Did acceptance of a bid create a contract?

Date: July 2022

On construction projects, there can often be questions about whether (a) a tendering process has sufficient formality such that “Contract A” is created upon acceptance of a bid; and, (b) whether a bid was actually accepted.

In Rumpel Construction v. Western Canadian Construction, a recent decision from the Supreme Court of British Columbia, the Court discusses and applies the principles for answering these two questions.

In its decision, the Court found that the tendering process between the contractor and subcontractor had sufficient formality because:

  • the tender package contemplated making an “award” of a contract upon certain conditions;
  • both parties agreed that there was a “bid”;
  • the tender package referred to an employee of the contractor as the “tender authority”;
  • there was a formal deadline for the submission of bids; and
  • the essential terms were stipulated.

In determining whether a bid has been accepted, a formal “notice of award” is not required. Instead, the Court must examine the surrounding circumstances, including: whether acceptance of a bid was conditional, the conduct of the parties, and the existence or absence of a “letter of intent”.

The Court ultimately found that the contractor had communicated its acceptance of the subcontractor’s bid, through the conduct of its employee referred to as the “tender authority”. This conduct included the “tender authority” communicating to the subcontractor that the contractor was “moving forward” with the subcontractor combined with a successful pre-contract meeting that took place shortly after.Click here for a link to the decision.

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