Financing Inventory Subject to Intellectual Property Rights: How Can Creditors Reduce the Risks?
The rights of a secured creditor holding security in a debtor’s inventory may be limited by certain third-party rights.
The Quebec Court of Appeal’s decision in SNC-Lavalin inc. v. Société québécoise des infrastructures (Société immobilière du Québec) is significant for construction law in more than one respect.
Structural problems were noted in a building in the city of Trois-Rivières belonging to the Corporation d’hébergement du Québec (the “CHQ”) (now known as the Société québécoise des infrastructures) that required remedial work consisting of driving new piles and raising the building. The CHQ issued a call for tenders and eventually awarded the fixed-price construction contract to general contractor Aecon. The latter entered into a subcontract with Consortium Bisson-Prétech (“CBP”) for driving the piles and raising the building. The owner had retained the services of engineering firm CIMA+ to draw up the plans and specifications that were included in the call-for-tender documents.
Two decisions were rendered recently by the Superior Court of Québec concerning legal construction hypothecs. These decisions highlight the importance of respecting the conditions for the validity of any claim made regarding this type of security, whether they be procedural ones or those that give rise to the right to register such a charge.
Article 916 of the Civil Code of Québec (the “CCQ”) provides that “No one may … acquire for himself property of legal persons established in the public interest that is appropriated to public utility”.
Compliance of a bid depends on the compatibility of two sets of documents: the call-for-tender documents and the documents comprising the bid. Two recent cases are indicative of the range of issues our courts are called upon to decide in this area.