Rights and Responsibilities of Clients in Enterprise Contracts

Jupiterimages / Photos.com / Thinkstock

An enterprise contract is a contract under which someone - the contractor - agrees to do physical or intellectual work for a client in exchange for payment.

Here's an overview of the rights and responsibilities of a client who hires a contractor.

Respect the Contractor's  Independence

A contractor who has entered into an enterprise contract can choose how she will perform the work, including the workers she hires. The contractor always retains control and supervision of the work.

The client therefore can't tell her how the work should be done.  However, the client can tell her what work needs to be done, oversee progress on the work and express preferences as to the result. For example, in an enterprise contract where a contractor agrees to renovate a building, the client can make general comments about the work to be performed, require the use of certain materials and ensure the renovations are carried out properly.

This independence of the contractor is the main difference between an enterprise contract and an employment contract.

Provide Information to the Contractor

Ordinary Client

A client who enters into an enterprise contract with a contractor must give the contractor all the information she has about the work to be performed, either before the contract is entered into or while it's being carried out.  The client must not give wrong information.

Expert Client

A client who's an expert in a field related to the requested work must give the contractor more information than a client who's not an expert.

Take the example of a client who hires a construction company to build a new house. The client drives heavy trucks and doesn't know anything about building houses. In this case, she only has to give the contractor information she reasonably believes to be useful.

However, the situation would be quite different if this client was an architect and had designed houses herself.  In this case, she would have an obligation to provide all specific information she has about the performance of the work, such as the importance of installing a specific number of beams to support a special structure.

Pay the Contractor

A client who has entered into an enterprise contract with a contractor must pay for the work she has received. (Remember that it's possible to get an estimate of the cost of the work before signing the contract.)

At the end of the work, the client has a choice to make before paying, depending on whether the work has been done satisfactorily.

Ending an Enterprise Contract

The client can put an end to an enterprise contract in certain situations, just as the contractor can under certain conditions.

For Bad Work

A client can end the contract if the contractor does poor work, for example, if she's seriously behind schedule or her work does not meet industry standards.

The client can also be compensated for damage caused by the contractor's fault. 

For Another Reason

A client can end an enterprise contract at any time and for no particular reason, even if the contractor is doing a good job. However, the client has to meet certain conditions:

  1. She must act in good faith. 
    This means that she cannot put an end to the contract just to needlessly harm the contractor. A client who terminates a contract abusively might have to pay the contractor money.

  2. The client usually has to pay the contractor for the following:
  • the work performed (e.g., the number of hours already worked)
  • expenses (e.g., equipment rental costs)
  • materials used for the work  that cannot be removed by the contractor (e.g., nails put in a floor) or that can't be used for something else (e.g., metal parts cut to a specific size that can't be used somewhere else)
  • losses suffered by the contractor due to the cancellation of the contract

With respect to such losses, the contractor cannot be compensated for the profit she would have made from the contract if the client had not ended it.

A contractor can sometimes be compensated if she proves that she had to turn down other contracts to accept the one the client is ending. However, the contractor must minimize her financial losses, such as by looking for new clients or using the materials she already bought on another contract, if possible.

Important! Unless it's a contract between a consumer and a merchant, the contractor and the client can agree that neither side can cancel it without the other side's consent.

The contract could also say that the client must have a valid reason to terminte the contract, or that she has to give 30 days' notice to end it.

Important !
This article explains in a general way the law that applies in Quebec. This article is not a legal opinion or legal advice. To find out the specific rules for your situation, consult a lawyer or notary.