Canada: Infrastructure Ontario Agreements

Numerous agreements are entered into throughout an Infrastructure Ontario project. This blog provides a brief overview of different types of agreements you may see.

Project Agreement

The Project Agreement is the primary document governing completion of the project by the project company. Attached to the Project Agreement as schedules are a number of other documents relating to the project and its completion. The project agreement and its schedules effectively provide the "blueprint" for completion of the project. The following are some of the important agreements that are attached as schedules to the project agreement.

Construction Contract

A Construction Contract is the agreement between the project company and the contractor regarding how construction will be completed. It usually incorporates by reference many of the terms of the Project Agreement. The Construction Contract will also deal with additional matters such as payments and application for payments.

The Lender's Direct Agreement

The Lender's Direct Agreement is a contract between Infrastructure Ontario, the lender and the project company which establishes the contractual relationship between the lender and Infrastructure Ontario. This Agreement deals with the lender's right to take security over the project company's interest in specific contracts, enforcement of that security by the lender and notification of same to Infrastructure Ontario, what constitutes an "event of default" and the lender's right to "step in" in the event of default, the remedies available to the lender including the right to enter into a replacement Construction Contract with a replacement contractor, and the requirement for Infrastructure Ontario to pay the substantial completion payment directly to the lender.

Assignable Agreement for Construction Contract

This Agreement is an Agreement between the project company, the contractor and Infrastructure Ontario. It assigns the project company's interest in the Construction Contract to Infrastructure Ontario as security for the obligations of the project company to Infrastructure Ontario in the Project Agreement. This Agreement provides that if there is a default, Infrastructure Ontario can step in and compel the contractor to complete the work in accordance with the Construction Contract.

Assignable Subcontract Agreements

These Agreements are agreements between the project company, Infrastructure Ontario, the contractor and a subcontractor. It is expected that each subcontractor will sign a separate Assignable Subcontract Agreement. These agreements assign to Infrastructure Ontario all rights of the contractor so that in the event of a default, Infrastructure Ontario can compel the subcontractor to continue to perform.

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