Notes_for_CHAPTER_12_-_LIABILITY_2009-03

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Unformatted text preview: CONCORDIA UNIVERSITY FACULTY OF ENGINEERING AND COMPUTER SCIENCE ENGR 201 PROFESSIONAL PRACTICE AND RESPONSIBILITY PROFESSOR : REMI ALAURENT, ENG. CHAPTER 12 LIABILITY 1. Civil liability 2. Insurance page 1 page 12 TOPIC 1 : CIVIL LIABILITY General principles The Civil Code of Québec (S.Q., 1991, c. 64) is the determining act in this province. Elsewhere in Canada and the United States (except Louisiana, which has a Civil Code), the English-born Common Law prevails. Generally speaking, liability is contractual or extracontractual in its origin. Generally speaking, the existence of three things have to be established in order to secure compensation : an action or omission a consequence a cause-effect relation between the action or omission and the consequence Rev. 2009-03 © Concordia University, 2003 ENGR201 PROFESSIONAL PRACTICE AND RESPONSIBILITY CHAPTER 12 Excerpts from the Civil Code more relevant to engineering follow. Special attention should be paid to those that are underlined. PRELIMINARY PROVISION The Civil Code of Québec, in harmony with the Charter of human rights and freedoms and the general principles of law, governs persons, relations between persons, and property. The Civil Code comprises a body of rules which, in all matters within the letter, spirit or object of its provisions, lays down the jus commune, expressly or by implication. In these matters, the Code is the foundation of all other laws, although other laws may complement the Code or make exceptions to it. BOOK ONE PERSONS TITLE ONE ENJOYMENT AND EXERCISE OF CIVIL RIGHTS 4. Every person is fully able to exercise his civil rights. In certain cases, the law provides for representation or assistance. 1991, c. 64, s. 4. 5. Every person exercises his civil rights under the name assigned to him and stated in his act of birth. 1991, c. 64, s. 5. 6. Every person is bound to exercise his civil rights in good faith. 1991, c. 64, s. 6. 7. No right may be exercised with the intent of injuring another or in an excessive and unreasonable manner which is contrary to the requirements of good faith. 1991, c. 64, s. 7. 8. No person may renounce the exercise of his civil rights, except to the extent consistent with public order. 1991, c. 64, s. 8. 9. In the exercise of civil rights, derogations may be made from those rules of this Code which supplement intention, but not from those of public order. 1991, c. 64, s. 9. PAGE 2 OF 20 © Concordia University 2003 ENGR201 PROFESSIONAL PRACTICE AND RESPONSIBILITY CHAPTER 12 CHAPTER III CIVIL LIABILITY SECTION I CONDITIONS OF LIABILITY §1. — General provisions 1457. Every person has a duty to abide by the rules of conduct which lie upon him, according to the circumstances, usage or law, so as not to cause injury to another. Where he is endowed with reason and fails in this duty, he is responsible for any injury he causes to another person by such fault and is liable to reparation for the injury, whether it be bodily, moral or material in nature. He is also liable, in certain cases, to reparation for injury caused to another by the act or fault of another person or by the act of things in his custody. 1991, c. 64, s. 1457; 2002, c. 19, s. 15. 1458. Every person has a duty to honour his contractual undertakings. Where he fails in this duty, he is liable for any bodily, moral or material injury he causes to the other contracting party and is liable to reparation for the injury; neither he nor the other party may in such a case avoid the rules governing contractual liability by opting for rules that would be more favourable to them. 1991, c. 64, s. 1458. §2. — Act or fault of another 1463. The principal is liable to reparation for injury caused by the fault of his agents and servants in the performance of their duties; nevertheless, he retains his recourses against them. 1991, c. 64, s. 1463. 1464. An agent or servant of the State or of a legal person established in the public interest does not cease to act in the performance of his duties by the mere fact that he performs an act that is illegal, unauthorized or outside his competence, or by the fact that he is acting as a peace officer. 1991, c. 64, s. 1464. §3. — Act of a thing 1465. A person entrusted with the custody of a thing is liable to reparation for injury resulting from the autonomous act of the thing, unless he proves that he is not at fault. 1991, c. 64, s. 1465. PAGE 3 OF 20 © Concordia University 2003 ENGR201 PROFESSIONAL PRACTICE AND RESPONSIBILITY CHAPTER 12 1467. The owner of an immovable, without prejudice to his liability as custodian, is liable to reparation for injury caused by its ruin, even partial, where this has resulted from lack of repair or from a defect of construction. 1991, c. 64, s. 1467. 1468. The manufacturer of a movable property is liable to reparation for injury caused to a third person by reason of a safety defect in the thing, even if it is incorporated with or placed in an immovable for the service or operation of the immovable. The same rule applies to a person who distributes the thing under his name or as his own and to any supplier of the thing, whether a wholesaler or a retailer and whether or not he imported the thing. 1991, c. 64, s. 1468. 1469. A thing has a safety defect where, having regard to all the circumstances, it does not afford the safety which a person is normally entitled to expect, particularly by reason of a defect in the design or manufacture of the thing, poor preservation or presentation of the thing, or the lack of sufficient indications as to the risks and dangers it involves or as to safety precautions. 1991, c. 64, s. 1469. SECTION II CERTAIN CASES OF EXEMPTION FROM LIABILITY 1470. A person may free himself from his liability for injury caused to another by proving that the injury results from superior force, unless he has undertaken to make reparation for it. A superior force is an unforeseeable and irresistible event, including external causes with the same characteristics. 1991, c. 64, s. 1470. 1471. Where a person comes to the assistance of another person or, for an unselfish motive, disposes, free of charge, of property for the benefit of another person, he is exempt from all liability for injury that may result from it, unless the injury is due to his intentional or gross fault. 1991, c. 64, s. 1471. 1472. A person may free himself from his liability for injury caused to another as a result of the disclosure of a trade secret by proving that considerations of general PAGE 4 OF 20 © Concordia University 2003 ENGR201 PROFESSIONAL PRACTICE AND RESPONSIBILITY CHAPTER 12 interest prevailed over keeping the secret and, particularly, that its disclosure was justified for reasons of public health or safety. 1991, c. 64, s. 1472. 1473. The manufacturer, distributor or supplier of a movable property is not liable to reparation for injury caused by a safety defect in the property if he proves that the victim knew or could have known of the defect, or could have foreseen the injury. Nor is he liable to reparation if he proves that, according to the state of knowledge at the time that he manufactured, distributed or supplied the property, the existence of the defect could not have been known, and that he was not neglectful of his duty to provide information when he became aware of the defect. 1991, c. 64, s. 1473; 2002, c. 19, s. 15. 1474. A person may not exclude or limit his liability for material injury caused to another through an intentional or gross fault; a gross fault is a fault which shows gross recklessness, gross carelessness or gross negligence. He may not in any way exclude or limit his liability for bodily or moral injury caused to another. 1991, c. 64, s. 1474. 1475. A notice, whether posted or not, stipulating the exclusion or limitation of the obligation to make reparation for injury resulting from the nonperformance of a contractual obligation has effect, in respect of the creditor, only if the party who invokes the notice proves that the other party was aware of its existence at the time the contract was formed. 1991, c. 64, s. 1475. 1476. A person may not by way of a notice exclude or limit his obligation to make reparation in respect of third persons; such a notice may, however, constitute a warning of a danger. 1991, c. 64, s. 1476. 1477. The assumption of risk by the victim, although it may be considered imprudent having regard to the circumstances, does not entail renunciation of his remedy against the person who caused the injury. 1991, c. 64, s. 1477. II — Assessment of damages 1. Assessment in general PAGE 5 OF 20 © Concordia University 2003 ENGR201 PROFESSIONAL PRACTICE AND RESPONSIBILITY CHAPTER 12 1611. The damages due to the creditor compensate for the amount of the loss he has sustained and the profit of which he has been deprived. Future injury which is certain and able to be assessed is taken into account in awarding damages. 1991, c. 64, s. 1611. 1612. The loss sustained by the owner of a trade secret includes the investment expenses incurred for its acquisition, perfection and use; the profit of which he is deprived may be compensated for through payment of royalties. 1991, c. 64, s. 1612; 2002, c. 19, s. 15. 1613. In contractual matters, the debtor is liable only for damages that were foreseen or foreseeable at the time the obligation was contracted, where the failure to perform the obligation does not proceed from intentional or gross fault on his part; even then, the damages include only what is an immediate and direct consequence of the nonperformance. 1991, c. 64, s. 1613. 1614. Damages owed to the creditor for bodily injury he sustains are measured as to the future aspects of the injury according to the discount rates set by regulation of the Government, from the time such rates are set. 1991, c. 64, s. 1614. 1615. The court, in awarding damages for bodily injury, may, for a period of not over three years, reserve the right of the creditor to apply for additional damages, if the course of his physical condition cannot be determined with sufficient precision at the time of the judgment. 1991, c. 64, s. 1615. 1616. Damages awarded for injury are exigible in the form of capital payable in cash, unless otherwise agreed by the parties. Where the injury sustained is bodily injury and where the creditor is a minor, however, the court may order payment, in whole or in part, in the form of an annuity or by periodic instalments, on the terms and conditions it fixes and indexed according to a fixed rate. Within three months of the date on which the minor becomes of full age, the creditor may demand immediate and discounted payment of any amount still receivable. 1991, c. 64, s. 1616. PAGE 6 OF 20 © Concordia University 2003 ENGR201 PROFESSIONAL PRACTICE AND RESPONSIBILITY CHAPTER 12 1617. Damages which result from delay in the performance of an obligation to pay a sum of money consist of interest at the agreed rate or, in the absence of any agreement, at the legal rate. The creditor is entitled to the damages from the date of default without having to prove that he has sustained any injury. A creditor may stipulate, however, that he will be entitled to additional damages, provided he justifies them. 1991, c. 64, s. 1617. 1618. Damages other than those resulting from delay in the performance of an obligation to pay a sum of money bear interest at the rate agreed by the parties, or, in the absence of agreement, at the legal rate, from the date of default or from any other later date which the court considers appropriate, having regard to the nature of the injury and the circumstances. 1991, c. 64, s. 1618. 1619. An indemnity may be added to the amount of damages awarded for any reason, which is fixed by applying to the amount of the damages, from either of the dates used in computing the interest on them, a percentage equal to the excess of the rate of interest fixed for claims of the State under section 28 of the Act respecting the Ministère du Revenu over the rate of interest agreed by the parties or, in the absence of agreement, over the legal rate. 1991, c. 64, s. 1619. 1620. Interest accrued on principal does not itself bear interest except where that is provided by agreement or by law or where additional interest is expressly demanded in a suit. 1991, c. 64, s. 1620. 1621. Where the awarding of punitive damages is provided for by law, the amount of such damages may not exceed what is sufficient to fulfil their preventive purpose. Punitive damages are assessed in the light of all the appropriate circumstances, in particular the gravity of the debtor’s fault, his patrimonial situation, the extent of the reparation for which he is already liable to the creditor and, where such is the case, the fact that the payment of the damages is wholly or partly assumed by a third person. 1991, c. 64, s. 1621. PAGE 7 OF 20 © Concordia University 2003 ENGR201 PROFESSIONAL PRACTICE AND RESPONSIBILITY CHAPTER 12 Contract of enterprise or for services (CCQ, Book Five, Chapter VIII) SECTION I NATURE AND SCOPE OF THE CONTRACT 2098. A contract of enterprise or for services is a contract by which a person, the contractor or the provider of services, as the case may be, undertakes to carry out physical or intellectual work for another person, the client or to provide a service, for a price which the client binds himself to pay. 1991, c. 64, s. 2098. 2099. The contractor or the provider of services is free to choose the means of performing the contract and no relationship of subordination exists between the contractor or the provider of services and the client in respect of such performance. 1991, c. 64, s. 2099. 2100. The contractor and the provider of services are bound to act in the best interests of their client, with prudence and diligence. Depending on the nature of the work to be carried out or the service to be provided, they are also bound to act in accordance with usual practice and the rules of art, and, where applicable, to ensure that the work done or service provided is in conformity with the contract. Where they are bound to produce results, they may not be relieved from liability except by proving superior force. 1991, c. 64, s. 2100. SECTION II RIGHTS AND OBLIGATIONS OF THE PARTIES §1. — General provisions applicable to both services and works 2101. Unless a contract has been entered into specifically in view of his personal qualities or unless the very nature of the contract prevents it, the contractor or the provider of services may employ a third person to perform the contract, but its performance remains under his supervision and responsibility. 1991, c. 64, s. 2101. 2102. Before the contract is entered into, the contractor or the provider of services is bound to provide the client, as far as circumstances permit, with any useful information concerning the nature of the task which he undertakes to perform and the property and time required for that task. 1991, c. 64, s. 2102. PAGE 8 OF 20 © Concordia University 2003 ENGR201 PROFESSIONAL PRACTICE AND RESPONSIBILITY CHAPTER 12 2103. The contractor or the provider of services furnishes the property necessary for the performance of the contract, unless the parties have stipulated that only his work is required. He shall furnish only property of good quality; he is bound by the same warranties in respect of the property as a seller. A contract is a contract of sale, and not a contract of enterprise or for services, where the work or service is merely accessory to the value of the property supplied. 1991, c. 64, s. 2103. 2104. Where the property is provided by the client, the contractor or the provider of services is bound to use it with care and to account for its use; where the property is evidently unfit for its intended use or where it has an apparent or latent defect of which the contractor or the provider of services should be aware, he is bound to inform the client immediately, failing which he is liable for any injury which may result from the use of the property. 1991, c. 64, s. 2104. 2105. If the property necessary for the performance of the contract perishes by superior force, the party that furnished it bears the loss. 1991, c. 64, s. 2105. 2106. The price of the work or services is fixed by the contract, by usage or by law or on the basis of the value of the work carried out or the services rendered. 1991, c. 64, s. 2106. 2107. Where the price of the work or services is estimated at the time the contract is entered into, the contractor or the provider of the services shall give the reasons for any increase of the price. The client is bound to pay such increase only to the extent that it results from work, services or expenses that the contractor or the provider of services could not foresee at the time the contract was entered into. 1991, c. 64, s. 2107. 2108. Where the price is fixed according to the value of the work performed, the services rendered or the property furnished, the contractor or the provider of services is bound, at the request of the client, to give him an account of the progress of the work or of the services rendered and expenses incurred so far. 1991, c. 64, s. 2108. PAGE 9 OF 20 © Concordia University 2003 ENGR201 PROFESSIONAL PRACTICE AND RESPONSIBILITY CHAPTER 12 2109. Where the price is fixed by the contract, the client shall pay the price agreed, and may not claim a reduction of the price on the ground that the work or service required less effort or cost less than had been foreseen. Similarly, the contractor or the provider of services may not claim an increase of the price for the opposite reason. Unless otherwise agreed by the parties, the price fixed by the contract remains unchanged notwithstanding any modification of the original terms and conditions of performance. 1991, c. 64, s. 2109. §2. — Special provisions respecting works I — General provisions 2110. The client is bound to accept the work when work is completed; work is completed when the work has been produced and is ready to be used for its intended purpose. Acceptance of the work is the act by which the client declares that he accepts it, with or without reservation. 1991, c. 64, s. 2110. 2111. The client is not bound to pay the price before the work is accepted. At the time of payment, the client may deduct from the price, until the repairs or corrections are made to the work, a sufficient amount to meet the reservations which he made as to the apparent defects or poor workmanship that existed when he accepted the work. The client may not exercise this right if the contractor furnishes him with sufficient security to guarantee the performance of his obligations. 1991, c. 64, s. 2111. 2112. If the parties do not agree on the amount to be deducted and on the work to be completed, an assessment is made by an expert designated by the parties or, failing that, by the court. 1991, c. 64, s. 2112. 2113. A client who accepts without reservation retains his right to pursue his remedies against the contractor in cases of nonapparent defects or nonapparent poor workmanship. 1991, c. 64, s. 2113. PAGE 10 OF 20 © Concordia University 2003 ENGR201 PROFESSIONAL PRACTICE AND RESPONSIBILITY CHAPTER 12 2114. Where the work is performed in successive phases, it may be accepted in parts; the price for each part is payable upon delivery and acceptance of the part; payment creates a presumption that the part has been accepted, unless the sums paid are to be considered as merely partial payments on the price. 1991, c. 64, s. 2114. 2115. The contractor is liable for loss of the work occurring before its delivery, unless it is due to the fault of the client or the client is in default to receive the work. Where the property is furnished by the client, the contractor is not liable for the loss of the work unless it is due to his fault or some other failure on his part. He may not claim the price of his work except where the loss of the work results from an inherent defect in the property furnished or a defect in the property that he was unable to detect, or where the loss is due to the fault of the client. 1991, c. 64, s. 2115. 2116. The prescription of rights to pursue remedies between the parties begins to run only from the time that work is completed, even in respect of work that was subject to reservations at the time of acceptance of the work. 1991, c. 64, s. 2116. II — Immovable works 2117. At any time during the construction or renovation of an immovable, the client, provided he does not interfere with the work, may examine the progress of the work, the quality of the materials used and of the work performed, and the statement of expenses incurred so far. 1991, c. 64, s. 2117. 2118. Unless they can be relieved from liability, the contractor, the architect and the engineer who, as the case may be, directed or supervised the work, and the subcontractor with respect to work performed by him, are solidarily liable for the loss of the work occurring within five years after the work was completed, whether the loss results from faulty design, construction or production of the work, or the unfavourable nature of the ground. 1991, c. 64, s. 2118. 2119. The architect or the engineer may be relieved from liability only by proving that the defects in the work or in the part of it completed do not result from any erroneous or faulty expert opinion or plan he may have submitted or from any failure to direct or supervise the work. PAGE 11 OF 20 © Concordia University 2003 ENGR201 PROFESSIONAL PRACTICE AND RESPONSIBILITY CHAPTER 12 The contractor may be relieved from liability only by proving that the defects result from an erroneous or faulty expert opinion or plan of the architect or engineer selected by the client. The subcontractor may be relieved from liability only by proving that the defects result from decisions made by the contractor or from the expert opinions or plans furnished by the architect or engineer. They may, in addition, be relieved from liability by proving that the defects result from decisions imposed by the client in selecting the land or materials, or the subcontractors, experts, or construction methods. 1991, c. 64, s. 2119. 2120. The contractor, the architect and the engineer, in respect of work they directed or supervised, and, where applicable, the subcontractor, in respect of work he performed, are jointly liable to warrant the work for one year against poor workmanship existing at the time of acceptance or discovered within one year after acceptance. 1991, c. 64, s. 2120; 2002, c. 19, s. 15. 2121. An architect or an engineer who does not direct or supervise work is liable only for the loss occasioned by a defect or error in the plans or in the expert opinions furnished by him. 1991, c. 64, s. 2121. TOPIC 2 : INSURANCE General principles Professional liability insurance is also known as "errors and omissions" insurance or "malpractice" insurance. It is purchased to address business liability risks that are not covered by their commercial general liability insurance. Even if it were not required by a regulation, such as the OIQ's Regulation respecting professional liability insurance for the members of the Ordre des ingénieurs du Québec, professional liability insurance should be purchased for one or more of the following reason : To protect the firm, its associates and employees from serious financial disruption; To provide the clients with financial security for the professional services; To access projects and clients that may otherwise shop elsewhere; To receive loss prevention information and consultation services; PAGE 12 OF 20 © Concordia University 2003 ENGR201 PROFESSIONAL PRACTICE AND RESPONSIBILITY CHAPTER 12 To have a "damage control" team and legal support available should a problem arise; Because the client requires it (as a condition for bidding, for example); For the peace of mind it provides. A professional liability insurance policy pays other parties for damages for which the policy holder is legally liable to pay as a result of negligent acts, errors or omissions in the performance of his professional service. Those damages can include property damage, bodily injury, economic loss and legal expenses. The insurance company has an obligation to defend the policy holder against claims, even if the allegations ultimately are determined to be false or groundless. However, coverage may be lost if the insured : fails to report to his insurer any event (accident, etc.) that may lead to a claim has made a false declaration when applying for the policy has committed a violation, such as practising in something he is not legally entitled to. The situation in Québec Since 2008, the Professional Code contains a provision on security : 60.7. Every professional must furnish and at all times maintain security to cover any liability he may incur because of any fault committed in the practice of his profession. A professional who complies with a regulation of the order under paragraph d of section 93 fulfils this obligation. 2008, c. 11, s. 35. This provision is new; since 1994, the Code only required the Bureau (now called the Borad of directors) to establish insurance requirements by regulation. Section 93 now states that the Board of directors of every order must, by regulation : (d) impose on the members of the order the obligation to furnish and maintain security, by means of an insurance contract or a surety bond or by any other PAGE 13 OF 20 © Concordia University 2003 ENGR201 PROFESSIONAL PRACTICE AND RESPONSIBILITY CHAPTER 12 means determined by the regulation, to cover liability for any fault committed in the practice of their profession, or the obligation to join a group plan contract entered into by the order or to contribute to a professional liability insurance fund established for such purposes in accordance with section 86.1. The coverage must extend to any claim filed against a member during the five years following the year he no longer is required to maintain security to cover his liability or following the year he ceases to be a member of the order or during a longer period determined by the order in the regulation. The regulation must prescribe the minimum amount of coverage and may prescribe special rules or exemptions based, in particular, on the professional activities engaged in by the members and the risk they represent; (g) pursuant to paragraph 2 of section 187.11, impose on the members referred to therein, on the basis of the risk they represent, the obligation to furnish and maintain coverage, on behalf of the partnership or company, by means of an insurance or suretyship contract or by any other means determined by the regulation, against liabilities of the partnership or company arising from fault in the practice of their profession, or the obligation to join a group plan contract entered into by the order or to contribute to a professional liability insurance fund established for such purposes in accordance with section 86.1; the regulation shall also determine the minimum amount of coverage and prescribe specific rules according to such factors as the nature of the professional activities carried on and the number of members of the order in the partnership or company; the coverage must extend to any claim filed against the partnership or company during the five years following the year the members cease to maintain the coverage, or during a longer period determined by the board of directors in the regulation; In 1995, the OIQ adopted the Règlement sur l'assurance-responsabilité professionnelle des membres de l'Ordre des ingénieurs du Québec, R.Q. c. I9, r.1.1.1 ((1995) 127 G.O. II, 5324), in French only. An unofficial translation is reproduced below. (NOTES : only the French edition has legal value, and the term "Section" as in "Section l" is somewhat misleading : "Part" would be more appropriate). REGULATION RESPECTING PROFESSIONAL LIABILITY INSURANCE FOR THE MEMBERS OF THE ORDRE DES INGÉNIEURS DU QUÉBEC c. I-9, r.1.1.1 SECTION I GROUP PLAN INSURANCE REGIME PAGE 14 OF 20 © Concordia University 2003 ENGR201 PROFESSIONAL PRACTICE AND RESPONSIBILITY CHAPTER 12 FOR PROFESSIONAL LIABILITY 1. Every member of the Ordre des ingénieurs du Québec shall join the group plan insurance contract for professional liability entered into by the Order. 2. The group plan contract entered into by the Order shall contain the following minimum requirements: 1° the commitment by the insurer to pay instead and in the place of the insured, within the limits of the guarantee, any amount that the insured may legally be required to pay to a third party as damages and interest relating to a loss arising during the period covered by the guarantee or which arose before that period but respecting which a claim is presented during the period of the guarantee and resulting from a fault or negligence committed in the exercise of the insured’s profession; 2° the commitment on the part of the insurer to fully assume the defence of the insured in any action taken against the insured and to pay, in addition to the amounts covered by the guarantee, all of the costs and expenses of actions taken against the insured, including those of the defence and including interest on the amount of any judgment; 3° a minimum guarantee of $100,000 per loss, $200,000 per total losses resulting from professional services relating to a single project notwithstanding the number of claims relating to that project which are presented and $10,000,000 per total losses arising during the period of the guarantee or which arose before that period but respecting which a claim is presented during the period of the guarantee. 3. In addition to the exclusions from coverage generally permitted in the insurance of professional liability of engineers, the group plan contract may contain other exclusions from coverage applicable to: 1° a member who is a decision-maker of a business in which he exercises his profession in private practice or of a business which creates and constructs, installs or manufactures; 2° a member who is an employee of a business in which he exercises his profession in private practice or of a municipal or supramunicipal body within the meaning of the Act respecting the Pension Plan of Elected Municipal Officers (R.S.Q., c. R-9.3); PAGE 15 OF 20 © Concordia University 2003 ENGR201 PROFESSIONAL PRACTICE AND RESPONSIBILITY CHAPTER 12 3° a member who individually and on his own account renders professional services, except where the member renders professional services outside of this principal employment for fees of less than $2,000 per project and less than $10,000 per total number of projects carried out during a given year. For purposes of paragraph (1), a member is deemed to be decision-maker of a business if that member is a sole owner of the business, a partner who holds more than 10% share of the partnership, or a director, officer, or shareholder of the business, who holds more than 10% of the issued shares carrying full voting rights. 4. (Repealed). 5. (Repealed). 6. A member shall join the contract referred to in section 1 on the coming into force of that contract. SECTION II PROFESSIONAL LIABILITY INSURANCE FOR MEMBERS IN PRIVATE PRACTICE 7. A member who exercises, full or part-time, the profession of engineer in private practice in any sector of activity not listed in section 7.1, on his own account, or on the account of another member, a partnership or a corporation, shall, in addition to joining the contract referred to in section 1, hold an insurance contract which complies with the requirements set out in sections 8 and 9, establishing a guarantee against any liability which the member may incur by himself or through the member’s employees or agents resulting from fault or negligence committed in the exercise of the profession. The member remains subject to this obligation for at least five years after the performance of any act in the exercise of his profession. The following shall be considered to meet the requirements of the above paragraph: 1° PAGE 16 OF 20 a member who is employed by another member who holds a contract of professional liability insurance meeting the requirements of sections 8 and 9 and which covers any personal liability that may be incurred by the employee in the exercise of his profession; © Concordia University 2003 ENGR201 PROFESSIONAL PRACTICE AND RESPONSIBILITY CHAPTER 12 2° a member who is a partner or an employee of a partnership or who is a shareholder, a director, an officer or an employee of a corporation, where the partnership or corporation holds a contract of liability insurance which meets the requirements of sections 8 and 9 and covers any liability that may be incurred by the member in the exercise of his profession; 3° a member whose private practice is constituted solely of professional services which are rendered individually and on his own account, outside of his principal employment, and the total fees from which do not exceed $2,000 per project and $10,000 per total number of projects carried out during a given year. 7.1. Members who perform professional acts in the following sectors of activity are considered to be in a different category from members subject to section 7: 1 the railway, nuclear, automotive or aeronautics industries; 2 naval architecture; 3 asbestos removal; 4 rehabilitation of contaminated sites. Notwithstanding section 7, members belonging to this category shall establish a guarantee against any liability which they may incur as a result of fault or negligence committed in the exercise of their profession through a written undertaking from their employer or their client to cover such liability, a copy of which is to be sent to the Secretary of the Order before the first day of April of each year. Such members shall meet all the following conditions: 1 They send a sworn statement by registered mail to the Secretary of the Ordre before the first day of April of each year, in which statement they certify the following to be true: a) They exercise their profession in one or more of the sectors of activity listed in the first paragraph; PAGE 17 OF 20 © Concordia University 2003 ENGR201 PROFESSIONAL PRACTICE AND RESPONSIBILITY CHAPTER 12 b) They have sent an application for professional liability insurance to all insurers known to insure engineers’ professional liability; c) All these insurers have declined to guarantee their liability; d) The reason stated by all the insurers for their refusal is the impossibility of covering the risks generally associated with the professional services rendered by members in this sector of activity; e) The refusal is not motivated by a member’s past claims record; f) Action was taken to obtain a contract of insurance in accordance with sections 8 and 9; 2 The letters from all the insurers approached by the member, explaining the reasons for their rejection, must be included with the sworn statement; 3 They inform each person to whom they render professional services contemplated by this section, including their employer, that they do not hold a contract of insurance in accordance with sections 8 and 9. 8. The contract of insurance shall contain the following minimum requirements: 1° 2° the commitment on the part of the insurer to fully assume the defence of the insured in any action taken against the insured and to pay, in addition to the amounts covered by the guarantee, all costs and expenses of any actions taken against the insured, including those of the defence and including interest on the amount of any judgment; 3° PAGE 18 OF 20 the commitment by the insurer to pay instead and in the place of the insured, within the limits of the guarantee, any amount that the insured may legally be required to pay to a third party as damages and interest relating to a loss arising during the period covered by the guarantee or which arose before that period but respecting which a claim is presented during the period of the guarantee and resulting from a fault or negligence committed in the exercise of the insured’s profession; a minimum guarantee of $250,000 per loss and $500,000 per total losses arising during the period of the guarantee or which arose before that period but respecting which a claim is presented during the period © Concordia University 2003 ENGR201 PROFESSIONAL PRACTICE AND RESPONSIBILITY CHAPTER 12 of the guarantee; those minimum amounts are $500,000 and $1,000,000 respectively where the insurance contract is subscribed to by a member, a partnership or a corporation for other members in the employment of the member, partnership or corporation, or for directors, officers or shareholders of the corporation or partners of the partnership; 3.1° the insurer’s commitment to extend coverage to any claim that is submitted during the five years following the insurance period during which the holder referred to in section 7 ceases to perform an act in the practice of his profession; 4° the commitment, by the insurer, to give advance notice to the Secretary of at least 30 days when it intends to rescind, not to renew or to amend the contract of insurance, where the amendment relates to a requirement set out in this section; 5° the commitment, by the insurer, to give notice to the Secretary within 30 days following recision, non-renewal or amendment of the contract of insurance where the amendment relates to a requirement set out in the section. 9. The contract of insurance may contain exclusions generally permitted in professional civil liability insurance for engineers. 10. A member who is subject to the requirement set out in section 7 shall submit to the Secretary of the Order, before the first day of April of each year, a declaration that the member holds and maintains an insurance policy in compliance with this regulation. A member who becomes subject to this obligation during the course of a year shall furnish such declaration within 30 days of becoming so subject. A declaration made pursuant to this section shall mention the name of the insurer. 11. A member subject to the requirements of section 7 shall, upon request, present his insurance policy to the Secretary of the Order or any other member of his personnel that the Bureau designates and provide to that person any information regarding the policy considered useful to the application of this regulation. PAGE 19 OF 20 © Concordia University 2003 ENGR201 PROFESSIONAL PRACTICE AND RESPONSIBILITY CHAPTER 12 SECTION III FINAL PROVISION 12. This regulation shall enter into force on the fifteenth day following the date of its publication in the Gazette officielle du Québec. SCHEDULE 1 (Repealed) SCHEDULE 2 (Repealed) This regulation does not take into account the nature and extent of the insurance coverage offered by insurance companies; it does not guarantee the availability of compliant insurance policies and does not regulate the premiums, which may be very expensive. The fact that insurance coverage may be difficult to obtain or prohibitively expensive does not dispense an engineer from the obligations and conditions stated in the regulation, even if it means restricted activities or going out of business. REQUIRED READING None SUGGESTED READING None PAGE 20 OF 20 © Concordia University 2003 ...
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This note was uploaded on 05/09/2010 for the course ENGR 201 taught by Professor Remialaurent during the Winter '10 term at Concordia Canada.

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