Can deadlines be changed if set out in contract?
Question: If a contract with an independent contractor contains deadlines and specific timelines for the work, is there a risk of breaching the contract if the timelines change?
Answer: Yes, in any contract, a failure to complete contractual undertakings or obligations by a specified date may be grounds for a breach of contract claim. Simply put, parties are obliged to live up to the terms they agree to in a contract; if the contractual terms include specific deadlines or timelines for the completion of certain works, a party risks breaching the contract if they fail to meet these deadlines.
In determining whether there has been a breach and if so, the appropriate remedy, courts will consider both the intended nature of the contractual term and the actual effect of the breach. While, for the most part, strict performance of contractual obligations is required, depending on the language of the agreement and the circumstances surrounding the alleged breach, courts may not consider a missed deadline important enough to warrant damages or termination of the agreement.
For example, in Endacom 2000 Inc. v. Hydro One Networks Inc., Endacom contracted to produce state-of-the-art electronic meters for Hydro One. After Endacom failed to meet the proposed delivery schedules on several occasions, Hydro One terminated the contract on the grounds of late delivery. However, even while Endacom admitted to missing the agreed-upon delivery schedules, the Ontario Superior Court of Justice concluded that Endacom did not breach the contract by failing to deliver the meters on schedule. Accordingly, the court held that Hydro One wrongly terminated the contract on the basis of delay in the delivery of the meters.
In coming to this conclusion, the court identified that there was no evidence it was crucial to Hydro One that the meters be delivered by a particular date or that Hydro One suffered any specific prejudice by the failure of Endacom to meet its proposed delivery dates:
“It is not surprising that the scheduled dates for the delivery of the meters were not met. The development of the EPM 2000 was a totally new concept. It meant transforming the existing meters from an electric mechanical system to a completely computerized digital meter containing functions that had never been previously developed. Neither Endacom nor Hydro knew what the road ahead, in developing the EPM 2000, would entail. At the outset it must have been evident that to develop the EPM 2000 as envisaged by the parties would take a considerable amount of trial and error with both parties learning by the experience of the development process.
In my view, scheduled dates for various phases of the development of such a futuristic product were meaningless. I suggest that the parties were more interested in developing a quality product than they were concerned about delivery of the EPM 2000 at a particular time.”
The court also noted that several previous delivery dates had passed without any complaint from Hydro One.
While contracting parties should be wary any time they do not comply with the terms of the agreement, a missed deadline may not automatically result in a breach of contract in every circumstance. Those looking to enforce a strict timeline should be cautious in their dealings with the defaulting party, as a court may find that their conduct implied that the agreed-upon deadline could be waived or extended.
For more information see:
• Endacom 2000 Inc. v. Hydro One Networks Inc, 2002 CarswellOnt 57 (Ont. S.C.J.).Brian Johnston, Q.C., is a partner with Stewart McKelvey in Halifax. He can be reached at (902) 420-3374 or email@example.com.