Call for tenders - Rejection of a bid after reception of the letter of intent and commencement of work

01 November 2015

During the tendering process, there are often times when a bidder will begin work upon receiving the letter of intent and before having signed a contract. In particular, 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 in this manner may put the bidder at risk.

In this case, the Société québécoise des infrastructures (SQI) issued a call for tenders for a snow removal contract and Ferme Lisand s.e.n.c. (“Lisand”) submitted what turned out to be the lowest bid.

Thereafter, on October 31, 2014, Lisand received a letter of intent from the SQI stating its intent to award Lisand the contract, subject to the communication by Lisand of certain documents as well as the results of a security check, the whole as provided in the tender documents. 

Following this letter, the SQI allegedly communicated with Lisand verbally, confirming that the contract would be awarded to Lisand and instructing the company to commence work as soon as the weather conditions required it. As a result, Lisand performed snow removal operations on November 18, 2014 with the SQI’s approval.

Shortly afterwards, on November 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. Consequently, Lisand would not be awarded the contract. In response, Lisand filed a claim 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 to the effect that the contract was awarded to Lisand are also insufficient as the tender documents are clear that the signing of the contract was an essential step.

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 process requires a high standard of formalism. On these grounds, the Court summarily dismissed Lisand’s claim, without allowing the case to proceed to a trial on the merits. 


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