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1 (B) The municipality's obligations are determined, in large part, by the proper characterization of its procure- ment. Since the R. (Ont.) v. 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 bidders 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 obligations between them, and courts will look at various indicators to determine what the intent was. The municipality'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 negotiation is to be carried out in a tender process, and the situation could be made worse if the bid selection committee goes "bid shopping" — a process by which an owner uses 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, the municipality should run a Request for Proposal process, which allows for more significant negotiation. 2 3 (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. The committee could accept BuildBig's mistakenly low bid price and force it to enter into the contract. If BuildBig refused, the committee could sue for damages based on the difference in cost between Build- Big's bid and the bid price of the next lowest bidder. However, if BuildBig found a problem making its bid non-compliant, then no "Contract A" could arise and BuildBig would be free to walk away from its bid without obligation or penalty. (B) The "discretion clause" is one of the terms and con- ditions of "Contract A" between the municipality and all compliant bidders. Since BuildBig's bid submission was non-compliant (and no "Contract A" arose), such a discretion clause would be ineffective in allowing the municipality to waive non-compliance. However, if BuildBig was prepared to go ahead with the contract at its quoted price and the municipality accepted its bid, such a clause may be a successful defence against the claim of a compliant bidder who complains about the municipality 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 this bidder's 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 this one does not need to be disqualified. 4 5 (C) The Supreme Court of Canada examined the word- ing of an exclusion of liability clause in the decision of Ter- con Contractors Ltd. v. British Columbia (Transportation and Highways) 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 perfectly drafted exclusion clause would be enforceable in the absence of unconscionable circumstances, it remains open whether subse- quent courts would still find that such clauses offend public policy and knock them down. YOUR RANKING? One or less correct: might be time to brush up Two correct: not bad, but some further work needed Three or four correct: very well done, but not perfect Five correct: excellent A DAILY BLOG [ 16 • JUNE/JULY 2012 OF CANADIAN LEGAL NEWS WWW.CANADIANLAWYERMAG.COM/LEGALFEEDS INHOUSE ] CANADIAN LAWYER & LAW TIMES POWERED BY

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