The tendering and procurement process in Canada has traditionally been treated by the courts as a special area of contract law in which fairness and protecting the integrity of the tender process have been guiding principles. Courts have implied terms into contract “A” bid contracts that have obliged owners to act fairly, and wide discretionary clauses have been interpreted narrowly to ensure the integrity of the tendering process.

Owners looking to maximize their control over the selection of contractors have continued to fine-tune instructions to bidders and attempt to limit their own liability. How far will the courts go to intervene in these commercial contracts because of the special status historically bestowed on the tendering process? In a 5 – 4 split decision, the Supreme Court of Canada (SCC) has delivered its views in the case of Tercon Contractors Ltd. v. British Columbia (Ministry of Transportation and Highways), 2010 SCC 4. The SCC has highlighted the importance of maintaining the integrity of the tendering process and treating bidders fairly, but has also “laid to rest” the doctrine of fundamental breach in connection with exclusion clauses and provided guidelines for the future preparation and analysis of tender documents.

Recent examples illustrate clearly that cancelling a project can be very expensive. The City of Ottawa recently paid over C$36 million to settle claims from contractors arising from the cancellation of a light rail transit project. In Montréal, the termination of a contract to build an incinerator has resulted in years of costly litigation and…

News that the global economy is on the mend is translating into a renewed construction industry in Ontario, particularly with the infusion of infrastructure dollars from various levels of government. From Sudbury to Sarnia, towns and cities are re-investing in new or renovated infrastructure projects. The recent Court of Appeal decision in Maystar General Contractors…