E. Concurrent Liability in Contract and Tort

• Author: John D. McCamus
• Profession: Professor of Law. Osgoode Hall Law School, York University
• Pages: 700-702

Page 700

Representations of fact that have been made fraudulently or negligently may attract liability in damages in a tort claim. As we have also seen, misrepresentations that have induced agreements may be properly characterized as warranties in the form of a unilateral agreement collateral to the main agreement or as terms of the main agreement itself, thus making available to the misrepresentee the normal remedies for breach of contract. Further, we have noted that it is a common practice to draft an explicit term of an agreement giving an undertaking that a particular set of representations is true. In such circumstances, then, it may be asked whether the maker of the misrepresentation may be liable both in tort and in contract for the making of a particular false statement. The traditional doctrine, treating the question of whether an individual who has breached a contract in such fashion that the conduct also amounts to a tort that may be liable concurrently in both contract and tort, is rather subtle and complex.³²As a general principle, the traditional doctrine held that once the parties had entered into a contractual relationship, the terms of the contract ought to provide the exclusive source of the parties’ mutual rights and obligations. This principle was, in turn, subject to a number of limitations and exceptions of uncertain ambit. In recent years, however, this subject has been greatly simplified by the decision of the Supreme Court of Canada in BG Checo International Ltd. v. British Columbia Hydro & Power Authority.³³In this case, the defendant tendered out a project involving the construction of a hydro line. The invitation to tender negligently mis-represented that a right of way for the line had been cleared by others. This negligent misstatement was repeated as a term of the construction contract entered into by the plaintiff, the successful bidder. In this case, the Supreme Court confirmed that the remedies available for the breach of contract constituted by the misrepresentation would be the normal contractual remedies for breach of contract. The Court went on to consider, however, whether it might be possible to claim tort damages in such a case if the breach of contract (i.e., the false representation) also constituted the tort of negligent misstatement. The BG Checo decision is the leading Canadian decision on concurrency of liability

Page 701

in tort and contract where a breach of contract also constitutes...