Bidders are frequently told in bidding and tendering
instructions that bids or tenders are required to be submitted
"under seal" or that "sealed tenders are
required". Confusion arises because the term "seal"
is often used in three different contexts in the bidding and
1. The seal as creating a binding promise
previously discussed Ron Engineering and the Contract A -
Contract B scenario. In essence, the courts treat the submission of
a tender as a binding promise (Contract A) on the part of the
bidder that, if it is selected as the successful bidder, it will
enter into a contract (Contract B) with the owner.
Under contract law, however, promises made without receiving
consideration in return are not enforceable. Without some
consideration from the owner to the bidder, the agreement on the
part of the bidder to enter into Contract B is unenforceable by the
The law does, however, recognize promises given under seal as
enforceable. Dating back to the early days of English common law, a
promise to which a seal was affixed was known as a deed and was
enforceable without the need to receive consideration in
Wax seals are no longer used, and in their place small red
adhesive seals are often used where it is necessary to create a
2. The seal as a symbol of corporate
Most corporations adopt a form of corporate seal, which is used
to emboss corporate documents, contracts, indentures, etc. It is
usually kept by the corporate secretary. It is most often used,
after a document has been signed by the officers of the
corporation, to indicate that the corporation has authorized the
The corporate seal is an indication of corporate authority only
- while it may indicate that bid or tender was properly authorized
by the corporation, it does not create a deed or an enforceable
promise within the meaning of Ron Engineering.
3. Put it in an envelope
In order to avoid shenanigans, tendering procedures often
require that all bids be submitted in sealed envelopes which will
be opened at a specified time in public. Sealing a bid document in
an envelope neither creates a deed nor indicates corporate
4. Faulty tenders may be saved
There are many cases which have discussed the differences
between the various concepts above and in which the courts have
tried to avoid an injustice by turning an improperly sealed
document into a deed, or turning a document to which a corporate
seal was affixed into a deed. The courts are sometimes called upon
to discuss the use of the phrase "c/s" or
"seal" near signatures. See for example Fast v. Nieuwesteeg, in which many of
the above concepts were discussed.
As a result, if bid procedures are not precisely complied with,
there may be some room for latitude. But understanding of the above
and strict compliance with procedures is still the best policy.
5. Best practices
For owners: be clear in bid procedures what is being asked of
bidders. Be clear whether a wafer seal to create a deed is
required, whether a corporate seal is to be affixed, and/or whether
the bid is to be submitted in a sealed envelope. Do not intermingle
the concepts referred to above.
For bidders: follow bid instructions precisely. If the bid
instructions are not clear, ask for clarification as to what
formalities are required.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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