Legal news and trends for Canadian in-house counsel and c-suite executives
Issue link: https://digital.canadianlawyermag.com/i/50882
By Glenn W. Ackerley, partner, WeirFoulds LLP Side-stepping procurement traps Since the 1981 decision of the Supreme Court of Canada in R. (Ont.) v. Ron Engineering, the law of tender- ing has developed into a legal mine- field. Although the public sector is subject to layers of laws, regulations, trade agreements, bylaws, and poli- cies affecting procurement, such as the Agreement on Internal Trade and Ontario's new broader public-sector procurement directive, the private sector is not free of legal responsi- bilities. On the contrary, the common law principles of tendering law apply equally to private-sector owners, and the rules create traps for the unwary. In this quiz, Tom has taken over the position of purchasing manager of Shiny Minerals Corp. and has to quickly get up to speed on procure- ment law principles. If you were Tom, how would you do? Shiny Minerals is planning to develop a mine site and construct a processing facility. Tom decides to run a competitive procurement and ask interested contractors to provide a firm price, schedule, and bid security. Once he has received responses, he intends to sit down with the best three responses and negotiate with each to arrive at the best deal. Can he take this approach? Goldbuild Contracting, one of the bidders, realizes that a portion of the scope of work for the project has been overlooked and Goldbuild's overall price is mistakenly too low, but Tom cannot tell there is a pricing error. What must Goldbuild do? In an effort to prevent Goldbuild and other bidders from getting off the hook through flaws or problems with their respective bids and to allow Tom to accept any bid submitted, Tom adds a "discretion clause" to the bid documents that allows him to waive errors and omissions in any bid received. Tom can use this clause to accept Goldbuild's non-compliant bid. Tom asks bidders to provide bid prices in both words and numbers. Diggum Engineering submits a bid but the bid price in words does not match the bid price written in numbers. Both prices are lower than any of the other bid prices received. What should Tom do? To protect Shiny Minerals from lawsuits arising from tenders, Tom adds an "exclusion of liability" clause to the instructions to bidders. It states Shiny Minerals is free of any liability associated with the tender process. Shiny Minerals gets sued by Rich Contracting, the second-lowest bidder, for having chosen Diggum's non-compliant bid. Can Tom successfully defend the claim? INHOUSE JUNE 2011 • 15 1 c) b) d) 3 d) 5 c) Y No. b) a) Who The es. The knows? courts will courts always not enforce ce enfor exclusion exclusion clauses. clauses. c) W b) a) rite 4 Reject the to Pick the Pick Diggum' of Diggum higher s lower and price bid. ask b) rue False a) T T ry a) When 2 c) T rite do om to W t Can' and accepts anything. T pr find esented a om it. flaw with in the describing the bid b) a) Definitely oblem. a pr be Could pr a Not a pr oblem. Goldbuild contract oblem. the is err submission for or stuck and signatur the and and e, point two awar Diggum to prices the d and clarify withdraw with the the simply it r befor out price. bid to awar contract. d which efuse e T to om. sign it. is contract. the the intended price.