During the tendering process, there are often times when a bidder will start the work upon receiving the letter of intent and before having signed a contract. 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 this way may put the bidder at risk.
With regards to this case, the Société québécoise des infrastructures (“SQI”) issued a call for tenders to award a snow removal contract. Ferme Lisand s.e.n.c. (« Lisand ») ended up submitting what turned out to be the lowest bid.
Thereafter, on Oct. 31, 2014, Lisand received a letter of intent from the SQI stating its intent to award Lisand the contract, subject to the SQI receiving certain documents as well as the results of a security check, as provided in the tender documents.
After this, the SQI allegedly communicated with Lisand verbally, and thusly confirmed that the contract would be awarded to Lisand and that the company should commence work as soon as weather conditions allowed it. As a result, Lisand performed a few snow removal operations on Nov. 18, 2014, with the SQI’s approval.
Shortly afterwards, on Nov. 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 and that Lisand would not be awarded the contract. In response, Lisand commenced an action 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 that the contract was awarded to Lisand are also insufficient due to the essential nature of the signing of the contract as provided in the tender documents.
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 requires a high level of formalism. On these grounds, the Court summarily dismissed Lisand’s claim, without allowing the case to proceed to a trial on the merits.