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low bidder by a substantial margin. It was then discovered that the price on the tender documents was far lower than the price that Ron
Engineering had intended to submit, and that they had made a mistake in calculating their total bid price. They informed the owner of the mistake and tried to have the offer changed. The change was refused, the contract was given to another company, and the owner kept Ron Engineering's bid deposit. Ron Engineering sued to get their deposit back. The owner counter-claimed for costs incurred as a result of having to go with a different bidder. At trial the counter-claim was dismissed but it was held that the owner was entitled to keep the deposit. The Ontario Court of Appeal reversed the trial decision and held, relying on the contractual doctrine of mistake, that Ron Engineering was entitled to get its deposit back. The owner appealed to the Supreme Court of Canada.
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obligations under contract A. It is not correct to say that when a mistake was proven after the tenders were opened by the production of reasonable evidence, the person to whom the tender was made could neither accept the tender nor forfeit the deposit. The test was to be imposed when the tender was submitted, not at a later date, and at that time the rights of the parties under contract A crystallized, at least in circumstances where the tender was capable of acceptance in law.
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error in the sense that the contractor did not intend to submit the tender in its form and substance. Then, too, there was no principle in law under which the tender was rendered incapable of acceptance by the appellant. No mistake existed which impeded the coming into being of contract A. The effect of a mistake upon the formation, enforceability or interpretation of a subsequent construction contract need not be considered in this case.
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conditions of which had been met. The omission by the owner to insert the number of weeks specified by the tender in the appropriate blank in the contract had no bearing on the rights of the parties to the appeal and did not stand in the way of the owner’s asserting its right to retain the deposit.
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There was no question of mistake on the part of either party before the moment when contract A came into existence. The tender, despite its being the product of a mistaken calculation, could be subject to the terms and conditions of contract A so as to invoke forfeiture of the deposit. There was no
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The issue did not concern the law of mistake but the application of the forfeiture provisions contained in the tender documents. The deposit was recoverable by the contractor under certain conditions, none of which was met, and also was subject to forfeiture under another term of the contract, the
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A call for tenders was sent out requiring a deposit of $ 150,000 which would be lost if the tendered offer was withdrawn. Ron
Engineering submitted an offer along with the required deposit in the form of a certified cheque. The submitted tenders were opened by the owner and Ron Engineering was the
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for a construction job could constitute a binding contract. The Court held that indeed in many cases the submission of an offer in response to a call for tenders constitutes a contract separate from the eventual contract for the construction. With the release of the decision, the tendering process
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The principal term of contract A was the irrevocability of the bid and the corollary term was the obligation in both parties to enter into a construction contract, contract B, upon the acceptance of the tender. The deposit was required to ensure the performance by the contractor-tenderer of its
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APPEAL from a judgment of the Court of Appeal for
Ontario, (1979) 24 O.R. (2d) 332; (1979) 98 D.L.R. (3d) 548, reversing the judgment of Holland J.
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Her
Majesty The Queen in right of Ontario and the Water Resources Commission v Ron Engineering & Construction (Eastern) Limited
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Government
Procurement, Fourth Edition, by Paul Emanuelli, p. 125, Published by Lexis Nexis Canada, Year of Publication: 2017,
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Sandori, Paul and
William M. Pigott, Bidding and Tendering: What is the Law? 3rd ed. (Markham, ON: LexisNexis, 2004).
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Tendering has become the focus of six significant decisions of the
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Tercon
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The
Supreme Court held that the tender process involved two contracts:
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335:(on the issue of compliance with the terms of a call for tenders), and
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M.J.B. Enterprises Ltd. v
Defence Construction (1951) Ltd.
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