Licence exemptions for certain contractor partnerships

Construction contractors sometimes form partnerships for the purpose of carrying out work on a single, generally large-scale, construction project. Everyday language uses "consortium" or "joint venture" to designate these partnerships, which can be general or undeclared partnerships, with or without a written contract.

Under section 3.2.5 of the Regulation respecting the application of the Building Act, a contractor partnership is exempt from the obligation of holding a licence where the following conditions are met:

• The partnership is a general or undeclared partnership; accordingly, a limited partnership or a legal person cannot avail itself of this exemption.
• The general or undeclared partnership was formed for the purpose of carrying out construction work on a single project.

The planned work is authorized by the following licence subclasses:

• 1.3 Contractor - all buildings
• 1.4 Contractor - roads and mains
• 1.5 Contractor - civil engineering structures
• 1.6 Contractor - underwater civil engineering
• 1.7 Contractor - telecommunications, transmission, transformation and distribution of electric power
• 1.8 Contractor - petroleum equipment installation
• 1.9 Contractor - building mechanicals
• 1.10 Contractor - mechanical lifts

Each of the contractors who are members of the general or undeclared partnership must hold a general contractor's licence covering the entire project.

The tender documents for the construction project require the successful bidder to provide a contract performance guarantee and a labour, material and services payment guarantee (e.g. security, certified cheque).

All of these conditions must be met in order to qualify for the exemption.

If this is not the case, your contractor partnership will need a licence to bid on the project and to carry out the project work, or have it carried out.

Precautionary measures to be taken before bidding

You believe that your partnership meets all of the conditions set out in section 3.2.5 of the Regulation respecting the application of the Building Act, and you therefore intend to bid on a project without applying for a contractor's licence?

Beware! Before you bid, make sure your file contains all the necessary documents clearly showing that this exemption applies. The client could require these documents in order to verify that the bids submitted are compliant.

In particular, your file should contain the following:

• The contract of partnership, in which the contractors who are members of the partnership agree, in a spirit of co-operation, to be engaged in an activity, to contribute to it by pooling assets, knowledge or activities, and to share among themselves the monetary benefits arising from it. Although a written contract is not mandatory to form a partnership, such a document, even if concise, may help you to establish that the exemption applies to you. The partnership contract must also specify that the general or undeclared partnership is established with a view to carrying out construction work involving a single project.
• In the case of a general partnership, a copy of the declaration of registration filed with the Registraire des entreprises du Québec.
• A copy of the general contractor's licence of every contractor who is a member of the partnership, each including all the subclasses of the general contractor's licence that are required under the terms of the project.
• The relevant extracts from the tender documents with respect to the planned work (subclasses 1.3 to 1.10), as well as the contract performance guarantee and a labour, material and services payment bond.
• Any other document required by the client to establish the application of the exemption, e.g. a sworn statement.

The general partnership must, during the course of its activities, indicate its legal form of business organization, either as part of its legal name or following it. Note that a general partnership, over and above any ground for dissolution provided for by the contract, is dissolved by the attainment of its object or the impossibility of attaining it, or with the consent of all partners.

An undeclared partnership, over and above its termination with the consent of all its partners, ceases with the advent of its term or the occurrence of the condition appended to the contract, through the attainment of the object of the contract or the impossibility thereof.

Lastly, even if the exemption does apply to your partnership, it is essential that you read the tender documents carefully, particularly any clause pertaining to licences issued by the Régie du bâtiment du Québec. The client could indeed require that any bidder hold a building contractor's licence, even in the case of a partnership to which the exemption set out in section 3.2.5 applies.