Respond to the following case with a 500-word (minimum) essay. Following the normal tendering process, a regional power company RPC has offered a $25,000,000 contract for the design and installation of a wind and solar generation station to provide Northwestern Ontario communities with 10 megawatts of power generation. The winning contractor was a Toronto-based, privately owned business called Green Energy Performance (GEP). The final system must meet the target generation level using only 80% of the maximum capacity of the solar panels and wind turbines in order to account for downtime of some units for maintenance. In addition, solar must account for 70% of the generation as the expectations for wind energy is minimal in this region. Finally, the contract called for storage capacity of 2 MWh. The means of storage was not specified. The contract stated that failure to meet performance measure would result in penalties based on the severity of the shortfall in either power generation or storage. Specifically, there was a $1,000,000 penalty for each megawatt reduction in generation capacity at the aforementioned 80% rate and there was a $25,000/day penalty for going past the date of completion. However, the contract included an exclusion clause limited the contractors liability to $5,000,000. RPC was not entitled to make any other direct or indirect damage claims. While contractor had 5 years experience in the field with several major jobs completed successfully, they encountered many difficulties while completing the work. Unfortunately, the remote location of this installation ended up being much more difficult than WEP anticipated. The contractor was paid $22,000,000 before RPC realized that targets were unlikely to be met. While GEP did complete the installation, the power generation capacity was below target and the completion date was well past the deadline. Based on the shortfalls and overruns, RPC calculated the penalties to have accumulated to $6,000,000. At this point, RPC claimed the contract had been breached and brought in another contractor to fix the system. This resulted in another $10,000,000 in expenses above the funds already paid to GEP. Explain and discuss what claim RPC could make against GEP under these circumstances, what damages they would likely receive, etc. Explain the approach taken by Canadian courts with respect to contracts that limit liability and cite the cases that the courts would likely reference in their decision. Given the difficulty that GEP encountered in this project, could they have sought discharge by frustration or some other means? Explain.
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