The Contractor in Enterprise Contracts
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.
Contractors have several responsibilities under enterprise contracts:
- work carefully
- act in the client’s best interests
- make sure the work is performed on time and in keeping with the contract
- follow the rules, standards and guidelines that apply in their fields, often called the “rules of art” or “good practices”.
Control and Supervision of the Work
A contractor who has entered into an enterprise contract can choose how he will perform the work, including the workers he will hire. The contractor always keeps control and supervision of the work.
This means that the client cannot tell him how to do the work. However, the client can tell him what work has to be done, oversee progress on the work and express preferences regarding the result. For example, if a contractor agrees in an enterprise contract to renovate a building, the client can make general comments about the work to be performed, require that certain materials be used and ensure that the renovations are properly performed.
This independence of the contractor is the main difference between an enterprise contract and an employment contract.
Keeping the Client Informed
Before the Contract Is Entered Into
Before an enterprise contract is entered into, the contractor must, as much as possible, provide the client with all useful information about the work to be performed, including the materials and time it will require. This way, the client has an idea of the cost of the work and can decide whether or not to commit by signing a contract.
For example, before signing a renovation contract, a contractor must inform the client of how long he expects the work to take and, if he works on an hourly rate, the number of hours he expects to work.
The contractor must also explain to the client what the renovation work consists of and give important details, such as the fact that the proposed contract only covers part of the repairs necessary for the building to be returned to perfect condition or the fact that a wall will have to be damaged to do plumbing work.
During the Work
If the contractor is paid based on the value of the work performed (for example, on an hourly rate), he must, on request, inform the client to the extent possible about the progress of the work and the expenses incurred so far. This way, the client can assess how much the work will cost before getting a final bill and settle any concerns with the contractor.
The contractor must also inform the client when he realizes that the work will cost more than what was discussed, when the nature of the work has changed or when it will take longer than expected. This lets the client decide what he wants to do in light of the new information.
A contractor who gave a cost estimate cannot just bill a higher amount at the end of the contract than what was given in the estimate.
Supply the Tools and Materials
In an enterprise contract, the contractor usually provides the tools, materials and other items required to perform the contract. However, he can agree with the client that the client will provide them.
When the contractor provides the tools, materials and other items, he must guarantee that they are of good quality and appropriate for the work.
When the client provides the tools, materials and other items, the contractor must use them with care. He must tell the client how he is using them and notify the client if the materials provided are not suitable for the work or have apparent or hidden defects that a reasonable contractor should notice.
A contractor can perform an enterprise contract by asking another person (a “sub-contractor”) to do all or part of the work for him.
However, a contractor cannot sub-contract work if the contract has been entered into specifically because of his expertise or personal qualities, or if the very nature of the contract makes sub-contracting impossible.
For example, a contractor can give a contract to dig a ditch to someone else. It makes no difference who digs the ditch, as long as it’s dug!
But the situation is quite different if a client hires a painter he considers the next Picasso to paint a portrait. In this case, the painter cannot sub-contract the work since the client hired him because of some specific skill the contractor has, namely his style.
To avoid problems, the client can always say directly in the contract that the contractor cannot sub-contract the work.
Finally, even where a contract is sub-contracted out, the contractor remains responsible toward the client. This means that, if the sub-contractor does not perform the work or performs it poorly, the contractor cannot merely blame the sub-contractor: he must do everything possible to correct the situation.
Achieving the Results Required by the Contract
A contractor must obviously respect an enterprise contract he enters into with a client. But does he have to achieve a particular result in performing the work? It all depends on the nature of the work:
In certain situations, the contractor has an obligation to achieve a specific result (called an “obligation of result”).
For example, a mover must deliver furniture to the right place, a roofer must install a roof that doesn’t leak and a cabinetmaker must create a piece of furniture that respects the client’s order.
In this type of situation, the contractor is always responsible toward the client if he does not provide the expected result, unless unexpected events clearly beyond his control prevented him from doing so. Sometimes events beyond a person’s control are called “acts of God”.
In other situations, the contractor must use all reasonable means to perform the work, but he’s not obliged to achieve a specific result (called an “obligation of means”).
For example, a contractor who performs complex work to modify an industrial machine does not have to guarantee that his work will give the desired results, especially when the client knows that the contractor might be not succeed.
In this type of situation, the contractor will only be responsible if he did not take all reasonable means to achieve the result indicated in the contract.
Stopping the Work and Ending the Contract
The contractor can end an enterprise contract in some situations, just like the client can in certain situations.
The contractor can end an enterprise contract by stopping work. However, he must respect some rules to do this:
1. He must have a serious reason.
Examples of serious reasons:
- The client interfered with the performance of the work several times.
- The client refused to cooperate with the contractor.
- The client wanted to change the contract without the contractor’s agreement.
- The client was abusive, disagreeable and impolite on several occasions.
Examples of reasons that do not allow the contractor to end the contract:
- The fact that he did not charge a high enough price in the contract, unless the price was set based on wrong information given by the client.
- The fact that the client is very demanding regarding performance of the work.
- The fact that the client has not paid certain small amounts.
2. He must not end the contract a time that causes the client damage.
He must do whatever is necessary to ensure that the client does not suffer any immediate damage due to stopping the work.
For example, if a contractor is hired to repair the roof of a building, he cannot stop the work in the middle of winter and leave a large hole where snow can come in. The contractor must take steps to avoid this damage, such as by installing a temporary roof to patch the hole.
If he received a payment in advance from the client, he must repay any extra amount he had already received over and above the value of the work he had time to perform.
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.