Can an informal tender process which is not part of a bid depository system give rise to liability for negligent misrepresentation?
Can it give rise to liability for bad faith conduct?
In Oz Optics Limited v. Timbercom, Inc., the Ontario Court of Appeal recently answered
Yes to the first question, and after agonizing over the second question, decided not to answer it.
The unanswered questions are whether there is any need for a duty of good faith in an informal tender situation, and if there is, what the basis of that duty would be. The need for a duty of good faith could exist in at least two situations which I discuss in my article.
If there is a need for the duty of good faith, what is its legal foundation? Does any tender, no matter how informal, result in an inferred contract? If so what are its terms? An obligation on the parties to deal with each other in good fiath cannot be the only term. Would the court have to invent all the other terms, such as an obligation of the bidder to leave its bid open for some specified period, and if so what period, or the obligation of the party calling for the bid to accept only a complaint tender, and if so, complaint with what? The uncertainties surrounding the proposed contract seem daunting.
We have heard the alarm bell, but not heard the last word, on the duty of good faith in informal tenders.
construction law, tenders, negligent misrepresentation, duty of good faith
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Construction Law Updates
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