Tercon Contractors? The Latest Chapter!


The 2010 decision of the Supreme Court of Canada in Tercon Contractors Ltd. v. British Columbia (Transportation and Highways) is one of the most important recent Canadian decisions relating to contract law. It has particular importance to building contracts. Those interested in construction law are watching to see how Tercon will be applied in subsequent cases. In the recent decision of the British Columbia Court of Appeal in Roy v. 1216393 Ontario Inc., we now have one of our first indications of where Tercon will go.

One way of looking at the decisions in Tercon and Roy is to question whether the invitation to tender creates any enforceable rights at all. If it contains an exclusion clause that gives no enforceable rights to the bidding contractor, then there may be no consideration for the contractor's bid, and therefore no Contract A created by the tender. If that is so, then the contractor's bid is itself just an invitation to treat. If the contractors bid is just an invitation to treat, then the owner's "acceptance" is just an offer and the contractor is not obliged to leave its bid open or accept the owner's "offer". That could be the result of an owner's invitation to bid containing an exclusion clause which eliminates any risk or obligation of the owner.

See Heintzman and Goldsmith on Canadian Building Contracts (4th ed), chapter 1, part1(f)

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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