The Importance of Spelling Out What Is or Isn’t in a Contract
One of the most frequent mistakes people make in entering contracts is in making incorrect assumptions about what is or is not included in a contract. This can arise from miscommunications, misunderstandings or misapprehensions. When parties differ on their understandings of what is included in a contract, the result can be a dispute that engages potentially complex notions of representations, limitations clauses and principles of contractual construction which, in turn, can make the resolution of contractual disputes protracted and expensive.
In the recent case of Tri-X Excavating Ltd. v Morman, 2018 BCSC 1493 (CanLII), Tri-X was suing the Mormans for unpaid invoices related to blasting services which it provided. The Mormans were countersuing Tri-X for Tri-X allegedly damaging a neighbouring property and for failing to leave the blasted rock wall in stable condition.
Tri-X was hired to provide “rough grade” blasting services for the Mormans, who planned on building a shop utilizing the area cleared by blasting. The Mormans did not hire a geotechnical or structural engineer with respect to installing a retaining wall but were “sort of aware” that a retaining wall would have to be checked for safety. The Mormans’ were very cost conscious in their discussions and negotiations.
The court had no issue finding that a contract existed but posited that the dispute entailed the scope or work covered by the contract, the interpretation of the contract and the degree to which the contracted work was performed. In particular, whether the contract included an obligation for Tri-X to provide more than simply blasting services.
The court found that the Mormans were not aware of what might be involved with remediating the rock face once blasting was completed. There were no discussions with Tri-X’s agents that the Mormans had an expectation that the contract would include rock face remediation. Additionally, the Mormans were aware that the contract was for a low price compared to other estimates that entailed more extensive remediation of the rock face. In the result, the Mormans failed to establish that there were instructions relayed to Tri-X to stabilize the rock face after it completed its blasting services nor were the Mormans’ plans to construct a building at the foot of the rock wall communicated to Tri-X.
The court agreed with the Mormans that Tri-X owed them a duty of care but found that the applicable standard had been met. There was a lack of evidentiary basis to establish the duty of care posited by the Mormans or that such a duty had not been met. Further, the expert evidence offered by the Mormans only suggested that aspects of the alleged duty of care may have been breached, but did not go so far as to actually assert such a breach.
The blasting done by Tri-X was always going to require some form of engineered solution to stabilize the exposed rock slope and the court found that the Mormans simply failed to retain Tri-X or another company to provide that solution. In short, Tri-X was not contractually responsible for work required to stabilize its blasting where the contract it was operating under failed to require such work.
Tri-X Excavating Ltd. v Morman is illustrative of the importance of understanding what falls under the rubric of a contract or not. It is not prudent to expect a party to perform matters and adhere to duties that were not contracted for based expectations that were uncommunicated, not contracted to or both.
Concerns about what is being contracted to, the duties a contractor might owe or the standards to which a contractor is to adhere to, those goals, duties and standards can and should be made clear and explicit within a written contract. Expectations that are not agreed upon and recorded in writing are left open to differing understandings which, in turn, invites potentially protracted and expensive litigation to resolve. The old adage “an ounce of prevention is worth a pound of cure” remains sage advice when entering contractual relations.