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Professional Practice ExamPart "A" Question 1

Basics to Know - 'key words' format

For the section references below, 'A' means Professional Engineers Act (PE Act), and 'R' meansOntario Regulation 941 (O. Reg. 941). Please refer to these sections for more comprehensive information.

Definition: practice of professional engineering - actions, principles, safeguards A 1. (13th item)

PEO: - principal object - regulate the practice, to serve and protect the public interest A 2.(3)

- additional objects - knowledge, practice standards, ethics, public awareness, other A 2.(4)

PEO Main Functions:

enforce requirements for licences and Certificates of Authorization (C of A)under authority of the PE Act - penalties for offences are in A 40. A 12.(1), A 12.(2)

issue licences and C of A’s - a C of A is a permit to offer services A 14., A 15., A 18 receive complaints re conduct or technical competency - discipline, if referred A 24., A 28

PEO organization and processes: Council, Committees - regulate the practice A 3., A 10., A 12., A40.

Requirements / conditions for:

P.Eng. licence: 18 years, academics, experience 48 mos 12 Cdn, PPE, good character A 14.(1), R 33

Provisional licence: all of A 14.(1) except experience, valid 12 mos. A 14.(7), A 18.(1), R 44.1.(1)

Temporary: specific work/client, P.Eng. collaborator, 12 mos., qualifications A 18.(1), R 42., R 43., R 44.

Limited licence (LL): specific services, tech. diplm, 13 yrs exper, PPE, good char A 18.(1), R 45., R 46.

Certificate of Authorization: P.Eng(s) responsible, 5 yrs after degree A 15., A 17., R 47., R48., R49 Consulting Engineer: P.Eng., + 5 yrs, 2 yrs independent practice, 5 yrs valid R 56., R 57., R 59., R60.

Liability insurance, conditions for a C of A - insurance limits / conditions R 47.3., R 74. Engineer’s Seal - sign, date and seal documents - charges for misconduct R 53., R 72.(2)(e)

Penalties for enforcement offences - when no licences or C of A’s. A 40.(1), A 40.(2), A 40.(3) Complaints committee - consider and investigate, may act or otherwise refer A 24.(1), A 24. (2)

Discipline committee - hear and determine allegations, impose penalties A 28.

Fees Mediation committee - fee disputes; mediate, or arbitrate with consent A 32. Conflict of interest - must be disclosed, (5 conditions) if disclosed then not misconduct 72.(2)(i) Work other than employer - no conflict, status as employee, limits, inform employer R 77.5. Advertising - professional, factual, without criticism, without seal reference R 75. Code of 'misconduct', R72. - could lose licence but not for 'ethics', R 77. R 72.(2)(g)

Competence - depends on judgment of individual practitioner, good character R 72.(2)(h), R 77.1.v.



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ASSOCIATION OF PROFESSIONAL ENGINEERS OF ONTARIO

PROFESSIONAL PRACTICE EXAMINATION – August 10, 2013

PART “A” – "#$%&''($)*+ "#*,-(,& *). /-0(,'

This examination comes in two parts (Part “A” and Part “B”). Both parts must becompleted in this sitting. You will be given a total of 180 minutes to complete theexamination.

Use the correct colour-coded Answer Book for each part, place in the correct envelope andseal after completed.

White Answer Book for Part A white question paper.

Coloured Answer Book for Part B coloured question paper.

This is a “CLOSED BOOK” examination. No aids are permitted other than the excerptsfrom the 1990 Ontario Regulation 941 covering sections 72 (Professional Misconduct ) and77 (Code of Ethics) supplied at the examination. Dictionaries are not permitted.

The marking of questions will be based not only on academic content, but also on legibilityand the ability to express yourself clearly and correctly in the English language. If youhave any doubt about the meaning of a question, please state clearly how you haveinterpreted the question.

All four questions constitute a complete paper for Part “A”. Each of the four questions is

worth 25 marks.

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You should identify where applicable the appropriate clauses in Regulation 941. 79G"B/

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PROFESSIONAL PRACTICE EXAMINATION – August 10, 2013Part “A” – Professional Practice and Ethics

Question 1

(a) What is the “Complaints Committee”? Describe its function.

(b) PEO issues Temporary licences. In addition to paying the necessary fee, the applicantmust meet one of three other requirements to obtain such a licence. Please briefly givetwo of those requirements for obtaining this license.

(c) Where a licence, certificate of authorization, temporary licence, provisional licence orlimited licence is revoked or cancelled what should the holder do with the certificate

and seal?

(d) Which licence holders can hold a Certificate of Authorization?

(e) What are the consequences, if any, to a professional engineer who does not keep his orher licence permanently displayed in his or her place of business?

Question 2

Sigma is a licensed professional engineer charged with enhancing the efficiency of aliquid detergent production line for his employer, SoftSoap, a soap manufacturer. Duringhis work he has access to confidential company information and observes that thecompany is adding very small quantities of a well-known carcinogen (i.e. a substancesuspected of causing cancer) to the detergent but is not listing it as an ingredient. Thisconfidential information is irrelevant to Sigma’s work. However, Sigma is aware that the

additive is a banned substance.

The production process is handled by Tau, a P.Eng. in another department of SoftSoap.Sigma is reluctant to bring the matter to Tau since they have had some recentdisagreements. Sigma has been receiving e-mails forwarded from Tau with jokes of aracially insensitive nature. More often than not, the jokes are aimed at Sigma’s race and

are also sent to other members of Sigma’s department. Sigma, had become offended bythese e-mails and decided to speak with Tau one-on-one last week to explain how the e-mails are affecting him. Sigma told Tau that not only are the e-mails offensive to him, but they are not appropriate for the work environment in general. Tau shrugged offSigma’s concerns telling him that no harm was intended and they were only for a good

laugh. Tau also said that “everybody else in your department enjoys them and nobodyelse ever gets offended”. This week Sigma received another e-mail forwarded from Tauwith a series of jokes about Sigma’s race.



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(10)

PROFESSIONAL PRACTICE EXAMINATION – August 10, 2013PART “A” – Professional Practice and Ethics

Using PEO’s Code of Ethics and Code of Professional Misconduct as your guide:

(a) Discuss what action(s) Sigma is obligated to take as a professional engineer?

(b) Discuss Tau`s actions and what should Sigma consider doing about them?

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Question 3

You are a professional engineer and have been hired recently as the chief operations andmaintenance engineer of a paper mill near a remote village in northern Ontario. The millis the largest industry in the area and employs (directly or indirectly) most of the workersin the region.

Upon starting your new job, you review the facilities at the mill and its operation andmaintenance procedures. You discover that your predecessor (also a professionalengineer) had been operating the mill for several years with inadequate environmentalequipment. The mill has been discharging hazardous substances into a nearby rivercontrary to legal limits. You also learn that government authorities are not aware of theillegal discharges.

You discuss the situation with the company’s vice president in charge of Canadianoperations. You report to the vice president that a number of environmental measureswould be necessary in order to stop the illegal discharge. In your estimation, themeasures would require a substantial capital investment in the plant. The vice presidentinforms you that the mill has been earning very small profits in the last decade and thatthe capital expenditure could not be justified at this time. According to the vice president, the company’s head office would likely close the mill rather than spend themoney.

Using PEO’s Code of Ethics and Code of Professional Misconduct as your guide:

(a) Discuss your obligations with respect to the public. What is the public interest inthis case? How is the public interest impacted by your actions?

(b) Discuss your obligations with respect to the company.

(c) Discuss your obligations with respect to your predecessor.



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PROFESSIONAL PRACTICE EXAMINATION – August 10, 2013PART “A” – "#$%&''($)*+ "#*,-(,& *). /-0(,'

Question 4

ProTestCo is a products testing company. Typically, ProTestCo is hired by variousmanufacturers to perform tests on their products in order to verify that the products aremanufactured according to published standards.

You are a professional engineer and have been employed for several years on a full-time basis as an employee of ProTestCo. In your job, you are responsible for supervising theapplication of tests on various products. During your years of employment withProTestCo you have acquired a great deal of expertise regarding the design andmanufacture of small household appliances and have earned an excellent reputation.

Given your reputation and expertise, manufacturers of such appliances are ofteninterested in hiring you on a private basis (i.e. outside of your employment with

ProTestCo) to provide input on their product designs. You are able to supplement yourincome by occasionally undertaking such work for them. You perform this work onweekends and during evenings.

One day, while at work at ProTestCo, you are assigned the job of supervising the testsand issuing a report on a new product that has been submitted to ProTestCo. You realizethat the product was submitted by one of your own manufacturing clients and that you provided design input on the product.

(a) Comment on the appropriateness of how you have set up your workingarrangement.

(b) How should you deal with the testing of the new product?

(c) Is a P.Eng. licence sufficient to permit you to provide such design input to yourown manufacturing clients? Explain.

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Professional Practice Exam

Study Guide - Part "A"

August 10, 2013

The purpose of Part "A" is to examine a candidate's knowledge of PEO functions (question 1),

and the Misconduct and Ethics Codes (questions 2, 3 & 4) as found in Regulation 941, sections72. and 77.

These 2 code sections will be supplied at the examination but they should be carefully studied

before the exam. Advance study will facilitate recognition of situations in the questions which

may be matched to the codes, and the notating of exact code numbers and their sub-sections

within the answers.

Answers should be given within about 20 minutes each. During study time, try practice writing,

review and re-writing, to develop a timing skill. Also try answering without aids, even using the

same questions.

This Study Guide may contain more material than would be expected in an answer within 20

minutes.

The references given below are from the PE Act, or Regulation 941 (R 941). These references

are here for study purposes only, and are not anticipated in an answer, except for 72. & 77.

1(a) Complaints Committee, function: to review complaints about a P.Engs professional

practice and to determine if an issue can be resolved, or if it needs to go to the DisciplineCommittee, PE Act sect 24.(2)

1(b) Temporary License, requirements: 1) residence outside Ontario; 2) qualifications equal to

Ontario; 3) ten years experience; and, 4) collaboration with an Ontario P.Eng. unless exempt,

Reg. 941 sect's 43. & 44.

1(c) Certificate and seal, when license ceases - should be returned to PEO, Reg. 941 sections

54. & 55.

1(d) Certificate of Authorization (C of A), can be held only by: P.Eng.'s and Temporary Licence

holders, and not by any other licence holders, Reg. 941 section 47.1. and PE Act section 40.(2).Note: Limited Licences are proposed to be added, but not for this exam, see PE Act sections

15. & 17.

1(e) License not displayed, consequences: None. Endeavouring to display is in Code of Ethics

section 77.2.iv., but a breach of ethics is not misconduct, section 72.(2)(g).



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Study Guide - Part "A" - August 10, 2013

2(a) Sigma's obligations:

(1) Out of loyalty to SoftSoap as employer, 77.1.i., Sigma should confer with management

to consider the consequences of adding a carcinogen to the liquid detergent, 72.(2)(f),

and the need to follow legal codes and rules for banned substances, 72.(2)(d), and to

provide for the health of the public, 72.(2)(b).

(2) If no agreement is reached, Sigma should report the situation to public health

authorities, 72.(2)(c).

(3) Although Sigma is obligated to regard an employer's information as confidential, 77.3., a

report must be made, because public welfare is paramount, 77.2.i., and also to show

fidelity to public needs, 77.1.ii.

2(b) Tau's actions - making racial jokes constitutes harassment, 72.(1), and violates 72.(2)(n). Itis not showing courtesy and good faith towards another practitioner, 77.7.i. Neither is it fair to

send the jokes to other members of Sigma's department, 77.1.i. Tau's conduct is disgraceful

and unprofessional, 72.(2)(j).

Sigma did the right thing by first speaking with Tau, not just trying to maliciously injure Tau's

reputation, e.g., with other jokes in return, 77.7.iii. But Tau acted incorrectly again and sent

another racist email.

Sigma should review Tau's behavior with management and ask for a transfer, or consider

resigning. Sigma could also complain against Tau, to PEO and to the Ontario Human Rights

Commission, 77.8.

3(a) My obligations to the public - the public interest is to reduce the illegal discharges into the

river so that these are within legal limits, 72.(2)(d), and thereby to safeguard the health of the

people who are being affected, 72.(2)(b). The public interest is also to maintain employment in

the region. I should be sensitive to this interest and act where possible to show fidelity to public

needs, 77.1.ii.

If my actions can control the illegal discharges this will impact the public interest positively and

thereby fulfil my duty to regard the public welfare as paramount, 77.2.i. If the operation can be

saved, this will contribute significantly to safety in the community and to the overall welfare of

the workers in the company, 72.(2)(c). I will also have acted with devotion to high ideals,77.1.iii.

My estimation of the substantial investment required, should be reviewed with specialists in the

field, to see if a way could be found at less cost to control the discharges. I would also suggest

trying to find investors willing to help upgrade equipment. The object is always to be faithful to

public needs, 77.1.ii.

at happened?atons?

t should happen?



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Study Guide - Part "A" - August 10, 2013

3(b) My obligations to the company - I have taken a correct first step in being loyal to my

employer, by conferring with the vice-president, 77.1.i. Although I have an obligation to keep

company information confidential, 77.3, I have a greater obligation to regard public welfare as

paramount, 77.2.i.

I should report the discharges to the government authorities, 72.(2)(c), and ask for a temporary

stay of legal charges, for failing to comply with applicable regulations, until the matter can be

resolved, 72.(2)(d).

3(c) My obligations to my predecessor - to inform that P.Eng., that the negligence while

operating the paper mill has been discovered, and to give that person a fair opportunity to

respond, 77.1.i. and 77.7.i.

Although I do not wish to injure the reputation of another practitioner, 77.7.iii., I will further

advise if the response is not favourable, I intend to expose the behavior before the propertribunals, 77.8., and to proceed with a charge of unprofessional conduct, for the time of

employment at the mill, 72.(2)(j).

If I do not take the actions in 3(a), 3(b) and 3(c), I could be charged with negligence, 72.(2)(a).

4(a) Working arrangement, weekends and evenings (W & E) - this is 'moonlighting'. I should:

1) satisfy myself the outside work will not interfere with my employment at ProTestCo

2) confer with my daytime employer to ensure there is no objection

3) give a written document to the W & E employer about my status as a daytime employee

4) give a written document to the W & E employer about limitations on my outside work,

77.5.5) recognize if I do not do these things, it is a breach of ethics but is not subject to

discipline, 72.(2)(g).

4(b) New Product, how to test - I should decline this assignment because of a conflict of

interest, which could be construed as prejudicial to my judgment as an employee of ProTestCo,

77.3. and 77.4. To decline would also be fairness and loyalty to the client, 77.1.(i).

Perhaps there is another employee at ProTestCo who could do it. As an option, my supervisor

might oversee the full test with me involved, and be satisfied no conflict of interest has taken

place, 72.(2)(i),

4(c) P.Eng. Licence, is more needed? - a P.Eng. licence by itself is not sufficient since the

outside services are essentially being offered to the public. I should apply for and hold my own

Certificate of Authorization (C of A), PE Act section 12.(2), otherwise I would breach the Act and

be subject to misconduct, 72.(2)(g).

Alternatively, an outside employer may have a C of A and I might perform services under that

C of A as a contract employee. However, it would be better to have my own C of A.



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PROFESSIONAL PRACTICE EXAMINATION – April 13, 2013

PART “A” – "#$%&''($)*+ "#*,-(,& *). /-0(,'

This examination comes in two parts (Part “A” and Part “B”). Both parts must be completedin this sitting. You will be given a total of 180 minutes to complete the examination.

Use the correct colour-coded Answer Book for each part, place in the correct envelope and seal

after completed.



This is a “CLOSED BOOK” examination. No aids are permitted other than the excerpts fromthe 1990 Ontario Regulation 941 covering sections 72 (Professional Misconduct ) and 77 (Code

of Ethics) supplied at the examination. Dictionaries are not permitted.

The marking of questions will be based not only on academic content, but also on legibility andthe ability to express yourself clearly and correctly in the English language. If you have anydoubt about the meaning of a question, please state clearly how you have interpreted thequestion.

All four questions constitute a complete paper for Part “A”. Each of the four questions is worth

25 marks.

12/3/ 4 56/789:; 47<7 9= 4 >/3849; 4>89:; ?@ 4; /;A9;//3 147

/829>4B :3 ;:8C 4 79MPLE “YES” OR “NO” A;71/3 97 ;:8 76==9>9/;8D

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7986489:; 47 9= @:6 1/3/ "/37:;4BB@ 9;H:BH/FD

You should identify where applicable the appropriate clauses in Regulation 941. 79G"B/

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2:1 82/ >B467/ 4""B9/7 9; 82/ 7986489:; F/7>39?/F 97 ;:8

76==9>9/;8D



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PROFESSIONAL PRACTICE EXAMINATION – April 13, 2013PART “A” – Professional Practice and Ethics

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Question 1

(a) PEO's Discipline Committee has the power to revoke or suspend any of the licences

issued by PEO if the licence holder commits professional misconduct. Besidesrevocation and suspension, describe three (3) other penalties or sanctions that thediscipline committee may impose.

(b) What are the limits of the “Temporary License”? (In your answer, DO NOT

discuss the qualifications/requirements for obtaining this license.)

(c) PEO allows the use of electronic seals on electronic documents. Briefly discuss thesteps that a P.Eng. should take when allowing the electronic use of his/her seal.

(d) PEO issues both a Certificate of Authorization and a Consulting Engineering Title.Briefly explain the purpose of each.

(e) What is the professional engineer ’s primary obligation?

Question 2

Alpha is a P.Eng. employed by EngInc, an engineering company. As Chief ProjectEngineer, Alpha is in charge of a project for BigGuy, an important client of EngInc.BigGuy and Alpha have several disagreements over the design that Alpha has developed.BigGuy wants a cheaper, more conventional solution. Alpha is convinced that the desigis a "masterpiece" and believes that BigGuy "doesn't have an ounce of imagination".

Alpha simply shrugs off BigGuy and refuses to discuss any other alternative.

BigGuy is furious and phones Beta, P.Eng., the President of EngInc, to yell and complaiabout Alpha. BigGuy threatens to hire another engineering firm to complete the designaccording to BigGuy’s wishes.

You work for EngInc as an intermediate design engineer. Beta calls you into a privateoffice and closes the door. Beta asks you to review Alpha's design and instructs you tokeep the review a secret from Alpha. Beta explains that Alpha is a senior engineer who been with EngInc for 28 years and could be "a bit sensitive at times".

(15) (a) What do you tell Beta? Discuss.

(10) (b) Please comment on Alpha's conduct in dealing with BigGuy.How should Alpha have responded to BigGuy’s request?

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Question 3

Omega, a P.Eng with many years of experience and a valid Certificate of Authorization

was hired by ABC to design a fire protection system for a new building and superviseits installation. Omega produced the design and gave signed, sealed and dated copiesof the final design to Theta (P.Eng) of Faultless to install. Faultless is a contractorhired by ABC and Theta is their project manager.

Once the installation was complete, Omega provided the city with a sealed, signed anddated report affirming that the fire protection system had been installed as designed andthat it met all codes and standards. Omega had not checked the installation but haddepended on the assurance by Theta who said that it had been installed as designed.Omega had worked with Theta and Faultless for many years and was very confidentabout their work.

Three months later the city conducted a building review and found 20 deficiencies inthe as-built work. They issued a letter to Omega requesting that the construction befixed to comply with the design and standards. Omega forwarded the letter to Thetaand asked her to make the necessary changes. Theta made some modifications andinformed Omega a few weeks later that all the changes had been made. Omega thensent the city another sealed, signed and dated report affirming that the fire protectionsystem had been installed as designed and that it met all codes and standards.

A second building inspection by the city found that a number of significant deficienciesstill remained.

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(15) (a) Discuss the conduct of Omega and identify any consequences he might face.

(10) (b) Discuss the conduct of Theta and identify any consequences she might face.

Question 4

Turbco is a company that manufactures turbines for power generating plants. Turbcorecently signed a contract with an independent power producer, PowerCo. Accordingto the contract, Turbco agreed to supply a turbine for a new power plant owned byPowerCo. Turbco guaranteed in the contract that the turbine would produce electricityat a rate of 100 megawatts. In addition to supplying the turbine, Turbco’s contractual

responsibilities included providing technical advice and on-site support during thestart-up, testing and commissioning of the turbine.



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(15)

(10)


PowerCo hired MechCo, a separate construction contractor, to construct the power plant, including installing the turbine supplied by Turbco. MechCo installed theturbine and the construction of the power plant is now almost complete. The contractor

is now ready to commission the plant by running a number of tests to make sure thatthe turbine is working properly and producing the power at the guaranteed rate.

Turbco sent one of its employees, Juno, to the site to witness the tests and to providetechnical advice to assist MechCo during the testing. Juno is a very experienced professional engineer and has worked on many different construction sites over theyears. Soon after arriving at the site, it became apparent to Juno that MechCo wascarrying out its work in an unsafe manner. Many of MechCo’s workers were working

without hardhats, eye protection or safety shoes. In fact, Juno learned that MechCohad not established any safety procedures for its crew.

MechCo completed the tests. During the testing, however, Juno noticed that MechCo’s personnel did not conduct the tests in complete compliance with the official testing procedures that were established for the project. According to the tests that wereactually carried out, it seemed that the turbine achieved the guaranteed rate of performance. In reality, however, the turbine only produced power at 98 megawatts.Juno realized that had the tests been conducted properly, they would have revealed theturbine’s deficient power output. Juno was concerned that Turbco would be requiredunder its contract to pay PowerCo liquidated damages as a result of the powerdeficiency. Juno did not say anything to anyone about the improper testing procedure. No one else noticed that the tests were not performed properly.

(a) What, if any, duties does Juno have under the code of ethics and the definition of professional misconduct regarding the potential dangers to MechCo’s workers?

Explain whether it matters to Juno’s duties that the unsafe practices involved work

that was not relevant to the services that Turbco was hired to perform and whetherit matters to Juno duties that MechCo agreed to have overall responsibility for sitesafety?

(b) Comment on Juno’s obligations, if any, under the code of ethics and the definitionof professional misconduct regarding the test procedure and the failure of theturbine to perform at the guaranteed rate. In your answer assume that the impropertesting and deficient power output create no safety risks or other dangerous

situation.



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Professional Practice Exam

Study Guide - Part "A"

April 13, 2013

The purpose of Part "A" is to examine a candidate's knowledge about PEO functions (question

1) and the Misconduct and Ethics Codes (questions 2, 3 & 4) found in Regulation 941, sections72. & 77.

These 2 code sections will be supplied at the examination but they should be carefully studied

before the exam. Advance study will facilitate recognition of situations in the questions which

may be matched to the codes, and the notating of exact code numbers and their sub-sections.

Answers should be given within about 20 minutes each. During study time, try practice writing,

review and re-writing, to develop a timing skill. Then try answering without aids, even using the

same questions.

This Study Guide may contain more material than would be possible to answer within 20

minutes.

The references given below are from the PE Act or Regulation 941 (R 941) or PEO publications.

These references are here for study purposes only, and are not anticipated in an answer,

except for 72. & 77.

1(a) Discipline Committee, 3 other penalties, e.g., to require - 1) limits on practice 2) complete

specific studies 3) practice only under supervision; - or, any of '9 other' penalties, PE Act,section 28.(4).

1(b) Temporary licence (TL) limits - a) specific services; b) specific client; c) collaboration with a

P.Eng., unless the TL is exempt, and d) valid up to 12 months, Reg. 941 sections 42. and 44.

1(c) Electronic seals, steps in using: 1) password protect and/or encrypt a sealed document

2) record and update all document locations 3) protect the electronic facsimile of seal and

signature from being copied or altered 4) have a revision process that ensures authenticity and

5) delete when finished use.

More detail is in PEO publication, Practice Guideline for Use of Professional Engineer's Seal,section 7.3.

1(d) Purposes of - Certificate of Authorization - to act as a business licence, PE Act 12.(2), and

to name the licence holders who will assume responsibility for engineering services, Reg. 941

section 47.; and Consulting Engineering Title, to identify P.Engs who have qualifications beyond

P.Eng., Reg. 941 sec 56.



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Study Guide - Part "A" - April 13, 2013

1(e) P.Eng. primary obligation - to serve and protect the public interest, PE Act 2.(3), i.e., to

undertake work with competence, 72.(2)(h) and 77.1.v., and to regard the public welfare as

paramount, 77.2.i.

2(a) What to tell Beta - if I act as instructed, I would be in breach of the code of ethics, reviewing

another’s work without their knowledge, section 77.7.ii. However, I should be loyal to Beta as

my employer, 77.1.i., and keep business affairs confidential, 77.3. I should also act with

courtesy and good faith toward Alpha, P.Eng., as another practitioner, 77.7.i. In any case, a

breach of the code of ethics is not a breach of the code of conduct, 72.(2)(g). Conduct we must

do, ethics we should do.

I will choose the 'least evil'. I will follow Beta's instructions and look for cost reductions in

Alpha's design as desired by BigGuy. As a first priority, any design that is used must safeguard

life, health or property, 72.(2)(b), and comply with all codes and rules, 72.(2)(d). Failure to be

compliant will be taken as negligence, 72.(2)(a). If Beta is a P.Eng. and does not support

compliance with safety, this is unprofessional, 72.(2)(j). I should expose this conduct before the

proper tribunals at PEO, 77.8.

It is not my intention to injure the reputation of Alpha as another practitioner, 77.7.iii. but rather

to act with overall devotion to high ideals of personal honour and professional integrity, 77.1.iii.

2(b) Alpha's conduct with BigGuy - was short-sighted and being unfair in dealing with a client,

77.1.i. Alpha should have responded with diplomacy and explained the benefits of the design.

Alpha could also consider including some of BigGuy’s wants within Alpha's ‘masterpiece’

design, as long as the result is safe, 72.(2)(b). The design should regard public welfare as

paramount, 77.2.i.

Alpha should explain to Big Guy, the negative consequences of a cheaper and more

conventional solution, 72.(2)(f). If BigGuy does not respond in a positive way, and happens to

be a PEng., this should be reported to the proper tribunals, 77.8., and BigGuy charged with

unprofessional conduct, 72.(2)(j).

3(a) Omega's conduct and consequences - Omega was incompetent because of depending

entirely on an 'assurance' by a person, even a PEng. Omega signed a report that the system

had been correctly installed but did not actually check the installation, 72.(2)(e). This act of

omission is not professional competence, 77.1.v., nor devotion to high ideals, 77.1.iii. Based on

the city's reviews, all applicable codes and rules were not followed, 72.(2)(d), and the fireprotection system is clearly not safeguarding life or property, 72.(2)(b).

The same mistake was made a second time when after supposedly fixing 20 deficiencies, there

were still remaining significant deficiencies. This is not fidelity to public needs, 77.1.ii. and

Omega has ignored a duty to public welfare, 77.2.i. As a consequence, Omega should be

charged with negligence, 72.(2)(a) and with conduct that could reasonably be regarded as

unprofessional, 72.(2)(j).



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Study Guide - Part "A" - April 13, 2013

3(b) Theta's conduct and consequences - based on the deficiencies found, Theta's assurance

the installation had been installed as designed, was not correct. Even making modifications and

informing Omega a few weeks later the changes had been made, turned out to be not correct.

The faulty fire protection system does not regard the welfare of the public as paramount, 77.2.i.

As a consequence, Theta should be charged with negligence 72.(2)(a) and with dishonourable

conduct, 72.(2)(j).

4(a) Juno's duties re safety - Juno must try to ensure reasonable provision for the safety of

workers, 72.(2)(b), and to ensure applicable safety codes are followed, 72.(2)(d). It does not

matter that unsafe practices are not directly relevant to the contracted services. An engineer's

duty to the public welfare is paramount and workers are members of the public, 77.2.i. It does

not matter if MechCo agreed to have overall responsibility for safety. If an accident happens

and people are hurt, Turbco is implicated and its reputation would suffer. Juno does have a

duty to report on safety deficiencies, 72.(2)(c).

4(b) Juno's obligations re test procedure - Juno must say something to someone, especially to

the supervisor or manager at Turbco. This is a basic loyalty to the employer, 77.1.i., and

devotion to high ideals of integrity, 77.1.iii. Juno should present clearly the consequences of

following an inadequate test procedure, i.e., the liquidated damages and also to the technical

reputation of Turbco, 72.(2)(f).

These actions are required of a reasonable and prudent practitioner, otherwise it is negligence,

72.(2)(a).

If Turbco management fails to disclose the performance problem to PowerCo, this conduct is

unethical, 77.1.i. If Juno's supervisor is a P.Eng, and any other P.Engs are directly involved,they should all be exposed before the proper tribunals, 77.8., and should be charged with

disgraceful conduct, 72.(2)(j).



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PART “B”



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Professional Practice Exam - Part "B" Question 1 - Basics to Know - 'key words' format

For further information, please see Marston text, 4th

Edition, page(s) referenced here Page Arbitration & Alternative Dispute Resolution (ADR) - without recourse to courts, it may be binding 235

Bid shopping - after tenders are closed, an owner attempts to negotiate a lower price with a bidder 131

Civil-law - based on codes of behavior, expected by governing bodies, e.g., used in Quebec 33

Common-law - or judge-made law, relies on precedents as a basis of predictability in decisions 2

Contra proferentem, rule of - for clause ambiguity, interpretation is against party that drafted clause 136

Contract 5 elements - offer accepted, mutual intent, consideration, capacity, lawful purpose 79

Contract A - formed for each tender submitted; Contract B - formed on award of 1 contract 121

Contract A, breach - to depart from instructions to bidders, and risk claims about tendering issues 122

Defamation - a false public statement that damages a reputation (written - libel; verbal - slander) 64

Director's fiduciary duty - to act honestly for a corporation and exercise prudent diligence 21

Discoverability concept - when limitation period begins, 2 years on discovery, 15 years from cause 71

Dispute Resolution Board (DRB), purpose - avoid major claims litigation, select before project start 31

Duress - threatened or actual violence to sign a contract, party's will is not free, may be repudiated 110

Duty to mitigate damages - for a breach, a plaintiff must take reasonable steps to minimize loss 149

Employment (workplace) rights - equal treatment, 14 items (google Ontario Human Rights Code) 322

Equitable estoppel – a means to obtain an equitable result if a gratuitous promise is not being kept 92

Fiduciary duty – an obligation to act honestly for a corporation, and not for personal interest 21

Indirect (or consequential or special) damages - losses beyond control, e.g., interruption of supply 148

Liabilities, breach of contract, who pays for what - fundamental breach, true construction approach 159

Limitation periods - time windows within which a claim must be filed, basic 2 yrs, ultimate 15 yrs 71

Liquidated damages - costs of contractor failure, must be a genuine pre-estimate of probable loss 150

New York Convention - arbitration decisions will be enforced by signing nations (over 135 in 1958) 30

Parol evidence rule - verbal agreements not allowed, except if condition precedent to define terms 136

Repudiation - when one party stops their performance of a contract, the other could claim damages 146

Secret commission - bribe to one party, by a 3r person, to secretly defraud interests of other party 179

Statutory Holdback - % contract price held until after substantial performance, covers project liens 249

Tort principles, potential liabilities - duty of care, breach of that duty, damages from the breach 38

Vicarious liability - employer (with deep pockets) is responsible in liability, for actions of employee 52



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PROFESSIONAL PRACTICE EXAMINATION – August 10, 2013

PART “B” K /)L()&&#()L B*M *). "#$%&''($)*+ B(*N(+(-O


Use the correct colour-coded Answer Book for each part, place in the correct envelope and sealafter completed.






All four questions constitute a complete paper for Part “B”. Each of the four questions is worth

25 marks.



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PROFESSIONAL PRACTICE EXAMINATION – August 10, 2013PART “B” - Engineering Law and Professional Liability

(25) 1. Briefly define, explain or answer any five of the following:i. Fraudulent misrepresentation

ii. The difference in dispute resolution through arbitration and through

mediationiii. Five examples of employment rights to which individuals are entitled under

Ontario’s Human Rights Code (list only)iv. The discoverability concept as it relates to limitation periodsv. The New York Convention

vi. Dispute resolution boardvii. Secret Commission

viii. Common law

(25) 2. A long-established manufacturing company, XYZ Ltd., contemplating the possibility of asale of some of its properties, retained an environmental consulting firm, E Inc., to prepare an

environmental compliance audit.

The Vice-President of E Inc., a professional engineer, responsible for the performance of theenvironmental compliance audit, turned the matter over to one of E Inc.’s employees who hadonly recently become licensed as a professional engineer. However, on the basis of previousassignments, the Vice-President had been very impressed by the young engineer’s abilities. The

Vice-President was also aware that an extremely busy schedule would likely limit the amount oftime he himself could spend on the environmental compliance audit and, accordingly, selectedthe younger employee engineer in the hope that the young engineer’s involvement woulddecrease the Vice-President’s supervisory time in connection with the audit.

The employee engineer carried out an environmental compliance audit with respect to each ofthe properties identified and E Inc. submitted its reports on each property. Included at the beginning of each report was the following qualifying statement:

“This report was prepared by E Inc. for the account of XYZ Ltd. The material in it reflects E

Inc.’s best judgement in light of the information available to it at the time of preparation. Anyuse which a third party makes of this report, or any reliance on decisions to be made based on it,are the responsibility of such third parties. E Inc. accepts no responsibility for damages, if any,suffered by any third party as a result of decisions made or actions based on this report.”

Some time later, XYZ Ltd. sold two of its properties to Acquisitions Inc. In negotiating the salewith Acquisitions Inc., E Inc.’s reports were shown to Acquisitions Inc., but Acquisitions Inc.

had no dealings with E Inc. E Inc. had no knowledge of the sale to Acquisitions Inc. untilapproximately four years later when Acquisitions Inc. commenced a lawsuit against E Inc.Acquisitions Inc. claimed it had commenced the lawsuit in tort against E Inc. because it hadencountered hazardous substances on one of the properties and had subsequently obtained theopinion of another environmental consulting firm who confirmed that the report in question by EInc. contained negligent misstatements which, in the opinion of the second consulting firm, hadr esulted from E Inc.’s representatives having spent too little time investigating the property for

Ok

Ok



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hazardous substances. Acquisitions Inc. claimed in its lawsuit that E Inc. was aware that thereport might be shown to prospective purchasers and, accordingly, E Inc. should be responsible

for damages arising as a result of reliance by Acquisitions Inc. on the negligent misstatements inE Inc.’s report.

What potential liabilities in tort law arise in this case? In your answer, explain what principles oftort law are relevant and how each applies to the case. Indicate a likely outcome to the matter.In your answer indicate if your conclusion would differ if the reports by E Inc. had not containedthe qualifying statement identified above and, if your conclusion would differ, explain why.

(25) 3. An Ontario municipality (the “Owner”) decided to update and expand its water treatmentfacilities. To do so, the Owner invited competitive tenders from contractors for the constructionof the new water treatment facility.

The Owner’s consultant on the project, a professional engineer, designed the facility and prepared the Tender Documents to be given to contractors interested in bidding on the project.Each of the bidders was required to be prequalified and approved by the Owner for participationin the bidding. The Tender Documents included the Plans and Specifications, the TenderingInstructions which described the tendering procedure and other requirements to be followed bythe bidders, the Tender Form to be completed by the bidders, the form of written Contract thatthe successful contractor would be required to sign after being awarded the contract, and anumber of other documents.

According to the Tendering Instructions, each tender bid as submitted was to remain “firm andirrevocable and open for acceptance by the Owner for a period of 60 days following the last day

for submitting tenders”. The Tendering Instructions also provided that all bids were to besubmitted in accordance with the instructions in the Owner’s Tender Documents and that theOwner was not obligated to accept the lowest or any tender.

Tenders were submitted by five bidders. All bids were submitted in accordance with theOwner’s Tender Documents. The lowest bid was well within the Owner’s budget.

Within the 60 days specified and before the Owner’s consultant had made a recommendation to

the Owner as to whom the contract should be awarded, the consultant was called to a meetingwith a prominent member of the Municipal Council who noted that the lowest bidder was notone of the bidders who were “local bidders” from within the Municipality. The Councillor

expressed a very strong view that the contract should in fact be awarded to a local bidder. TheCouncillor also noted that if one item that had been included in the specifications was deletedfrom the bids the result would be that the bid of the lowest “local contractor” would become the

lowest bid overall and the Councillor’s preference for awarding the contract to a “localcontractor” could be satisfied.

There had been no reference in the Tendering Instructions to any preference being shown to localcontractors.



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How should the consultant deal with the political pressure being applied by the Council member?

If the contract is awarded to the lowest local bidder what potential liabilities in contract law may

arise? If the consultant engineer recommends to the Owner that the contract be awarded as theCouncillor suggests what liabilities may arise for the engineer? Please provide your reasons andanalysis.

(25) 4. An information technology firm submitted a bid to design software and hardware for anelectronic technology process to control the operation of a large scale baggage handling andrelated security facility for a major airline.

The firm’s fixed guaranteed maximum price was the lowest bid and the contract was awarded toit. The contract conditions entitled the information technology firm to terminate the contract ifthe airline did not pay monthly progress payments within 15 days following certification that a progress payment was due. Pursuant to the contract, an independent engineering firm engaged ascontract administrator carried out the certification. The work under the contract was to be performed over an 8 month period. After commencing work on the project, the informationtechnology firm determined that it had made significant judgment errors in arriving at its bid price and that it would face a major loss on the project. Its concern about the anticipated lossincreased further when it also learned that, in comparison with the other bidders, its bid price wasextremely low and that, in winning the bid, by comparison with the other bidders, it had leftmore than two million dollars “on the table”.

Three monthly progress payments were certified as due by the independent engineering firm and paid by the airline in accordance with the terms of the contract.

However, after the fourth monthly progress payment was certified as due by the independentengineering firm, the airline’s finance department asked the information technology firm’srepresentative on the project for additional information relating to an invoice from asubcontractor to the information technology firm. The subcontractor’s invoice comprised a

portion of the fourth pr ogress payment amount. The airline’s finance department requested that

the additional information be provided prior to payment of the fourth progress payment.

There was nothing in the signed contract between the information technology firm and the airlinethat obligated the information technology firm to provide the additional information on theinvoice from its subcontractor. However, the information technology firm’s representative did

verbally indicate to the airline’s finance department that the additional information would be

provided.

The information technology firm never provided the additional information relating to thesubcontractor's invoice.

Sixteen days after the fourth progress payment had been certified for payment, the informationtechnology firm notified the airline in writing that it was terminating the contract because theairline was in default of its obligations to make payments within fifteen days pursuant to theexpress wording of the contract.



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Was the information technology firm entitled to terminate the contract in these circumstances?

In giving reasons for your answer, identify and explain the relevant legal principle, its purpose,how it arises, and how it would apply to the facts.



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Professional Practice Examination

Study Guide - Part "B"

August 10, 2013

The purpose of Part "B" is to examine a knowledge of elementary law as it may apply to an

engineer’s work experience. Question 1. is definitions with 8 options but requiring answers to

only 5 of the options.

Questions 2., 3. and 4. are case studies. Each answer should include the names of relevant

legal terms and principles, and how each term or principle applies to one or more elements of

the case.

This Study Guide may contain more material than could be given in an answer within 20

minutes.

Page numbers as given below are for the Marston text, 4th edition. Page references are for

study purposes only, and are not anticipated in an answer. Case precedent examples can

benefit an answer.

1.(i) Fraudulent misrepresentation - is a deceptive statement made by a party:

1) knowingly, or 2) without belief in its truth, or 3) careless of whether it is true or false.

The deceived party may rescind the contract, claim compensation for costs and sue for

deceit, page 109.

1.(ii) Dispute resolution - one way is mediation, to resolve a dispute through voluntary

negotiation. Another way is arbitration, where a dispute is resolved by one arbitrator, or board

or panel, and where the determination will bind both parties. The difference is arbitration will be

binding, pages 30 and 239.

1.(iii) Equal entitlement - means employment without discrimination because of (list only 5 of

15 here) race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual

orientation, age, marital status, family status, record of offences, handicap, and without sexual

harassment, page 322.

1.(iv) Discoverability concept - relating to a time limitation period within which any claims

against an engineer or contractor must be filed. The basic limitation period is 2 years from

when a defect is discovered or ought reasonably to have been discovered. The ultimate

limitation period is 15 years from when work was completed, e.g., when a building was built. If a

defect were discovered in the 14th year, filing for action is needed within 1 year. An action not

filed within these periods will be 'statute barred'. Parties to business agreements may specify

periods that are different from the above, pages 71 - 73.



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Study Guide - Part "B" - August 10, 2013

1.(v) New York Convention - an agreement signed by over 135 nations including Canada, that

in case of a dispute, a court of each nation would enforce an arbitration award made in another

signing nation. The agreement was made in 1958 in New York under the auspices of the United

Nations, to minimize the costs of foreign litigation. Foreign work contracts should only be with

signing nations, page 30.

1.(vi) Dispute resolution board (DRB) - a panel to recommend solutions to disputes as these

arise and thereby avoid the expense of litigation. A DRB is formed by the contracting parties

before work begins. A panel of 3 neutral individuals is selected, who have expertise in the

applicable industry, page 31.

1.(vii) Secret Commission - something of value, offered as a bribe or kickback, to a party to a

contract, to secretly defraud another party to the contract. The person offering the secret

commission, or a party accepting the commission, is in violation of the Criminal Code of

Canada, text pages 179 and 180.

1.(viii) Common law - law based on court decisions (precedents) which establish legal

principles. It is 'judge-made' law as opposed to laws passed by legislatures or parliament.

2. Tort, potential liabilities - a suit would be in tort because Acquisitions Inc. (Acq Inc) did not

have a contract with E Inc. The purpose of tort law is to compensate an aggrieved party as far

as money may relieve a loss. All three principles of tort law can be proven relevant here, and

these are:

1) a duty of care

2) a breach of that duty and

3) damage or loss as a result of the breach, text page 32.

Tort principle 1) applies because Acq Inc expected a duty of care from E Inc, even without a

contract.

There had been contracts between XYZ Ltd and E Inc, and between XYZ Ltd and Acq Inc.

Tort principle 2) applies because hazardous substances were found by another environmental

consulting firm, who gave 'expert testimony' as confirmation, thus a duty of care was breached.

Tort principle 3) applies because there was damage and extra expense needed to cover the

losses.

Acq Inc may obtain damages from XYZ in contract, if the clauses cover this but if not

completely, then in tort. If this were the case, XYZ would be sued in tort and in contract.

XYZ and E Inc would be concurrent tortfeasors. As professionals in this technology, E Inc

should have taken more time to look for hazardous substances and to be aware of the potential

for problems.

tion is in Tort

rpose of Tort

nciples of Tort

ciples Relation

roposedmpensation

Concurrent

tFeasers

ommendation



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A primary area of negligence was the limited amount of time the Vice-president could spend on

the audit. The recently licensed engineer could have asked more questions but in any case the

employer is 'vicariously liable' for the actions of the employee, which assumes the employer has

more ability to pay.

Because E Inc had a clear and valid qualifying statement in their reports, they have no liability.

This is a principle established in the case of Hedley Byrne , and in Wolverine Tube vs. Noranda

Metal , page 43.

A related tort case precedent is Unit Farm Concrete vs. Eckerlea Acres , page 46.

3. Contract tender changes, liabilities - the consultant PEng (CPE) should say 'sorry, no' to

the prominent Council member (PCM). The Owner's Tender Documents (OTD) represent an

agreement in the formation of a 'Contract A'. The Contract A concept is from the Ron

Engineering case, page 121.

Any change in treatment of the OTD instructions or specifications, would be a breach of the

Contract A.

Contract A is formed when each bidder submits a bid, and 5 Contract A's have been duly

formed. When the final contract is signed with a bidder, one 'Contract B' is formed.

If a signing were 'outside' the OTD with the lowest local bidder (LLB) then the other 4 bidders

could sue the owner municipality (OM) for breach of their Contract A's. The potential liabilities

could include bid expenses and lost profits. The total expenses to OM, could come in well overOM's budget.

If CPE does go along with PCM and recommends the award to the LLB, then CPE is open in

turn to a suit by OM for breach of trust and damages. Furthermore, CPE is open to a charge of

misconduct by Professional Engineers Ontario (PEO), Regulation 941, section 72.(2)(j).

An alternative is to reject all bids and issue a revised tender package without the 'limiting item',

and also to clearly state that preference would be shown to local contractors. Then all previous

bidders would be on a level playing field and could decide whether or not to bid. This has the

possible exposure of reducing the number of bidders and the 'local contractor' could come in

with a higher bid than before, especially if confidential information happens to be given to thelocal contractor through the PCM.

The PCM must have known well before the preparation of OTD, that water treatment facilities

were to be updated and expanded. Representation to Council, and an agreement on

preference to local bidders, should have been reached well before the preparation of the OTD.

Liabilities ofd

Liabilities of(Vicarious

bility)



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4. Equitable estoppel - the information technology firm (ITF) was not entitled to terminate the

contract. ITF was exposed to significant loss, and was trying to use the default of a 4th payment

from the airline's finance department (AFD) within 15 days of certification, as an excuse to break

the contract.

If ITF insists on the express wording of the contract, AFD could invoke the relevant legal

principle or concept of "promissory" or "equitable estoppel", which is to ensure the result would

be equitable.

A 'gratuitous promise" had been made by the ITF representative to AFD. The promise to AFD

was, to be given additional information relating to an invoice from a subcontractor to ITF, before

AFD would make the 4th progress payment. The contract was not amended, the promise was

not in writing, and it was freely made. This makes the promise "gratuitous". AFD was clearly

depending on the promise.

The contract stays in force and ITF takes the loss. Strict contractual rights are not followed

because equitable estoppel is an 'exceptional remedy' to those rights. Any other result would

be inequitable.

A similar case precedent is Conwest Exploration vs. Letain , page 92.



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PROFESSIONAL PRACTICE EXAMINATION – April 13, 2013

PART “B” K /)L()&&#()L B*M *). "#$%&''($)*+ B(*N(+(-O


Use the correct colour-coded Answer Book for each part, place in the correct envelope and sealafter completed.






All four questions constitute a complete paper for Part “B”. Each of the four questions is worth

25 marks.



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PROFESSIONAL PRACTICE EXAMINATION - April 13, 2013

PART “B” - Engineering Law and Professional Liability

(25) 1. Briefly define, explain or answer any five of the following:

(i) Equitable estoppel(ii) New York Convention(iii) The corporate director’s standard of care (iv) Vicarious liability(v) Secret commission(vi) Dispute resolution board(vii) Parol evidence rule(viii) The discoverability concept as it relates to limitation periods

(25) 2. Live Rail Inc. (“Live Rail”), a company specializing in the manufacture and

installation of railway commuters systems was awarded a contract by a municipal

government to design and build a transit facility in British Columbia. The contractspecified electrically powered locomotives. As part of the design, Live Rail wascontractually obligated to design an overhead contact system in a tunnel. Live Railsubcontracted the sub-design of the overhead contact system to a consulting design firm,Ever Works Limited (“Ever works”).

Ever Works designed an overhead electrified wire contact system suspended from theceiling in the tunnel, however, in doing so it did not carry out any testing, nor did itgather any data of its own relating to the conditions inside the tunnel. It did not evenrequest copies of underlying reports, which, had they been examined, would haveindicated that there was a large volume of water percolating through the tunnel rock, and

that the tunnel rock contained substantial amounts of sulphur compounds. The projectdocumentation that was turned over to Ever Works by Live Rail did not include theunderlying reports, but did identify the existence and availability of the underlyingreports.

The construction of the rail system through the tunnel was completed in accordance withthe Ever Works design. However, within eight months of completion, the overheadcontact system in the tunnel became severely corroded and damaged due to the waterseepage in the tunnel.

As a result of the corrosion damage, the municipality had to spend substantial additionalmoney on redesigning and rewiring the system.

What potential liabilities in tort law arise in this case? In your answer, explain what principles of tort law are relevant and how each applies to the case. Indicate a likelyoutcome to the matter.



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PROFESSIONAL PRACTICE EXAMINATION - April 13, 2013

PART “B” - Engineering Law and Professional Liability

(25) 3.An Ontario municipality (the “Owner”) decided to construct a gas-fired power plant. Todo so, the Owner invited competitive tenders from contractors for the construction of the newgas-fired power plant facility.

The Owner’s consultant on the project, a professional engineer, designed the facility and prepared the Tender Documents to be given to contractors interested in bidding on the project.Each of the bidders was required to be prequalified and approved by the Owner for participationin the bidding. The Tender Documents included the Plans and Specifications, the TenderingInstructions which described the tendering procedure and other requirements to be followed bythe bidders, the Tender Form to be completed by the bidders, the form of written Contract thatthe successful contractor would be required to sign after being awarded the contract, and anumber of other documents.

According to the Tendering Instructions, each tender bid as submitted was to remain “firm and

irrevocable and open for acceptance by the Owner for a period of 60 days following the last dayfor submitting tenders”. The Tendering Instructions also provided that all bids were to besubmitted in accordance with the instructions in the Owner’s Tender Documents and that the

Owner was not obligated to accept the lowest or any tender.

Tenders were submitted by five bidders. All bids were submitted in accordance with theOwner’s Tender Documents. The lowest bid was well within the Owner’s budget.

Within the 60 days specified and before the Owner’s consultant had made a recommendation tothe Owner as to whom the contract should be awarded, the consultant was called to a meetingwith a prominent member of the Municipal Council who noted that the lowest bidder was notone of the bidders who were “local bidders” from within the Municipality. The Councillorexpressed a very strong view that the contract should in fact be awarded to a local bidder. TheCouncillor also noted that if one item that had been included in the specifications was deletedfrom the bids the result would be that the bid of the lowest “local contractor” would become thelowest bid overall and the Councillor’s preference for awarding the contract to a “localcontractor” could be satisfied.

There had been no reference in the Tendering Instructions to any preference being shown to localcontractors.

How should the consultant deal with the political pressure being applied by the Council member?

If the contract is awarded to the lowest local bidder what potential liabilities in contract law mayarise? If the consultant engineer recommends to the Owner that the contract be awarded as theCouncillor suggests what liabilities may arise for the engineer? Please provide your reasons andanalysis.



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PROFESSIONAL PRACTICE EXAMINATION - April 13, 2013PART “B” - Engineering Law and Professional Liability

(25) 4. A telecommunications development company leased an outdated and unusedunderground pipe system from an Ontario municipality. The developer’s purpose in leasing the pipe was to utilize it as an existing conduit system in which to install a fibre optic cable system

to be designed, constructed and operated in the municipality by the telecommunicationsdeveloper during the term of the lease. All necessary approvals from regulatory authorities wereobtained with respect to the proposed telecommunications network.

The telecommunications development company then entered into an installation contract with acontractor. For the contract price of $4,000,000, the contractor undertook to complete theinstallation of the cable by a specified completion date. The contract specified that time was ofthe essence and that the contract was to be completed by the specified completion date, failingwhich the contractor would be responsible for liquidated damages in the amount of $50,000 perday for each day that elapsed between the specified completion date and the subsequent actualcompletion date. The contract also contained a provision limiting the contractor’s maximum

liability for liquidated damages and for any other claim for damages under the contract to themaximum amount of $1,000,000.

Due to its failure to properly staff and organize its workforce, the contractor failed to meet thespecified completion date. In addition, during the installation, the contractor’s inexperienced

workers damaged significant amounts of the fibre optic cable, with the result that thetelecommunications development company, on subsequently discovering the damage, incurredsubstantial additional expense in engaging another contractor to replace the damaged cable.Ultimately, the cost of supplying and installing the replacement cable plus the amount ofliquidated damages for which the original contractor was responsible because of its failure tomeet the specified completion date, totalled $1,800,000.

Explain and discuss what claim the telecommunications development company could makeagainst the contractor in the circumstances. Explain the approach taken by Canadian courts withrespect to contracts that limit liability and include a brief summary of the development ofrelevant case precedents.



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Professional Practice Examination

Study Guide - Part "B"

April 13, 2013

The purpose of Part "B" is to examine a knowledge of elementary law as it may apply to an

engineer’s work experience. Question 1. is definitions with 8 options but requiring answers to

only 5 of the options.

Questions 2., 3. and 4. are case studies. Each answer should include the names of relevant

legal terms and principles, and how each term or principle applies to one or more elements of

the case.

This Study Guide may contain more material than would be possible to answer within 20

minutes.

Page numbers as given below are for the Marston text, 4th edition . Page references are for

study purposes only, and are not anticipated in an answer. Case precedents however, can

benefit an answer.

1. (i) Equitable estoppel - after a contract is underway, if one party makes a 'gratuitous

promise' affecting the terms, e.g., a time limit, and the other party relies on that promise, the first

party cannot later try to renege. As written, the contract will not be enforced, ensuring an

equitable and fair result, page 92.

1. (ii) New York Convention - an agreement under United Nations auspices, signed in 1958 by

over 135 countries, including Canada. They agreed, in cases of contract disputes, that the

courts in each of their countries would enforce any arbitration awards, and thus minimize the

costs of foreign litigation. Parties to contracts should only be from nations that have signed the

New York Convention, page 30.

1. (iii) Director's standard of care - an obligation to act honestly and in good faith for the best

interests of the corporation, and not for personal benefit. Conflicts of interest must be disclosed,

pages 21 and 23.

1. (iv) Vicarious liability - an employer's liability when an employee's work has led to a

damages claim. The employer is presumed to be better able to pay than the employee, i.e., has

'deep pockets', page 52.

1. (v) Secret commission - a payment, bribe, promise or kickback, offered to a party to a

contract, to secretly defraud the interests of the other party. The person offering the secret

commission, or a party accepting the commission, is in violation of the Criminal Code of

Canada, pages 179 and 180.



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Study Guide - Part "B" - April 13, 2013

1. (vi) Dispute resolution board (DRB) - a panel to determine solutions as disputes arise and

thereby avoid the expense of court actions. A DRB is formed by the contracting parties before

work starts. A panel of 3 neutral individuals is selected, who have expertise in the applicable

industry, page 31.

1. (vii) Parol evidence rule - verbal agreements are not acceptable to enforce the terms of a

contract. Verbal evidence of an omitted condition may be admitted, providing this condition can

clearly be established as a prerequisite and necessary for the formation of the contract, page

136.

1. (viii) Discoverability concept - any claims against an engineer or contractor must be filed

within a time limitation window. For the basic limitation it is 2 years from when the cause of

action is discovered or ought reasonably to have been discovered. For the ultimate limitation it

is 15 years from completion, e.g., when a building was built. An action not filed within these

periods will be 'statute barred'. Parties to business agreements are entitled to agree on periods

that may differ from the above, pages 71 - 73.

2. Tort, potential liabilities – as these arise are; Ever Works (EW) would be liable for the

failure of the contact system, and Live Rail (LR) would be liable for failing to manage the project

to minimize problems.

The suit would be in tort because the municipal government (MG) did not have a contract with

EW.

The purpose of tort law is to compensate an aggrieved party, so far as money may relieve a

loss.

All three principles of tort law can be proven relevant here, and these are:

1) a duty of care

2) a breach of that duty and

3) damage or loss as a result of the breach, text 32.

Tort principle 1) applies because MG could expect a duty of care from EW, even though there

was no contract between them. There were contracts between MG and LR, and between LR

and EW.

Tort principle 2) applies because the contact system failed thus EW breached a duty of care.

Tort principle 3) applies because there was damage and extra expense needed to rectify the

damage.

MG may obtain damages from LR in contract, if the clauses cover this, but if not completely,

then in tort. If this were the case, LR would be sued in tort and in contract.



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LR and EW would be concurrent tortfeasors. As professionals in this technology, EW should

have been aware of the potential for corrosion problems. As project manager, LR should have

passed to EW, all the information available. Use of 'expert testimony' may establish the

responsibilities of EW and LR.

A likely outcome is EW would be 80% responsible and LR would be 20% responsible.

A similar case precedent is Unit Farm Concrete vs. Eckerlea Acres , text page 40.

3. Contract tender changes, liabilities - the consultant P.Eng. (CPE) should say 'sorry, no' to

the prominent Council member (PCM). The Owner's Tender Documents (OTD) represent an

agreement in the formation of a 'Contract A'. The Contract A concept is from the Ron

Engineering case, page 121.

Any change in treatment of the OTD instructions or specifications, would be a breach of the

Contract A.

Contract A is formed when each bidder submits a bid, and 5 Contract A's have been duly

formed. When the final contract is signed with a bidder, one 'Contract B' is formed.

If a signing were 'outside' the OTD with the lowest local bidder (LLB), then the other 4 bidders

could sue the owner municipality (OM) for breach of their Contract A's. The potential liabilities

could include bid expenses and lost profits. The total expense, of legal defense by the OM and

damages, could come in well over OM's budget.

If CPE does go along with PCM and recommends the award to the LLB, then CPE is open inturn to a suit by OM for breach of trust and damages. Furthermore, CPE is open to a charge of

misconduct by Professional Engineers Ontario (PEO), Regulation 941, section 72.(2)(j).

An alternative is to reject all bids and issue a revised tender package, without the 'limiting item'

and also to clearly state that preference would be shown to local contractors. Then all previous

bidders would be on a level playing field and could decide whether or not to bid. This has the

possible exposure of reducing the number of bidders and the 'local contractor' could come in

with a higher bid than before, especially if confidential information happens to be given to the

local contractor through the PCM.

The PCM must have known well before the preparation of OTD, that water treatment facilitieswere to be updated and expanded. Representation to Council, and agreement on preference to

local bidders, should have been reached well before the preparation of the OTD.




4. Contract breach, claims enforceability - this case is one of fundamental breach going the

root of a contract and, historically, a clause to limit liability is not normally enforceable.

However, if the wording as expressed or constructed in the liability clause is clear and true, and

the liquidated damage provisions are supported in detail by a genuine pre-estimate of the costs

of a possible breach, then the legal principle of “true construction approach” is said to have

taken place and the clause is enforceable. This means therefore, that the law has changed in

this area.

The telecommunications development company (TDC) could make a claim of $1,800,000

against the original installation contractor for fundamental breach, to recover the excess costs,

and failure to meet the completion date. However, some Canadian courts have allowed the

enforceability of a liability clause if the wording is clear. Then the recovery would be

$1,000,000. TDC would sustain a loss of $800,000.

Relevant case precedents are Harbutt’s Plasticene vs. Wayne Tank and Pump where the

clause was not enforceable and Hunter Engineering vs. Syncrude where it was, text pages 155

and 159.

.