Bill 142* and standard construction contracts: are contractors entitled to an adjustment of their stipulated price contracts concluded before May 30, 2017?
On May 30th, Quebec’s National Assembly adopted Bill 142, putting an end to a construction workers’ strike that had been ongoing for seven days and decreeing a wage increase of 1.8% for the workers concerned.
This wage increase has a direct impact on employers in the industry, who must now increase the hourly pay rates of their employees.
Obviously, in the case of cost-plus contracts, the pay rates in effect will be used to calculate the cost of the work.
But what about stipulated price contracts?
Can a general or trade contractor require a price adjustment under a standard contract of the Canadian Construction Documents Committee (CCDC) entered into before Bill 142 (May 30, 2017)?
Section GC 10.2.7 of Stipulated Price Contract CCDC-2, the equivalent of which is also found in Stipulated Price Subcontract CCA-1, provides as follows:
“If, subsequent to the time of bid closing, changes are made to applicable laws, ordinances, rules, regulations, or codes of authorities having jurisdiction which affect the cost of the Work, either party may submit a claim in accordance with the requirements of GC 6.6 – CLAIMS FOR A CHANGE IN CONTRACT PRICE.”
It is thus possible for the contractor to be compensated for the increase in the cost of the work resulting from the adoption of Bill 142, provided the contractual procedure specified in section 6.6 of the contract is followed.
A request in this regard should thus be sent in writing to the client as soon as possible. Ideally the parties would then agree upon a change order providing for the cost adjustment, either on a lump-sum basis or by multiplying the number of hours actually worked as of May 30, 2017 by the applicable wage increase.
In the event that a non-standard construction contract is being used, we recommend that the relevant provisions be analyzed and that the client be sent a similar request in accordance with the contractual procedure provided for in the contract, or, failing that, as soon as possible.
If you would like more information on the legislative changes brought about by Bill 142 and its major impacts, please don’t hesitate to contact one of our professionals.
*An Act to ensure the resumption of work in the construction industry and the settlement of disputes for the renewal of the collective agreements.