BG+Checo+International+v.+BC+Hydro+and+Power+Authority

__**Facts:**__ - Checo contracted to erect power lines for Hydro. - The tender documents and contract stated: "Clearing of the land has been done by Hydro." (Let's call this **Clause X1**) - The contract also stated that responsibility for any misunderstandings as to the conditions of the work or errors in the tender documents falls on Checo. (Let's call this **Clause X2**) - Hydro didn't clear the land properly but told Checo it had. - Checo had to clear the land and sued Hydro (1) for breach of contract; (2) in tort for misrepresentation; and (3) for fraud.

Trial judgment: Hydro acted fraudulently; awarded damages to Checo. Court of Appeal: No fraud; but there was misrepresentation; reduced the trial judge's award.

__**Issues:**__ (1) __Claim in contract:__ Can Checo recover for breach of contract? **YES- Checo to be put in position it would have been had K been performed as agreed** (2) __Claim in tort:__ Can Checo recover for negligent misrepresentation? **YES** (dissent: NO.) - **Check to be put in position it would have been in had misrepresentation not been made**

__**Reasoning (Majority, La Forest and McLachlin JJ.):**__ __(1) The claim in contract__ - The two clauses X1 and X2 seem contradictory. Principle of statutory interpretation: if there is a general clause that conflicts with a specific one, they are reconciled by interpreting the general term to not extend to the subject-matter of the specific term. - ie: Hydro had to clear the land (clause X1) and the general duty placing on Checo consequences of errors and misunderstandings (clause X2) did not apply to clearing the land. - There was breach of contract. Checo is to be placed in the position it would have been had contract been completed.

__(2) The claim in tort__ __(a) The theory of concurrency__ - does the contract preclude Checo from suing in tort? - Iacobbuci's dissent says: a contract precludes the possibility of suing in tort where there is an **__express__** term in the K dealing with the **__matter__**. - Majority: The contract does not take away the right to sue in tort but a contractual clause, by limiting the scope of or waiving a right, limits or negates tort liability. - **Principle of primacy of private ordering:** A party may sue in contract or tort subject to any limit the __parties themselves__ have placed on their right to tort. Ex: a person participating in a dangerous sport can waive the right to sue the organizers. Ex: two parties can allocate the entire risk on one party by contract. - If a contractual limitation on a tort duty is partial, a tort action on a modified duty might lie. - Problem with Iacobucci's argument: there is no longer a right to sue in tort (even partially) when the __matter__ is covered in the contract.

Three situations: (1) The contractual clause is more stringent that the general law of tort. It is in the plaintiff's favour to sue in contract rather than in tort. But the tort duty is not extinguished and can be used by the plaintiff if the limitation period of the contractual action passes. (2) The contract stipulates a lower duty than the general law of tort (ex: clause of exclusion of liability). The tort duty can be nullified only by clear terms. Possible that only part of the tort duty is negated (ex: the exclusion clause applies only above a certain amount) and so the plaintiff can sue partially in tort. (3) The duty in contract and in tort are co-extensive. The plaintiff can sue concurrently or alternatively in tort or contract.

This case falls into category (3). Checo may sue in tort.**
 * The contract did not negate Hydro's common law duty of care not to negligently misrepresent to Checo. The duty is not excluded by the contract, which confirmed Hydro's obligation to clear the land. Checo did not waive its right to bring tort actions.

__(b) The Express-Implied Distinction__ - Iacobbuci's dissent says: a contract precludes the possibility of suing in tort where there is an **__express__** term in the K dealing with the **__matter__**. - The converse of this proposition: implied terms in contracts do not oust tort liability. - Iacobucci stressed the difference between express and implied terms. What is the utility of a distinction between express and implied terms for determined when a contract term may affect tort liability? This raises problems.
 * The law has always treated express and implied contractual terms as equal. Breach of each is identical.
 * Why should parties that were certain in their obligations and did not feel the need to spell them out be able to sue in tort, while others who wrote them down cannot?
 * Parties who include an express contractual term may not want to oust tort liability. They may just want to clarify what each party understands as his obligations, and to prevent litigation.
 * Iacobucci writes that ousting the tort duty depends not only on //express// terms but also considers the commercial/non-commercial nature of the parties; their bargaining powers; whether the court thinks it unjust. Majority: this produces uncertainty.
 * Iacobucci's test will be difficult to apply when the contract does not perfectly overlap the tort duty.
 * No scholarly authorities draw a distinction between express and implied terms to oust/leave tort liability.

(c) __The damages__ - Contract is concerned with 'expectation' or 'loss bargain' damages and tort is concerned with 'reliance' damages. - The denial of expectation damages will occur in a case like this where, but for the misrepresentation, the contract would not have been entered into. - The Court of Appeal concluded that Checo would have contracted no matter what: but would have raised the contract price to include clearing the land + 15% profit - Damage in tort: all reasonably foreseeable loss caused by the misrepresentation - Damage in contract: reimburse all expenses incurred as a result of the breach, whether expected or not, except if they are too remote. - "We note that the test for remoteness in contract may be of no practical difference from the test of reasonable foreseeability applicable in tort" (cb 143) - The damages are referred to back to the trial judge for determination.

__**Dissent (Iacobucci J.):**__ __(a) Concurrent Liability in Tort and Contract__ - As a general rule, the existence of a contract between two parties does not preclude the existence of a common law duty of care. A plaintiff can choose the most favourable action (in contract or tort) to her. - In //Central Trust v. Rafuse//, Le Dain J. found that a contract's terms limit a plaintiff's action in tort if a clause modifies (a) the __liability__ in tort or (b) the __duty__ in tort - Hydro argues that its contract excludes its liability. Iacobucci disagrees. - Historically, there was an "independent tort requirement" that said a contractual party could only sue in tort if he was proximate enough with the defendant __even if there were no contract between them__. There must be an independent tort unconnected with the performance of the K. - **If the parties choose to define a specific duty as an express term of the contract, then the consequences of breach of the contract ought to be determined by the law of contract, not by tort law. Where there is an express term, the parties should be held to the bargain they have made. If the liability is limited or excluded by a term of the contract, or if the duty is limited or negated by a contractual term, the plaintiff may not use an action in tort to impose a wider liability on the first party than would be available under contract.**

- In this case, there IS a contractual duty excluding a common law duty of care. Checo bases its claim for negligent misrepresentation on Clause X1. Checo is limited by whatever remedies are available in contract for breach of X1. Hydro argues that Clause X2 limits or excludes its liability and Iacobucci disagrees because X2 is general and X1 specific. - Hydro breached its contract and should receive only contractual damages.