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The title was a bit hard to form so I'll try to elaborate here. I was speaking with a vendor about X IT related services and after vetting out several vendors, another vendor of whom I have an existing relationship with informed us that they too offer the service we're looking for.

A respectable colleague of mine warned me that I have to be careful because If I choose to move forward with the vendor of whom I have an existing relationship with, that we CAN NOT let the other vendor know or else they could sue for us choosing to go with the existing vendor and not giving other vendors a chance.

How accurate is that statement? Can a vendor really sue us for choosing another vendor of whom we have an existing relationship with?

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    Have you rigorously scrutinized your existing contracts to see if it's required that you allow them to bid on future related services? If there is such a clause, they can really sue you.
    – user6726
    Oct 3 '17 at 15:18
  • Yes, the existing contact isn't at risk of suing us. The external company of whom we don't have ties (or contracts) with is who we were warned about
    – calcazar
    Oct 3 '17 at 15:42
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If you reached an agreement with the other vendor and signed a contract, you could easily be sued for breach of contract if you fail to pay for the contracted service. Even if the contract wasn't signed but you had an agreement, you can be sued. If there is no agreement and you're in the negotiations phase, a suit is possible based on promissory estoppel. There are other forms of estoppel, but it's hard to see how they could possibly apply in this situation.

Normally you would have the right to ignore those guys, but you could be legally prevented from making that claim in court under that doctrine of estoppel. They would have to establish that there was a promise, and they relied on that promise to their detriment (for example, hired extra staff, rented a new building). This article looks at numerous cases of promissory estoppel cases.

Anyone can file a lawsuit. The process is spelled out for one jurisdiction and set of circumstances here. The suit might be easily dismissed for many reasons – the point is, anyone can file the papers. This page gives a general overview of filing suit, and for your jurisdiction you can look up the specific rules and probably find examples of complaints that were filed.

Failure to say anything to the other party does not prevent them from filing a suit. If you conclude a contract with another vendor but string the outside guys along, you could in fact be sued successfully (they will have been harmed, in investing further resources to get the contract, and you misled them into thinking that they count get the business: Aspex v. Clariti).

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As user6726 suggests you are legally obligated to the existing vendor to the extent that you have a fixed term contract or one that requires a certain amount of time to elapse after a notice of termination.

A respectable colleague of mine warned me that I have to be careful because If I choose to move forward with the vendor of whom I have an existing relationship with, that we CAN NOT let the other vendor know or else they could sue for us choosing to go with the existing vendor and not giving other vendors a chance.

How accurate is that statement? Can a vendor really sue us for choosing another vendor of whom we have an existing relationship with?

Unless you are a government agency or a government contractor, in general, you do not have an obligation to be fair in any way in choosing who you do business with. You are entirely within your rights to go with your nephew's company over a company that offers a better deal, for example. The only real exception to that is that you can not discriminate on a prohibited basis (e.g. race).

There is a concept in the law called "intentional interference with contract" with involves deliberately screwing up someone's existing contractual relationship for an unjustified reason that was the principle cause of action in the recent lawsuit against Taylor Swift in federal court in Denver where it was alleged that she or her associates made false statements to a radio station to have a DJ fired. (The DJ lost.)

But, the cause of action for intentional interference with contract has an exception called the competitor's privilege which says that it is O.K. for one vendor to try to steal business from another vendor.

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Any company can sue you for any reason whatsoever. What you describe doesn't give any indication that they could sue you successfully, but they can sue you. As a company, you are free to use any vendor that you like.

If that colleague of yours is right, and the second company has a reputation of suing for stupid reasons or with no reason whatsoever, then he may very well be right and it may be best to avoid any contact with them. In the end, a pointless lawsuit that never had a chance to win is still going to cost your company time and money.

On the other hand, if your colleague makes this up and is trying to destroy their reputation (for example because a relative is boss of the first vendor), they might have a real reason to sue your colleague.

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  • Where's your source for the information in your answer? Any official documentation you could link us to? This answer lacks links. Feels like I'm reading someone's opinions.
    – Dioxin
    Oct 3 '17 at 16:34

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