Legal Blog

Cost Plus

Infinity Construction Inc. v. Skyline Executive Acquisitions Inc. 2020 Ont SCJ

A cost plus, CCDC 3 contract does not grant an unlimited right to the contractor to perform any work it wishes. It still has an obligation to exercise a degree of diligence in carrying out work so as to not incur costs significantly higher than the estimate without prior approval. Courts will imply a term preventing payment for wasteful and uneconomic use of labour and materials and, if there is an estimate providing a guidepost, the final price should fall somewhere near the estimate – unless the contractor promptly notifies the owner of an expected overrun. In this case, the contractor’s work and invoices were satisfactory. Contractual interest did not run until the invoices were provided, but there was no reason to eliminate interest in its entirety.

Written by Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.