October 17, 2018
Obligation to supply salt during a shortage
BY ROB KENNALEY AND JOSH WINTER
RECENT INDICATORS are that Canadian winter maintenance contractors may face a substantial shortage of salt supplies for the upcoming winter maintenance season. We understand that a strike at one of North America’s largest salt mines, coupled with flooding at another, has resulted in those primary suppliers advising that their supply will for the most part, be limited to their largest institutional clients. This has the potential to impose significant impacts on owners, contractors and the public at large.
For winter maintenance contractors, the first thing to remember in assessing the risk of a salt shortage is that the contractor is not the owner or occupier of the premises at first instance. It is the contractor’s client who has the responsibility to manage the risks associated with snow and ice on the premises. While the client can reasonably assign some or all of those obligations to a contractor under a contract for winter maintenance services, the impact of such a shortage is at first instance, and primarily, a risk to the clients.
THE STARTING POINT is, accordingly, what the contractor has agreed to do under its contract. If the contractor has not agreed, expressly or by implication, to apply salt under the contract, it will not be impacted by a salt shortage. However, if the contractor has assumed the obligation to supply salt (and unless the contract documents expressly or by implication provide otherwise) it will generally have assumed the risk of a salt shortage.
A contractor who cannot meet its obligation to supply salt under a contract should first have reference to the contract itself, to see what, if any, relief might be available. The Landscape Ontario winter maintenance contract (gfl.me/l4af), for example, provides that “the Contractor will not be responsible to apply the Ice Melting Products if they are not commercially and reasonably available to the Contractor, at commercially reasonable rates.” Other contracts may have similar clauses. Many might take the form of a ‘force majeure’ clause, which generally relieves a party from obligations which cannot be met due to acts of God and any other extraordinary events beyond its control, such as hurricanes and tornadoes, as well as civil insurrection or revolution.
Whether or not a clause will relieve the contractor from the obligation to supply salt, or from the risk of a salt shortage, will depend on the circumstances and the wording of the particular clause. Care should be taken to review and interpret these, if they are to be relied on. If you are in the process of negotiating a new contract, or contract term, you should of course make it clear that salt will most likely not be available and that, accordingly, other suitable alternative products will have to be used. If suitable alternatives are not available, your best advice may be to decline any responsibility to apply ice melting products except as directed by the client, with the client assuming all liability which might arise from the failure to apply ice melting products in any particular circumstance.
IF AN EXISTING CONTRACT is silent on the issue of salt availability or force majeure, whether or not the contractor will be relieved of the obligation to provide salt will depend on an assessment of the individual circumstances. Contractors may, for example, be able to rely on the legal concept of ‘frustration’ to avoid contractual liability. In the end, however, this determination cannot be made in advance of the actual shortage or by way of general application. The contractor’s obligations will depend on an assessment of who assumed the risk that salt might not be available in the context of whether or not the supply was truly unavailable, whether or not the lack of supply was foreseeable and what alternatives
Regardless, and without question, if you believe you will not be in a position to provide salt under a contract for the coming season, you should advise your clients of this as soon as possible, in writing. You should follow any notice procedures under your contract in that regard, to ensure the proper individuals get notice of the issue. Given the associated safety concerns, you should follow up until the issue is addressed — again, in writing.
YOUR CLIENTS should be informed that your ability to help them meet their obligations to manage the risks of ice in the coming season has been severally impacted by circumstances beyond your control. You should elaborate on the reasons why and confirm (if possible) that the contract will have to be changed to allow for alternative products to be supplied. The price of the alternative products should then be negotiated. You should be careful not to approve an alternative to salt which will not perform as well as salt, unless the client assumes full responsibility for the risks associated with such a change. Optimally, the client should be encouraged to consider the use of non-chloride options that will perform as well as, or better, than salt.
If non-chloride alternatives are not available, you may need to consider advising the client that your ability to perform the contract is frustrated and/or that you are entitled to rely on a contractual clause in order to be relieved of the obligation to provide salt. It may also be necessary to help the client develop strategies to close off areas to traffic and to post signs about the shortage as a means of managing the issue. It should be clear, to the extent possible, that these steps are taken to assist clients to meet their obligations and without any representation or warranty that they will necessarily be successful in managing the risk of slip and fall.
Finally, if an appropriate change to the contract cannot be negotiated so as to manage the risk of ice responsibly without the use of salt, experienced counsel should be consulted. This is because every contract and circumstance will be different and as the risks of a slip and fall in the circumstances can be significant.
Robert Kennaley and Josh Winter practice construction law in Toronto and Simcoe, Ont. They speak and write on construction law issues and can be reached for comment at 416-700-4142 or at rjk@kennaley.ca and jwinter@kennaley.ca. This material is for information purposes and is not intended to provide legal advice. Readers who have concerns about any particular circumstance are encouraged to seek independent legal advice in that regard.