During the tendering process, there are often times when a
bidder will begin work upon receiving the letter of intent and
before having signed a contract. In particular, this is common
practice in the construction industry. However, as shown in a
recent decision by the Superior Court of Québec in Ferme
Lisand, s.e.n.c. c. Société
québécoise des infrastructures, 2015 QCCS 4720,
proceeding in this manner may put the bidder at risk.
In this case, the Société québécoise
des infrastructures (SQI) issued a call for tenders for a snow
removal contract and Ferme Lisand s.e.n.c. ("Lisand")
submitted what turned out to be the lowest bid.
Thereafter, on October 31, 2014, Lisand received a letter of
intent from the SQI stating its intent to award Lisand the
contract, subject to the communication by Lisand of certain
documents as well as the results of a security check, the whole as
provided in the tender documents.
Following this letter, the SQI allegedly communicated with
Lisand verbally, confirming that the contract would be awarded to
Lisand and instructing the company to commence work as soon as the
weather conditions required it. As a result, Lisand performed snow
removal operations on November 18, 2014 with the SQI's
Shortly afterwards, on November 28, 2014, the SQI informed
Lisand that its bid was not compliant as it did not meet the
confidentiality and security criteria set forth in the tender
documents. Consequently, Lisand would not be awarded the contract.
In response, Lisand filed a claim for damages against the SQI
before the Superior Court.
According to Lisand, the contract was formed between the parties
immediately upon verbal confirmation by the SQI, and the SQI had
therefore illegally terminated the contract.
The SQI requested that the Court summarily dismiss Lisand's
claim, arguing that the tender documents and letter of intent
clearly provided that the SQI had no commitment to the bidder prior
to the signing of the contract.
Agreeing with the SQI, the Court found that, as Lisand's
tender was not in compliance with the tender document requirements,
it was impossible for Lisand to be awarded the contract resulting
from this tendering process. Furthermore, the SQI's oral
representations to the effect that the contract was awarded to
Lisand are also insufficient as the tender documents are clear that
the signing of the contract was an essential step.
The Court found that the awarding of a contract to Lisand under
such circumstances would be contrary to the objectives of the
public tendering process, which process requires a high standard of
formalism. On these grounds, the Court summarily dismissed
Lisand's claim, without allowing the case to proceed to a trial
on the merits.
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