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ANSWERS (B) Tom's obligations are determined in large part by the proper characterization of his procurement. Since the Ron Engineering case, the law of tender in Canada has been subject to the "Contract A/Contract B" framework, where "Contract A" refers to the mutual obligations owed between owners and bid- ders during the tender process and "Contract B" is the contract between the owner and the successful bidder. "Contract A" arises when the parties to the procurement intend to create legal obliga- tions between them, and courts will look at various indicators to determine what that intent was. Tom's process would probably be considered a true tender and, as a result, duties such as fair treatment would be owed to the bidders. Typically, little or no nego- tiation is to be carried out in a tender process, and the situation could be made worse if Tom goes "bid shopping" — using one bidder's price to extract a better price from another bidder. The law of tender considers such behaviour to be a violation of the implied duty of fairness and of the goal of preserving the integrity of the bidding system. To avoid any problem, Tom should run a request for proposal — an RFP — process, which allows for more significant negotiation. (D) If a bidder makes a price error, Ron Engineering says the bidder can't revoke the bid unless the mistake itself is obvious on the face of the bid documents. Tom could accept Goldbuild's artificially low bid price and force Goldbuild to enter into the contract. If Goldbuild refused, Tom could sue for damages based on the difference in cost between Goldbuild's bid and the bid price of the next lowest bidder. However, if Goldbuild found a problem making its bid "non-compliant," then no "Contract A" could arise and Goldbuild would be free to walk from its bid without obligation. (B) The "discretion clause" is one of the terms and conditions of "Contract A" between Shiny Minerals and compliant bid- ders. Since Goldbuild's bid submission was non-compliant (and no "Contract A" arose), such a discretion clause would be ineffective in allowing Tom to waive non-compliance. However, if Goldbuild was prepared to go ahead with the contract at its quoted price and Shiny Minerals accepted its bid, such a clause may be a success- ful defence against the claim of a compliant bidder who complains about Shiny Minerals choosing a non-compliant bidder. (C) A fundamental principle of tendering law is that the bid price must be certain. If the price is ambiguous or vague (like Diggum's bid price), then the bid should be rejected as "non- compliant." For this reason, owners often include language in the instructions to bidders that permits owners to resolve ambiguities in accordance with a predetermined rule, such as amounts written in words will take precedence over amounts in figures. That way, a bid like Diggum's does not need to be disqualified. (C) The Supreme Court of Canada recently examined the wording of an exclusion of liability clause in the Tercon Contractors Ltd. v. British Columbia (Transportation and High- ways) case and, in a close 5-4 decision, the majority found the wording was not clear and broad enough to protect the owner from liability for having chosen an ineligible bidder as the suc- cessful bidder. While the court appeared to accept that a perfect- ly drafted exclusion clause would be enforceable in the absence of unconscionable circumstances, it remains open whether a subsequent court would still find such clauses offend public policy and knock them down. YOUR RANKING?YOUR RANKING? One or less correct: might be time to brush up Two or Three correct: not bad, but some further work needed Four correct: very well done, but not perfect Five correct: impressive A daily blog of FEEDS LEGAL LegalFeeds_CL_Feb_11.indd 1 16 • JUNE 2011 INHOUSE Canadian Legal News Powered by & 1/21/11 9:12:21 AM 1 2 3 5 4 canadianlaw Canadian Law yermag.com/legalfeeds yer Law Times