In Canada's famous "Ron Engineering" case, what really is protected by Contract A?

Question

In Ron Engineering, the supreme court ruled that a "Contract A" is formed when a bidder submits a bid. This seems to imply that Contract A is formed by the bidder, not the receiver of that bid, unilaterally. As I understand Ron Engineering, Ron Engineering made a mistake and could not retract their bid. In effect, Ron Engineering was not let out of Contract A.

However, as Contract A is usually explained, it protects bidders from poor practice from people receiving bids. For instance, if the receiver does not go with the lowest bid due to other bids having additional terms not spelled out in the original tender, the lowest bidder can sue. This appears to be the complete opposite of the decision in Ron Engineering.

So what does Contract A really do, and who is bound by it?

Answer 1

R v Ron Engineering and Construction (Eastern) Ltd

Established that, in certain circumstances (see What is a contract and what is required for them to be valid?), submitting a tender could create a binding contract on the tenderer and the caller of the tender.

In Tercon Contractors Ltd. v British Columbia (Transportation and Highways), the trial judge summarized the factors to be considered in deciding whether a matter constitutes a call for tenders or a non-binding request for proposals:

• the irrevocability of the bid,
• the formality of the procurement process,
• whether tenders are solicited from selected parties,
• whether there was anonymity of tenders,
• whether there is a deadline for submissions and for the performance of the work,
• whether there is a requirement for a security deposit,
• whether evaluation criteria are specified,
• whether there was a right to reject proposals,
• whether there was a statement that this was not a tender call,
• whether there was a commitment to build,
• whether compliance with specifications was a condition of the tender bid,
• whether there is a duty to award contract B, and
• whether contract B had specific conditions not open to negotiation

If the tender creates a Contract A, then what the obligations on each party will be under such a contract will depend on the particular terms of that contract. In the case of Ron Engineering, one of the terms was that if the tender was withdrawn the security deposit would be forfeit. In other cases, if the principal does not comply with their obligations the bidder can sue - those obligations might include one to assess tenders and award Contract B in a certain way. Most principals will spell out their assessment method with sufficient wiggle room so that any decision can be reasonable - a statement to the effect that "assessment of tenders is not based solely on price" would suffice.

Answer 2

The issuer of contract A would be legally bound if the contract was accepted is what it means.

The Canadian Supreme Court established that the bid is a contract (A) and the actual contract for construction (B) are both separate contracts.

The company sued in order to get it's deposit back, but was not successful, because the bid was considered a legal contract that the company was bound to.

The court was saying that a company is, generally, bound to what it's bid was.

https://en.wikipedia.org/wiki/R_v_Ron_Engineering_and_Construction_(Eastern)_Ltd