Construction tendering is governed by a distinctive Canadian doctrine from R. v. Ron Engineering & Construction (Eastern) Ltd. (1981 SCC). When an owner issues a call for tenders and a contractor submits a compliant bid, Contract A is formed automatically: a contract about the bidding process itself. The actual construction contract that the winning bidder later signs is Contract B.
Ron Engineering call-out: Submitting a compliant bid creates Contract A. Its terms (often including an irrevocability period and forfeiture of a bid deposit) bind the bidder. A contractor who tried to withdraw a mistaken bid forfeited its deposit because Contract A had already formed.
Contract A imposes obligations on both sides. The owner owes bidders an implied duty of fairness and a duty to treat all compliant bids equally and in good faith. Key consequences:
- An owner generally cannot accept a non-compliant bid without breaching Contract A owed to the compliant bidders.
- An owner cannot run a hidden or "bid-shopping" process that contradicts the published tender terms.
- A privilege clause ("lowest or any tender not necessarily accepted") gives the owner discretion but does not license unfairness or accepting a non-compliant bid.
Not every bid solicitation creates Contract A. It depends on whether the parties intended the process to be contractually binding (e.g., a Request for Proposals may be structured to avoid it). Engineers who prepare tender documents or advise owners must understand that the wording of the call determines these obligations.