. What steps should the obligee under a surety bond take regarding the safekeeping of documentation?

Answer: The obligee should ensure that she retains the original copy of the surety document. The bond will be unenforceable unless the obligee has the original bond document.

Page: 200

Difficulty: Moderate

Skill: Applied

MULTIPLE CHOICE 84. Which of the following is a course of action a surety under a performance bond could take upon being notified by the owner of a default by the contractor? a. complete the construction contract himself b. pay the owner the face value of the performance bond c. do nothing, and wait to see if the owner sues the contractor to prove that the contractor was actually in default d. all of the above Answer: d Comment: These are three of the six options open to the surety in the event of default by the contractor.

Page: 203

36

Difficulty: Moderate

Skill: Applied

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85. Which of the following may be a defence available to a surety who does not want to pay out under a performance bond? a. the surety did not review the obligations on the contractor under the construction contract b. the owner did not perform all the obligations under the construction contract c. the contractor made a misrepresentation to the surety before the surety agreed to provide the performance bond d. all of the above Answer: b Page: 205

Difficulty: Moderate

Skill: Applied

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37

Chapter 18

Construction Liens

TRUE FALSE 86. If the contractor is financially strong, and files a letter of credit with the owner stating that she will have no difficulty in paying subcontractors, she need not comply with the lien legislation trust provisions.

Answer: False

Page: 215

Difficulty: Difficult

Skill: Applied

Comment: All contractors must comply with the trust provisions regardless of their financial strength.

SHORT ANSWER 87. Why can it be said that contractors are in the business of granting credit?

Answer: The payment scheme used in construction contracts is generally that the contractor does the work, the work is certified, and then payment is made. Thus, the contractor provides the goods and services before being paid and is therefore effectively granting the owner credit.

Page: 210

Difficulty: Moderate

Skill: Applied

MULTIPLE CHOICE 88. How does one perfect a lien? a. b. c. d.

file a notice of lien in the land registry office file a certificate of pending litigation in the land registry office commence a legal action and prove the lien provide the owner with notice of the lien within the time set by the applicable lien legislation

Answer: c Comment: To perfect the lien, claimants must show that they were not paid for work done or material supplied, as they should have been.

Pages: 212

38

Difficulty: Moderate

Skill: Applied

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89. Contractor A employed two subcontractors, B and C. The total holdback retained by A is $100. B and C file liens for $60 and $240 respectively. Assuming there are no other liens on the project, the holdback amount is correct and the liens are proven, how much will C recover from the holdback? a. b. c. d.

$80 $100 $240 none of the above

Answer: a Comment: The liens total $300, which is three times the holdback amount. Therefore, since each claimant will get 1/3 of his claim, B gets $20 and C gets $80.

Pages: 217-219

Difficulty: Difficult

Skill: Applied

ESSAY 90. Why might a multiple holdback system result in practice even if the legislation only requires a single holdback system?

Answer: Under a single holdback system only the owner is required by statute to hold back money from the prime contractor. Under a multiple holdback system all contractors and subcontractors are required to hold back money from those below them on the construction chain. Under a single holdback system, if the prime contractor did not hold back money from the subcontractor after being paid by the owner, the prime contractor may have to pay out more than was received from the owner to that point. Consider a $100 prime contract where all the work is subcontracted out for a total subcontracts value of $92 (i.e. $8 profit for the prime contractor). If the holdback is 10% ($10), and a single holdback system is used, then the contractor would be required to pay out $92 after having only received $90 from the owner (i.e. the contractor would have to wait for the remaining $10 until the end of the holdback period). Because the contractor does not want to “finance” the project in this way, in practice the contractor will require her subcontractors to agree to a holdback system. For similar reasons, holdbacks will be agreed upon down the construction chain, and the result will be a multiple holdback system.

Page: 218

Difficulty: Moderate

Skill: Applied

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39

Chapter 19

Delay and Impact Claims

TRUE FALSE 91. The measured mile approach is suitable for analyzing jobs involving many short tasks all quite different in nature.

Answer: False

Page: 232

Difficulty: Difficult

Skill: Applied

Comment: With such a project it is difficult to use productivity on one task to predict productivity for another. The measured mile approach is better for jobs involving few tasks, which each extend for a long period of time.

SHORT ANSWER 92. How are critical path activities defined?

Answer: Critical path activities are those for which any delay will cause an equal delay to the project completion.

Page: 225

Difficulty: Difficult

Skill: Recall

MULTIPLE CHOICE 93. What is the common feature of all activities on the critical path? a. b. c. d.

they are all dependent on each other they cannot be performed at the same time they have no float all of the above

Answer: c Comment: The first activity on the critical path is not dependent on any other. Two critical path activities can take place at the same time, but at least part of the earlier one must be finished before any part of the later one can be started.

Page: 225

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Difficulty: Easy

Skill: Applied

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94. Which head of damage is generally most difficult to prove? a. b. c. d.

labour costs head office overhead loss of interest on holdback travel expenses

Answer: b Comment: Because contractors have one head office which oversees many jobs, it is hard to determine the portion of head office overhead to ascribe to a particular job.

Page: 230

Difficulty: Moderate

Skill: Applied

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Chapter 20

Labour Law

TRUE FALSE 95. Labour law is consistent throughout Canada.

Answer: False

Page: 235

Difficulty: Moderate

Skill: Applied

Comment: Since labour law is within provincial jurisdiction, it varies between provinces.

SHORT ANSWER 96. What feature of the relationship between employers and employees led to the development of unions?

Answer: The inequality of bargaining power that makes a single employee unable to bargain effectively against a large employer.

Page: 236

Difficulty: Moderate

Skill: Applied

MULTIPLE CHOICE 97. In what context will it likely be most difficult to effectively organize workers into a union? a. b. c. d.

schools (teaching) construction industry production-line-oriented assembly plant lumber mill work

Answer: b Comment: Because employees in the construction industry are typically hired on a project-by-project basis, there is seldom sufficient time to organize a union before the project is over.

Page: 238

42

Difficulty: Moderate

Skill: Applied

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98. Which of the following will release the purchaser of a business from the obligations under the existing collective bargaining agreement? a. b. c. d.

the previous owner was bankrupt at the time of the sale the business has moved to a new location the new owner closes down the business after a few weeks none of the above

Answer: d Comment: None of A to C alone will be determinative of whether the new owner is bound by the existing agreement. All of the circumstances must be considered.

Page: 242

Difficulty: Moderate

Skill: Applied

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43

Chapter 21

Employment Law

TRUE FALSE 99. Generally employers have the right to sue employees for the mistakes they make that result in the employer having to pay damages to a third party.

Answer: True

Page: 251

Difficulty: Moderate

Skill: Applied

Comment: Although this right is seldom exercised.

SHORT ANSWER 100. What test do courts apply to determine whether information is confidential?

Answer: If the information would be valuable to a competitor business, then it will likely be confidential. However, the mutual understanding of the parties when exchanging that information is also relevant.

Page: 248

Difficulty: Moderate

Skill: Applied

MULTIPLE CHOICE 101. Which of the following will likely constitute just cause warranting dismissal? a. the employee is late for work twice in one week b. the employee arrives at work hungover and leaves to go home early; this is the first alcohol-related absence for the employee c. the employer’s business is struggling because of an economic downturn d. none of the above Answer: d Comment: Each of A to C are either unrelated to the employee, or too minor to constitute just cause.

Pages: 251-252

Difficulty: Moderate

Skill: Applied

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102. What aspect of the employment standards dispute process is most different to litigating in court? a. b. c. d.

filing the claim notifying the defendant of the claim proving the claim recovering of a judgment

Answer: d Comment: The employment standards branch of the provincial government typically pursues the employer to recover judgment. This is different from the court system where the plaintiff must pursue the defendant to recover judgment.

Page: 254

Difficulty: Moderate

Skill: Applied

ESSAY 103. An employee was clearly wrongfully terminated by an employer, and then tried in vain for over a year to find a new job. Discuss the factors relevant to the employee’s decision of whether to sue in court or to make a claim under the employment standards legislation.

Answer: The first issue is limitation periods. Employment standards legislation typically sets short notice periods, and if the employee waited a year to make the claim, she may well have missed the limitation period. The limitation period to bring a court action will be longer (e.g. 6 years for an action for breach of contract in British Columbia). The second issue is quantum of damages. The damages the court would order under the common law will likely be more generous than the amount that would be payable under the employment standards legislation. The third issue is jurisdiction. The employment contract, or the legislation, may require the dispute to be resolved by the employment standards branch, and not in court. The fourth issue is recoverability. The government assists with recovery of claims under the employment standards legislation, but not with recovery of court judgments.

Page: 256

Difficulty: Moderate

Skill: Applied

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45

Chapter 22

Health and Safety Law

TRUE FALSE 104. Compliance with the general provincial occupational health and safety legislation is always enough to avoid contract and tort liability.

Answer: False

Page: 262

Difficulty: Moderate

Skill: Recall

Comment: Contracts may require stricter standards. Furthermore, in unusually dangerous circumstances, tort duties may require more than mere compliance with the minimum standards set by the occupational health and safety legislation that is of general application. Engineers, architects, or contractors who fail to meet the stricter standards may be liable to the owner if accidents occur and cause damage to property.

SHORT ANSWER 105. What workers’ rights are given up in exchange for the benefit of compensation under workers’ compensation legislation?

Answer: Workers must give up the right to sue their employer (in tort or contract) for causing their injuries.

Page: 259

Difficulty: Moderate

Skill: Applied

MULTIPLE CHOICE 106. What actions may be appropriate for a professional engineer to take if an owner requests the engineer to certify work which the owner and the engineer agree does not comply with the building code? a. refuse to certify the work b. explain to the owner that the engineer has a duty to report code breaches to the regulatory authority c. report the incident to the regulatory authority if the owner refuses to rectify it d. all of the above Answer: d Comment: But, if after doing B, the owner promptly arranges for the work to be rectified and there is no immediate safety concern, the engineer probably need not report the incident to the regulatory authority.

Page: 265 46

Difficulty: Moderate

Skill: Applied

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Chapter 23

Environmental Law

TRUE FALSE 107. Where federal and provincial statutes both deal with the same issue, the federal legislation will always apply and the provincial one will not.

Answer: False

Page: 272

Difficulty: Difficult

Skill: Applied

Comment: Unless the provisions have a direct operational conflict, they will both apply.

If they do conflict, the federal legislation will prevail.

SHORT ANSWER 108. What is the difference between an environmental site assessment and an environmental audit?

Answer: Environmental site assessments investigate and deal with pollution on a site, while environmental audits review a company's performance to determine compliance with environmental regulations.

Page: 269

Difficulty: Moderate

Skill: Applied

MULTIPLE CHOICE 109. Who may pass laws relating to acceptable standards of land contamination? a. b. c. d.

federal government provincial government municipalities all of the above

Answer: d Comment: The federal government can set standards for federal land. The provincial government can set standards for provincial land, or delegate the authority to municipalities to do so.

Pages: 272-273

Difficulty: Moderate

Skill: Applied

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110. What type of environmental assessment would likely be required for a pipeline project that will cut through First Nations land and will disrupt the migratory path of three species of nearly extinct animals? a. b. c. d.

screening comprehensive study mediation panel review

Answer: d Comment: Panel review is the most intense form of environmental assessment, and would be the likely option for such a sensitive project.

Page: 274

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Difficulty: Moderate

Skill: Applied

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Chapter 24

Aboriginal Law

TRUE FALSE 111. It is prudent, but not mandatory, for private parties to consult with aboriginal people affected by a project before commencing the project.

Answer: True

Page: 278

Difficulty: Moderate

Skill: Applied

SHORT ANSWER 112. If an owner wants to contract with an aboriginal contractor, but the contractor cannot get bonded, what precaution might the owner take to reduce the harm associated with default by that contractor?

Answer: The owner could insist on an increased holdback.

Page: 278

Difficulty: Moderate

Skill: Applied

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49

Chapter 25

Securities Law

TRUE FALSE 113. Because the securities guidelines issued by the Canadian Securities Administrators (CSA) do not create a cause of action for inadequate reporting, they are not relevant when claims of misrepresentation are made.

Answer: False

Page: 282

Difficulty: Moderate

Skill: Applied

Comment: They are relevant, but not determinative, when deciding on the standard of care.

SHORT ANSWER 114. In the context of securities regulation, what is the purpose of a prospectus?

Answer: The prospectus provides financial information to investors so they can make an informed decision on whether or not to invest.

Page: 281

50

Difficulty: Moderate

Skill: Applied

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Chapter 26

Privacy Law

TRUE FALSE 115. An organization will not likely be liable for disclosure of personal information if that information is already publicly available.

Answer: True

Page: 285

Difficulty: Moderate

Skill: Applied

SHORT ANSWER 116. Why is privacy legislation important for protecting citizens from misuse of their private information?

Answer: Because there is little protection against the misuse of private information at common law.

Page: 284

Difficulty: Moderate

Skill: Applied

MULTIPLE CHOICE 117. What must an organization do before collecting personal information? a. b. c. d.

ensure that persons can easily access their personal information limit the use of the information to the purpose for which it was collected identify the purpose for which personal information is collected all of the above

Answer: c Comment: The duties set out in A and B are important, but are only done after the information has been collected. It is important that the purpose for collecting the information be identified at the outset (i.e. the organization cannot collect a large amount of information and then look for justifications later).

Page: 284

Difficulty: Moderate

Skill: Applied

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Chapter 27

Internet Law

TRUE FALSE 118. Clicking "I agree" when making a purchase on an e-commerce website normally leads to formation of a legally enforceable contract.

Answer: True

Page: 290

Difficulty: Moderate

Skill: Applied

SHORT ANSWER 119. Why are jurisdictional issues particularly relevant in Internet law?

Answer: Because the Internet spans provincial and international boundaries.

Pages: 287-288

Difficulty: Moderate

Skill: Applied

MULTIPLE CHOICE 120. Which legal right might cyber-squatting infringe? a. b. c. d.

copyright trademark right to privacy freedom of contract

Answer: b Comment: If a company other than ABC Insurance uses www.ABCinsurance.com to sell insurance, consumers would likely be misled as to whom they are dealing with. A trademark gives the holder the exclusive right to use the mark in marketing the goods or services covered by the mark.

Page: 289

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Difficulty: Moderate

Skill: Applied

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