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ARTICLE · 17 FEBRUARY 2010

Fundamental Breach Doctrine "Laid To Rest" But Public Policy Considerations Reinvigorated In Procurement Cases

Blake, Cassels & Graydon LLP
Blake, Cassels & Graydon LLP
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In its recent decision in "Tercon Contractors Ltd. v. British Columbia (Transportation and Highways) (Tercon)", the Supreme Court of Canada (SCC) eliminated the doctrine of fundamental breach and outlined a new three-step process to analyse the applicability of exclusion of liability clauses, which are particularly prevalent in the public procurement context.

CanadaLitigation, Mediation & Arbitration
Roy Millen
Roy Millen
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Copyright 2010, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Litigation & Dispute Resolution/Procurement, February 2010

In its recent decision in Tercon Contractors Ltd. v. British Columbia (Transportation and Highways) (Tercon), the Supreme Court of Canada (SCC) eliminated the doctrine of fundamental breach and outlined a new three-step process to analyse the applicability of exclusion of liability clauses, which are particularly prevalent in the public procurement context. The SCC unanimously set out its new framework for analysis of such clauses, but split five-to-four on the application of the clause to the facts of the case. The majority of the SCC found the exclusion clause inapplicable to the breach of contract by the B.C. government, in order to uphold the integrity of the public procurement process.

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