Supreme Court Decision Impacts Tendering Process
The Supreme Court of Canada has overturned a decision of the BC Court of Appeal with significance for the design and construction industry. The case is relevant to the drafting of procurement documents, the bidding processes for construction and other contracts as well as the consultant selection process.
In the case of Tercon Contractors Ltd. v. British Columbia, 2010 SCC 4, the court ruled that the exclusion clause in the Request for Proposal (RFP) tendering contract does not protect the owner from liability for accepting a non-compliant bid.
The Province, as owner, was found to have failed to comply with the rules established in the RFP by accepting a bid from an ineligible bidder. In doing so, it also failed to discharge the duty of fairness implied in the tendering process. Under these circumstances, the exclusion clause was ruled to be invalid as the Province had acted in a manner contrary to the integrity of the bid process. The court upheld the $3.3 million in damages awarded to the plaintiff, Tercon Contractors, for loss of profits.
When preparing tender documents, advising owners on their interpretation or administering the tender process, it is important to be aware that this is a complex and litigious area and that legal advice should be sought as required.
A more detailed summary of the case is available in the February 17, 2010 E-Bulletin published by Bull, Housser & Tupper LLP’s Engineering and Construction Group.