Executive Summaries Sep 1, 2022

Ready to Bid? Be Sure to Read the Tender Documents Carefully

For a construction contractor who is about to bid, the obligation of good faith implies the duty to fully examine the terms and conditions of the call for tenders. Failure to meet these obligations can be fatal.

The client has a duty to inform the contractor of the aspects relevant to the contractor’s bid. This duty to inform is a direct consequence of the contractor’s assumption of the project risks.

Therefore, the contractor has an obligation to obtain information and ask any questions that may arise from the tender documents during the preparation of their bid. If in doubt as to what is expected of them as per the tender documents, the bidder cannot remain idle. They must be proactive and ask questions.

Can a Default Be Justified by a Client’s Poor Behaviour?

Sometimes a lack of care by the contractor may not be a fatal factor for obtaining a remedy. The fact that the contractor failed to fully or completely meet their obligation to carefully analyze the tender documents does not necessarily mean that no remedy can be sought.

Furthermore, the client’s obligation to act in good faith in the tendering and contracting process is an ongoing obligation: just because the bidder makes a mistake doesn’t mean that the client’s obligation to act in good faith ends. Case law illustrates precisely this point.

Client’s Duty to Inform a Bidder About the Presence of a Hazardous Product

The Entreprises électriques LM Inc. v. Société de transport de Montréal decision stems from a contract awarded to Entreprises électriques LM Inc. (hereinafter “LM”) after a public call for tenders by the Société de transport de Montréal (hereinafter the “STM”). Through this call for tenders, the STM sought to have subway car armatures and motor casings repaired.

Among the documents provided by the STM was a drawing on which appeared a list of materials. It could be seen in the list that the concrete found in the engines to be repaired was contaminated with asbestos. However, this list of materials had not been provided by the STM along with the tender documents.

This raised the question of whether LM, by not noticing on the drawing the mention of a list of materials and therefore not asking the STM for such list, failed in their duty to do a thorough analysis of the tender documents, which would have informed them about the presence of asbestos. The issue was also whether the STM had breached its duty of good faith by failing to inform LM that the concrete they would be working with was contaminated with asbestos.

The Superior Court of Québec found that, although LM could have been more careful in their analysis of the tender documents, the STM had a duty to inform them of the asbestos they knew was in the concrete. Given that asbestos is a publicly known hazardous material, the STM had a duty to explicitly disclose this fact. LM was therefore entitled to compensation for damages due to the STM’s negligence.

This decision shows that, even if it could be proven that the bidder had not been perfectly thorough in their analysis of the tender documents, the fact that a client refrains from disclosing to the bidder information of which they have knowledge, and which is essential to the allocation of risks, may be wrongful.

The bidder’s expected standard is not one of perfection.

In this case, asbestos was not likely to be found in the armatures. Given the dangerous nature of the product and the fact that the STM was aware that it was there, they had an obligation to communicate it transparently to the bidders.

Obligation to Point Out the Obvious Mistake of the Bidder and Reject its Bid

In Ville de Salaberry-de-Valleyfield v. Construction NRC Inc. the Court of Appeal of Québec was asked to hear an appeal of a decision in which the trial judge had ordered the City of Salaberry-de-Valleyfield (hereinafter the “City”) to compensate Construction NRC Inc. (hereinafter “NRC”) for damages caused by the City’s fault, notwithstanding the fact that NRC had made an inexcusable error.

While the City had issued a public call for tenders for duct burial work as part of the development of a new industrial park, NRC had bid as a subcontractor and mistakenly used the wrong unit of measurement to determine the cost for the work. In the weeks following the filing of the bid, NRC was informed by a competitor that their price was significantly lower than that of other bidders, due to their calculation error, even though the bid documents were clear on the calculation method.

Although the City was aware of NRC’s mistake, they nonetheless required NRC to do the work, rather than rejecting their bid for noncompliance.

Notwithstanding the finding of fact that NRC had made an inexcusable error in submitting their price, the trial judge still found that the City’s breach of their duty of good faith and their deceitful reluctance towards NRC made NRC’s error forgivable and justified obtaining compensation for the loss associated with the low price. The Court of Appeal confirmed this judgment.

This appeal demonstrates that a client who refrains from notifying the bidder of an obvious error and thereby rejecting the bid constitutes deceitful concealment.

According to the Court of Appeal, it was a determining factor that both the client and the professionals knew of the bidder’s mistake and that it would be impossible to carry out the contract for the price submitted. In this situation, the client and the professionals could not be passive. They were supposed to correct NRC and disqualify the bid on the grounds that it was not compliant.

Be Mindful of the Duty of Good Faith’s Scope

The contractor must remember that they have a duty to be thorough when reviewing tender documents. However, the contractor’s duty does not extend to a thorough examination of the tender documents, and, in any event, a bidder’s error should not negate the client’s obligation to act in good faith when opening the bids and awarding the contract.

Should you have any questions about a general contractor’s obligations related to a call for tenders, do not hesitate to contact our construction litigation team, who will be pleased to assist you.

Stay on the lookout!

Subscribe to our communications and benefit from our market knowledge to identify new business opportunities, learn about innovative best practices and receive the latest developments. Discover our exclusive thought leadership and events.

Subscribe

You would also like

court

When Announcing a Price Comes at a Cost: The Court of Appeal Rules on Damages in Union des consommateurs v. Air Canada

BCF Recognized in the 2025 Edition of Benchmark Litigation Canada

lexpert

27 BCF Professionals Stand Out in the Canadian Legal Lexpert Directory 2025

Lexology

6 BCF Professionals Recognized in Lexology Index Canada 2024

contrat

RBQ Resumes Investigation into Armoires PMM

Entrepreneurship forum

Entrepreneurship Forum: Vision 2025

construction site

Preservation of the right to a construction legal hypothec: What Is the Impact of a Contract Termination?

Tech Forum 360

Tech 360 Forum: Growth and Inflection Points

Contractor Liability for Ground Defects Leading to Loss of the Work

Droit

E-Power Resources Inc. Secures Major Victory Against Dissident Shareholders

lexpert

28 Professionals Stand Out in the Canadian Legal Lexpert Directory 2024

Prospera: Québec’s Economic Barometer

Canada's Best Managed Companies: BCF Recognized for 17th Consecutive Year

Contruction meeting

Site extensions : how do you build a solid claim?

stephanie-la-rocque

Stéphanie La Rocque Appointed to the Court of Québec

Victory for Développements St-Antoine as the Expropriated Party is Fully Compensated

Contractors: Why Is It Important for You to Be Directly Involved in the Work?

new-partners-2024

BCF Has Appointed Three New Partners

andre-ryan-client-choice

André Ryan Wins the Prestigious Client Choice Awards for 2023

Construction Work: An Additional Liability for Owner-Employers

Non-compliance with the Contractual Claims Procedure: a Fatality for Contractors?

Who’s Who Legal : 5 BCF Professionals Stand Out

BCF extends its Partnership with the Canadian Association of Black Lawyers to a Third Year

annie-claude-trudeau-rising-star-en

Annie-Claude Trudeau Honoured as a 2023 Lexpert Rising Star

Can Shareholders Reconcile their Business Withdrawal with their Non-Competition Clause?

Annie-Claude Trudeau and Audrée Anne Barry, Co-Authors of the 2023-2024 Annotated Code of Civil Procedure

house-near-river

Watercourses and Ditches: What are the Risks of Building your Home Close to One of Them?

pierre-nuage

Contractors : Are you Responsible for the Quality of your Materials?

newspaper

Le Devoir is now a Registered Journalism Organization

The Risks of Miscommunication on a Construction Site

Chambers Canada Ranking: Five of our Lawyers Recognized

Interlocutory Injunctions: The Appearance of Right Criterion and its Nuances

Photo of Julie Doré

Julie Doré Takes Over Management of The BCF Business Law Firm

Three Up-and-Coming Lawyers Join BCF

Prospera – Quebec Economic Barometer

34 Professionals Stand Out in the Canadian Legal Lexpert Directory 2023

Julien Tricart, Member of the Meritas Sports Law Group

Non-Compliance Clauses in Construction Contracts: When Do They Apply?

Court Alternatives to Add to Your Toolbox

Pride Month: Let’s Create an Inclusive Future

Canada’s Best Managed Companies: BCF Recognized for 16th Consecutive Year

Benchmark Litigation Canada's 2023 Edition: BCF Stands Out Once Again

Every Woman Counts

Strategic Forum on the Role Played by Businesses in the Fight Against Climate Change

BCF Partners with the Canadian Association of Black Lawyers to Promote Diversity in Québec Law Faculties

BCF's More Inclusive Approach: Improved Parental Leave

Shaun E. Finn Appointed to the Superior Court of Québec

How to Ensure a Business Succession?

Strategic Forum on Market Consolidation and Business Succession

Avoid and Prevent the Risk of Tax Litigation in Business Succession

Four New Partners Appointed

BCF Partners with the Clinique Juridique de Saint-Michel to Promote Access to Legal Studies for Young People from Diverse Communities

BCF Welcomes Two New Lawyers

Marie-Julie Lafleur Honoured as a Lexpert 2022 Rising Star

Dangerous Products Class Actions: Can Liability Be Unlimited?

Our Class Action Defence Group’s Expertise Featured in a New Volume of the Supreme Court Law Review

livres-echelle

Class Actions in Canada and Beyond: An Insightful Compilation on Class Actions

What’s the General Contractor’s Responsibility for Site Coordination?

Shaun E. Finn, Co-Author of In the Public Eye: Privacy, Personal Information, and High Stakes Litigation in the Canadian Public Sector

Should Using Personal Information Obtained Without Consent Be Grounds for Class Action Authorization?

André Ryan Receives the Advocatus Emeritus Honour

Five of our Lawyers Stand out in the 2023 Edition of the Chambers Canada Ranking

Is the Loss of Personal Information Sufficient to Justify the Success of a Class Action on the Merits?

43 BCF Professionals Stand Out with 78 Nominations in the 2023 Editions of Best Lawyers in Canada and Ones to Watch

Why Did the Superior Court of Québec Stay Some Sections of Bill 96?

Do Municipalities Have the Authority to Limit the Distribution of Printed Publicity within their Boundaries?

building

The “Arguable Case”: A Troubled History with an Uncertain Future

Can a General Contractor Significantly Increase Work Costs?

Shaun E. Finn, Co-Author of the 2022-2023 Annotated Code of Civil Procedure

Quebec Superior Court Addresses Legal Fees in Class Actions

Seven New Lawyers Join BCF

Post-Pandemic Trends and Negotiations in Commercial Leasing

Adoption of Bill 96: Be Ready

Commercial Leases: Where Do Things Stand Since the Pandemic?

Pride Month: The Value of Diversity

BCF, the 3rd Largest Law Firm in Québec

Canada’s Best Managed Companies: BCF Recognized for 15th Consecutive Year

Expropriation Compensation: How Far Does the “Highest and Best Use” Notion Extend?

Payment on Payment Clauses: Do You Know Your Rights?

BCF Stands Out in Benchmark Litigation Canada's 2022 Edition

lexpert

22 Professionals Stand Out in the Canadian Legal Lexpert Directory 2022

Court of Appeal Rules in Favour of Ville de Mont-Saint-Hilaire’s Real Estate Developers

BCF Welcomes Three New Partners

What Can a General Contractor Do to Be Relieved of His Duty to Advise?

Plan and Specification Errors: Who’s to Blame?

BCF Recognized by the Globe and Mail as one of Canada’s top Law Firms

What Legal Recourse Do Citizens Have When Bothered by Municipal Work?

Important Victory for Développements St-Antoine in Fair and Equitable Expropriation Indemnity Case

Schools, COVID-19, and Class Actions: Some Lessons to Be Learned

A Second Edition for the Manuel de l’action collective

Chambers Canada 2022: BCF Earned Band 1 Ranking in Québec for Corporate and Commercial Law

Did Airlines Fail in their Duty to Refund Tickets for Cancelled Flights Due to the Pandemic?

46 Lawyers of BCF Stand Out with 83 Recognitions in the 2022 Editions of Best Lawyers in Canada and Ones to Watch

Seven New Lawyers Join BCF

Shaun E. Finn Named Fellow of Litigation Counsel of America

Shaun E. Finn Co-Author of the Annotated Code of Civil Procedure 2021-2022

How to Navigate Québec's Complex Class Action System

A First in Quebec: COVID-19 Class Action Authorization Refused

Dismissal of a Class Action: How Far Does Police Liability Extend When Protesters Are Arrested?

Privacy and Data Protection Class Actions: Trends, Challenges and Best Practices

Our Partners Recognized in the 2021 Edition of Benchmark Litigation Canada Rankings

A First in Canada: Privacy Class Action Dismissed on the Merits

What Can Be Learned from Jurisprudential Developments in Public Contracts?

escalier

BCF Welcomes Seven New Lawyers

Supreme Court of Canada Takes Another Step towards the Guiding Principle of Good Faith in Contract Performance

Governance, a Key Element in Successful Business Succession Planning

Supreme Court Rules: Protection Against Cruel and Unusual Punishment Does Not Apply to Legal Persons

13 NHL Teams Move to Salary Arbitration Mode

An ever denser metropolis and the "Not in my backyard" syndrome

André Ryan and Shaun E. Finn, Co-Authors of the Book Québec Class – Actions - collectives au Québec

Shaun E. Finn Co-author of the Annotated Code of Civil Procedure 2020-2021

Regulations under Bill 102: A New Approach Based on the Environmental Risks of Each Project

Shaun E. Finn and Danielle Miller Olofsson Publish a Unique Practical Handbook on Privacy and Data-Protection Class Actions

23 BCF Partners Ranked in the Canadian Legal Lexpert Directory

36 Lawyers of BCF Stand Out with 52 Nominations in the 2021 Edition of Best Lawyers in Canada

BCF Welcomes Six New Lawyers in its Team

Hengyun International Investment Commerce Inc. Decision: A New Approach to Landlord-Tenant Relationships Arising from the Pandemic

Québec’s Bill 64 to Amend Data Protection Legislation: A Bill with Teeth?

How to Avoid Penal Liability in Your Post-COVID Activities

Criminal Offences in the Construction Industry: The Hidden Consequences of a Guilty Plea and Good Practices

COVID-19 and Construction: Impacts on Your Legal Hypothecs, RBQ Licences and Surety Bonds

COVID-19: Will the Pandemic Really Have an Impact on Your Contracts?

COVID-19: Contractual and Practical Measures to Be Taken

50 Questions You Need to Ask Yourself Before Doing Business in Canada

BCF once again ranks as one of Montreal's Top Employers

BCF Names 16 New Partners for Its 25th Anniversary

The Mike Ward Case: Why Did the Jokes About "Little Jérémy" Cross the Line According to the Court of Appeal?

Successful Judgment and Dismissal of a Claim Against Hydro-Québec and SEJB

Remember to Plan for Land Rehabilitation or for Management of Contaminated Soil in Your Projects

Are You a Leader or a Follower?Results of the Innovation Survey

The Autorité des Marchés Publics: What You Need to Know Regarding Major Projects and Request for Proposals

Environmental Impacts of Major Construction Projects: 5 Takeaways to Conduct Your Major Projects with Due Diligence

Infrastructure and Major Projects: Dare to Think Big

How to Deal With Changes During the Course of a Major Construction Project

Chambers Canada 2020: BCF Recognised in Corporate and Commercial Law

Strategic Forum on Innovation

Innovating to Survive: Are You a Leader or a Follower?

Legal Issues Surrounding the Industrial Revolution 4.0

Best Lawyers in Canada: 22 BCF Lawyers Recognized

How to React When your Photo is Reposted on a Satirical Website?

The Distressing Complexity of the Criteria for Authorizing a Class Action in Québec

Shaun E. Finn Co-author of the Annotated Code of Civil Procedure 2018-2019

Let’s Get the Leaders Talking: André Ryan Discusses his Career Path

The AMP's New Extrajudicial Complaint System Is Underway!

16 BCF Partners Recognized in the Prestigious Canadian Legal Lexpert Directory

Business Transfer: Ensuring the Continuation of Your Business

Define the Future we Want: Equal, Inclusive and Diverse

What are the risks of holding cryptocurrency funds on a platform such as QuadrigaCX?

piliers

Can a Demand for Share Redemption Lead to a Loss of Shareholder Attributes?

Get the latest thought leadership