Owners Under No Duty to Assess Feasibility of Project Before Tendering


In a new tendering law decision, the British Columbia Court of Appeal ruled there was no legal basis for a claim that the owners acted unfairly in tendering an economically unfeasible project or in waiting to the end of the irrevocable bid period to advise the bidders the project would not proceed.

Hub Excavating put in the lowest bid of $1,000,000 for the excavation work on one phase of a multi-phase residential construction project. The tender documents called for an irrevocable bid period and said the owners were not obliged to accept any bid. Soon after receiving the bids, the owners decided the project was economically unfeasible but they waited until the end of the irrevocable period to tell the bidders. During that waiting period, Hub had the chance to proceed with a bid on another project but elected not to do so because Hub’s resources would be stretched if it won both jobs.

Hub sued the owners, arguing they knew or should have known at the outset that the project was unfeasible and so they breached their duty of fairness to Hub by calling for bids, putting Hub through the bid process and then waiting for the full irrevocable period before telling Hub the project would not go ahead.

The trial judge found the owners had breached a duty of fairness. The Court of Appeal reversed, saying the duty of fairness pertained to evaluating bids and did not extend to the pre-bid period. Further, there was no duty of fairness that obliged owners to inform bidders of the project status before the end of the irrevocable period. There were other arguments about negligent misrepresentations by the owners and their representatives but these were also dismissed.

The link to the full text is here: