NPPE Legal Terms: 27 Words That Trip Up Engineers

Section IV.2 of the blueprint. Expect definition questions and short tendering scenarios.

Invitation to treat

An invitation for others to make offers, such as an advertisement or a general call for tenders. It is not itself an offer, so nobody can form a contract just by agreeing to it.

Consideration

Something of value each side gives or promises in return for the other side’s promise. It need not be money or of equal value, but a promise given for nothing in return is generally not binding.

Contract A

In Canadian tendering law, the preliminary contract formed between the owner and each bidder who submits a compliant bid, usually requiring a fair process and that the bid stay open for a set time. The construction contract itself is Contract B.

Statute of frauds

Provincial legislation requiring certain contracts, notably those about an interest in land and guarantees of someone else’s debt, to be in writing and signed to be enforceable.

The terms candidates most often say they had never heard before the exam.

Waiver

A voluntary decision, shown by words or conduct, not to insist on a contractual right you are entitled to.

Estoppel

A doctrine that stops a party who led the other side to believe a strict right would not be enforced from suddenly enforcing it, where that would be unfair, especially once the other side relied on the belief.

Repudiation

A clear signal, by words or conduct, that a party does not intend to perform the contract. Unjustified repudiation is a fundamental breach, and the other party may treat the contract as ended or insist on performance.

Quantum meruit

Latin for "as much as it is worth". A way to recover a reasonable amount for work actually done where no valid contract governs it, for example because the price was never agreed.

Liquidated damages clause

A clause fixing in advance what is payable for a specified breach, usually delay. It must be a genuine pre-estimate of the likely loss; a figure designed to punish is an unenforceable penalty.

Indemnification clause

A clause in which one party agrees to compensate the other for specified losses or claims, shifting that risk between them.

Section IV.3. Negligence is the heart of it, and the vocabulary around it is precise.

Tort

A civil wrong, other than a breach of contract, for which the law gives the injured person a remedy. Negligence, nuisance, trespass and defamation are all torts.

Standard of care

The skill and care a reasonably competent professional would have used in the same circumstances at the time, judged against ordinary competent practice, not perfection or hindsight.

Concurrent liability

The principle, confirmed by the Supreme Court of Canada, that the same conduct can breach both a contract and a duty of care in tort to the same party, so a claim can be brought in either or both.

Vicarious liability

An employer’s liability for a tort committed by an employee acting within the scope of employment, whether or not the employer itself was at fault.

Joint and several liability

Where several parties contributed to the same loss, each can be made to pay the whole of it. The plaintiff collects from whoever can pay, and the defendants sort out their shares among themselves.

Nuisance

Unreasonable interference with someone’s use and enjoyment of their land, such as vibration, dust or contamination reaching a neighbour. Unlike negligence, it does not require proof of carelessness.

Strict liability

Liability that does not depend on fault. Many environmental offences work this way, which is why a demonstrated due diligence program is usually the only defence.

Duty to warn

A tort obligation to warn people who could be harmed by a dangerous design, product or condition you become aware of, even after your contract or involvement has ended.

Limitation period

The time limit for starting a lawsuit, after which the claim is barred however strong it is. In most provinces the clock starts when the loss was discovered, or reasonably should have been.

Section IV.9: bonds and liens, where the numbers matter.

Bid bond

A guarantee that a successful bidder will sign the contract. If it does not, the surety pays the owner the extra cost of the next bidder, up to the bond amount, commonly about ten percent of the bid.

Performance bond

A guarantee that the contractor will complete the work. After a proper default, the surety can finish the work, bring in a replacement contractor, or pay out the bond amount.

Construction lien

A claim registered against the property itself by anyone who supplied work or materials to it and was not paid, even without a direct contract with the owner.

Holdback

A percentage of each progress payment the owner must keep back, most commonly ten percent under provincial lien statutes, as a fund to satisfy liens until the deadlines to preserve them have passed.

Sections IV.6 and IV.14, plus two terms that come up in ethics questions.

Arbitration

A private process in which one or more arbitrators decide a dispute. The decision is binding and enforceable, much like a court judgment.

Mediation

A neutral mediator helps the parties negotiate a settlement but cannot impose one. What is said in mediation is generally privileged if it fails.

Chattels

Movable personal property, such as equipment and materials, as opposed to real property, which is land and what is permanently attached to it.

Due diligence

Anticipating the reasonably foreseeable ways work could fail, putting a plan in place for each, and keeping a record that it was actually done. Evidence of it is a defence against negligence claims.

Definitions stick when you meet them in a scenario. Read the law chapter of the study guide, where each of these terms appears in context with worked examples, then test yourself with practice questions from Section IV. PassNPPE Pro also includes a searchable glossary of NPPE terms with examples.