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Tenders And Bids Notes

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This is an extract of our Tenders And Bids document, which we sell as part of our Contract Law Notes collection written by the top tier of University Of Ottawa students.

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THEME 8: TENDERS AND BIDS Traditionally, a call for tenders may be communicated by way of advertisement to the public or it can be an invitation to a specific group of companies made in a private manner. Under the traditional analysis, a tender is treated as an invitation to treat because a contractor chooses to send in a bid by way of a quotation. Unless the initial invitation indicates that the lowest bid will be chosen, any decision can be made to choose the best bid based on economic principles. If there is a communication indicating that the call will choose the highest or lowest bid, there is said to be an offer because the company is creating specificity (Harvala rule). Traditionally, the bidder is only bound by an offer it makes when it's accepted, so the offer of a bid can be withdrawn before acceptance. With Ron Engineering (SCC), policy seems to change this traditional rule such that offers cannot be withdrawn before acceptance because it would undermine the integrity of the tender system. The court says that in some cases, the formal tendering process may create a preliminary contract (A) such that the call was made as a unilateral offer. This is not always the case. The idea in Ron is that the caller needs to know that the call remains valid so the system remains fair. It remains unclear whether the caller must accept the best offer. We must look at business efficacy reasons to determine if the call is slanted in favour of the caller. The cases below demonstrate circumstances with a difference in the intention with the call. CASE Harvela Investments Ltd v Royal Trust Co of Canada [1986]
HIGHEST BID

I: Is this a fixed bidding or auction?
D: Fixed bidding, appeal allowed

R v Ron Engineering
& Construction Eastern Ltd [1981]
SCR GOVT TENDER I: Was PL bound by rules in tendering?
D: YES; deposit unrecoverable

RULE The provisions of an invitation to treat can either be a fixed bidding or a referential bid. This depends on the wording of the invitation to treat. A fixed bidding outlines that venders will accept X offer.

Contract A (sending offer for tender) creates obligations for contractor. A bid is irrevocable if it's filed in conformity with the conditions under which the call for tenders was made, if the conditions so provide.

FACTS

REASONS

- vendor requesting Sir Leonard and Harvela to bid
- offers to be sent via telex confidentially - closed at 3 pm
- would accept highest bid
- Harvela offered 2.175 million, but Leonard said 2.1 or 101 in excess of another bid that's a fixed amount, whichever higher
- at trial, court ruled in favour of PL
- contractor submitted tender for 2.7 million w deposit cheque of 150 000 as per condition of tender
-language said 1)bids need deposit 2)bids irrevocable after deadline 3) successful bidder required to create contract of project within 7 days of notification of win
- para 13 says condition

- you can adjust your bid with an auction, but not with fixed bidding
- invitation was fixed bidding because it was confidential and they indicated that they'd accept the highest bid
- vendors not entitled to accept Leonard's bid
- vendors should specify form of auction
- their intention shows fixed bidding (Reasonable person test was used to decide this
- DF's call was invitation to treat
- SCC disagrees that there was no contract until accepted (PL argued it could to revoke offer because there was no acceptance (process should be fair)
- cannot recover deposit because contractor didn't abide by the conditions of Contract A

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