April 2018
PFD | Construction

Construction: A subcontractor may be bound by clauses in the tender documents to which it is not party

On January 12, 2018, the Court of Appeal of Québec handed down an important ruling on the claim process set out in construction contracts (Cegerco inc. c. Les Équipements JVC inc., 2018 QCCA 28).

The facts in this case are as follows.  

On July 17, 2008, Cegerco inc. ("Cegerco") was awarded a subcontract with Les Équipements JVC. inc. ("JVC") to carry out concrete work under a contract between JVC and the Société d'énergie de la Baie James ("SEBJ").

Following the provisional acceptance of the work on December 22, 2008, Cegerco claimed that certain ground conditions were different from those foreseen in the contract and that delays had slowed the advancement of the work, leading to additional costs. However, the SEBJ only received Cegerco's claim for these additional costs on December 4, 2009.

When the SEBJ refused to pay, Cegerco initiated proceedings against JVC in the Superior Court of Québec in the amount of $1 472 120 to cover the added expenses and costs brought about by the delays, which were beyond its control. JVC called the SEBJ in warranty. When the hearing came to an end, the Court denied Cegerco's claim, particularly on the grounds that it had failed to comply with the claim process in the case of a dispute outlined in the tender documents, despite the fact that Cegerco was not party to them. 

Indeed, the Court held that, under article 19.2 of the terms of the call for tenders, a contractor that seeks to file a claim against the contracting authority must submit the detailed claim to the SEBJ in the three months following the provisional acceptance of the work. In this case, Cegerco's claim was filed nearly one year after the acceptance.

Cegerco appealed the decision, alleging that it was not bound by the terms of the contract between JVC and the SEBJ, to which its subcontract made no reference. Still, the Court of Appeal upheld the initial ruling, confirming that the judge was not mistaken. The Court affirmed that while the subcontract did not include conditions related to a claim process, Cegerco could not ignore the claim deadlines with which JVC had to comply since it had necessarily read the tender documents to draw up its own bid.

In light of this decision, it is essential for subcontractors to be familiar with the tender documents for construction projects since certain clauses, such as claim deadlines, may automatically apply to subcontractors, even when the subcontract does not explicitly refer to them.

For more information on this case, contact one of the construction law experts at PFD Lawyers.