When The Contractor Plays Hard-Ball What Does A Sub-Contractor Do; Peter Kiewit Redux?


An age-old problem arising from a tender on a construction project is: what does a sub-contractor do when it is the successful bidder but believes that the work is different than shown in the tender documents and the contractor says: Those are the conditions: Take 'em or leave 'em. But if you back out of your bid, I am going to sue you!

Should the sub-contractor perform the work and sue later, or leave the job? That is the issue that, once again, the Superior Court of Ontario faced in Asco Construction ltd. v. Epoxy Solutions Inc.

The decision of the sub-contractor to terminate the contract was a gutsy one. After all, the sub-contractor is exposing itself to a claim by the contractor for substantial damages. But the other choice was to proceed with the sub-contract under apparently changed circumstances, which might have been equally onerous. Is there no better solution?

Surely there should be a better solution than these two stark alternatives. One would think that, in the 50 years since the Peter Kiewit decision, Canadian construction law would have come up with one.

At least three solutions are apparent.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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