Losing Bidder Claims Breach Of Contract On The Part Of The Winner
February 6, 2020
Competition for construction jobs can be great, and there may be times when one bidder treats another unfairly in the pursuit of a contract. In an interesting case recently heard by the Court of Queen’s Bench of Alberta, the losing bidder of a construction project alleged that there was an agreement amongst the bidders to treat one another fairly. The winning bidder said no such agreement existed, and the court was left to determine how everything would shake out.
An Alleged Agreement
The plaintiffs and the defendants were construction companies who were both bidding on a provincial government Request For Proposal (RFP) for highway maintenance contracts. The defendants were ultimately successful in winning the contract, but the plaintiffs alleged the defendants breached a contract they had made to treat each other fairly during bid preparation. The plaintiffs claimed that no such contract existed.
The court had to determine first whether there was a contract, and if there was, did the defendants breach it?
Determining the Existence of a “Bidders’ Contract”
The plaintiff provided evidence they said showed proof of a contract, but much if it focused on an “understanding” that parties would behave in certain ways. The plaintiff said, “I have always understood that each of the parties bidding on such matters, including on Alberta Government RFPs in relation to highway maintenance contracts, had an obligation to follow the rules and meet the requirements of the RFPs.”
The court made many comments about how an understanding does not impose an obligation on anyone. The court wrote,
“Even assuming that “everyone agreed”, that on its own is neutral. Parties can “agree”, in the sense of acknowledging, on principles — “I accept, as you accept, that we should, or even must, conduct ourselves in a certain way” –without necessarily entering into a contract with each other to so conduct themselves.”
The court found that the plaintiffs had attempted to stitch together a bidders’ contract out of understandings, expectations, discussions, and ethical codes. But none of that went far enough to establish a contract. The only obligations owed by each party were to the government, who had issued the RFP, not between each other. While the RFP may have set out obligations the bidders have, the bidders’ obligations only extended to their relationship to the government, not to one another.
At HMC Lawyers, our team of skilled lawyers knows that construction disputes and project delays can have massive impacts on your financial bottom-line. We work closely with our clients to understand their business and personal needs and identify the best potential outcome, then work diligently to resolve matters quickly and with certainty. To speak with one of our lawyers about a construction contract or delay claim, contact us online or call 1-800-480-3534. We represent construction clients in Calgary, throughout Alberta, and across Western Canada.