The Easter Bunny

TENDERS

Contractors who submit tenders normally expect that they will be treated fairly and that the awarding of the tender will be based on an even playing field.

THE "PRIVILEGE CLAUSE"

The use of the privilege clause, the clause which provides that "the lowest or any tender shall not necessarily be accepted", is worrisome to contractors who may find that their bids are rejected for reasons other than price and over which they have no control or input. On the mere face of this clause, it would appear that the tender-caller has an absolute discretion in awarding the contract and might be able to commence bid shopping once the call for tenders closed.

In a recent Supreme Court of Canada case, MJB Enterprise Ltd. v. Defence Construction Canada, a contractor was successful in obtaining damages where the owner attempted to rely on the privilege clause to select a tender that, although lowest in price, contained qualifications that did not comply with the tender requirements.

The Alberta Court of Appeal upheld the selection of a tender which had the lowest price but contained a qualification that the price was based on the cheapest type of fill and the use of a more expensive type would be extra.

The call for tender, however, had provided that the engineer or the tender caller would have discretion as to what backfill type would be installed. The court relied on the "privilege clause" contained in the tender documents.

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