Original Court Decision
The case of Ron Engineering vs. Ontario is probably one of the most famous and influential trials in Canadian history. Everything began when the province of Ontario decided to create new water and sewage treatment plant and issued a call for tenders when the consultants offered the sum of $2,744,700. The Owner wanted to save more money and followed the suggestions available. It was required to submit a tender deposit.
The Agreement contained the following information: “the Commission may retain the tender deposit for the use of the Commission and may accept any tender, advertise for new tenders, negotiate a contract…” (“The Queen (Ont.) v. Ron Engineering”, 1981, p. 115) Ron Engineering offered the deposit is $150,000. Still, several hours after the cheque was sent, the mistake was recognized.
The total bid price had to be $3,498, 058 instead of the primarily offered price in $2,748,000 (“The Queen (Ontario) vs. Ron Engineering,” 1981). Ontario refused to return the deposit and changed the company.
Ron Engineering, as the Contractor of the Agreement, addressed to the court with the requirement to return the deposit to the company as soon as the province of Ontario refused the services offered by the company.
Ontario, as the Owner of the Agreement, claimed for the damages caused because of the mistake made by the Contractor. The defendant’s position was based on the idea that a number of points were discussed in the Agreement, and the Contractor did not have the right to ask for returns in case it agreed to pay a deposit.
Ruling, Rationale, and Remedies
The original court decision that had been achieved during the first time was expected: the trial held that the deposit was kept by the Owner and dismissed the counter-claim as soon as all the documents and several extras from the Agreement were introduced. It was legally approved and explained. Still, the complainant was not satisfied with the results and addressed the Ontario Court of Appeal to investigate the case and try to achieve another decision.
On the one hand, the intention of the Contractor is rational and clear: a certain sum of money was given, and no results were achieved. On the other hand, the mistake made the company led to the challenges the company itself faced. Still, it was also reasonable to address another legal body to ask for more appropriate solutions.
Court of Appeal
Within a short period of time, the Contractor addressed the Court of Appeal. This time, the complaint and defendant were the same: the Queen (Ontario) had to prove the correctness of choice made in regards to the Ron Engineering.
It turned out to be possible for Ron Engineering to reverse the trial decision and make use of the concept of the mistaken calculation as the contractual doctrine to rely on (Fellowes, 2008).
There is an extract from the appeal sent to the Court of Appeal for Ontario: “Mistake in calculation of bid discovered by respondent after tenders opened – Appellants notified of mistake before tender accepted – Respondent declined to enter into agreement – Whether or not appellants entitled to consider deposit forfeited” (“The Queen (Ont.) v. Ron Engineering”, 1981, p. 112).
Ron Engineering has introduced as the complainant again in order to use the possibility of the mistake as the excuse that had to be understood. There were no additional costs and losses for Ontario; it had to return the sum of money that was offered by Ron Engineering.
The defendant of the case was the representatives of the province of Ontario, who made a decision to call for a tender. As soon as a tender deposit was got, and the mistake was identified, the idea to return the deposit was declined because the mistake was made by the Contractor. The tender offered by Ron Engineering was cheaper in comparison to other propositions. That was the reason for the solution made. Still, the mistake made by another party could be accepted as it was. There had to be some compensation to be considered.
Ruling, Rationale, and Remedies
According to the existing system, it was defined that the Contractor was able to withdraw the offer that was spoiled by mistake any time until the official contract and tender were accepted. In case there was a mistake in tender, the Contractor suffered from losses. Still, the mistake was noticed before the tender was defined as a working one. It was the Owner, who refused the possibility to change the conditions of the Agreement even after being informed about the required changes.
As a result, it was ordered to the Ontario representatives to return the deposit to Ron Engineering without any money refunded or taken away. The results and rationale of this decision were put under the question. Now, the Ontario Commission made a decision to appeal to the local Supreme Court and ask for the justified and correct solution to the problem.
Supreme Court of Canada
The Ontario Commission addressed to the Supreme Court with an attempt to clear up whether the mistaken calculation doctrine could be used as the reason for revoking a tender and making the company able to ask for the deposit return.
Ron Engineering continued to support their right to get their tender deposit back because of the mistake made and announced before the Agreement was made.
Ruling, Rationale, and Remedies
The Supreme Court could not and did not want to agree with the suggestions because the law of mistake was not enough to provide the tender owner with a number of relief conditions. The only reason was used to support the chosen position: the time of submission of a tender was appropriate. There were no mistakes when the tender was discussed, and the Agreement was developed. The two parties had enough time to discuss the details and all issues that could influence the development of the project.
It was offered to use two types of contracts in any tendering operations: Contract A (the evident result of a complaint tender submission with the intention to trigger the relations between the parties) and Contract B (the identification of the conditions under which the Owner of the Agreement can accept the tenderer’s conditions (Hoffman & Pinsonnault, 2014).
Significance and Impact of the Decision
The significance of the decision made by the Supreme Court in regards to the case between Ron Engineering and Ontario is evident indeed. Tendering is one of the most captivating and effective alternatives that make it possible to improve the negotiations and promote an appropriate construction contract. With the help of the details defined by the tendering agreement, it turns out to be easy to set time limits and define the rules according to which the evaluation of bids and deposits can be done.
Canadian law got an opportunity to re-evaluate the conditions under which different parties make agreements and come to the conclusion that two types of contracts have to be offered. Contract A was created to define the relations between a particular tendering authority and a bidder. Contract B was developed to specify the conditions under which a tender authority is able to define a successful bidder.
The conditions discussed while the Supreme Court helped to clear up that the parties of the Agreement could make mistakes and make wrong decisions. Still, all of them are responsible for the changes their actions cause. Therefore, the party those actions or solutions caused the changes had to pay damages to another party of the current tender. The main conclusions were the restrictions of the freedom for both parties to any contract that introduce a tender as a unique operation two different organizations are involved in.
Detailed Analysis of Contract A and Contract B
Within a short period of time, the idea of two contracts combined turns out to be the main one in any kind of agreement discussed by different parties. Each contract is a combination of the ideas that help to understand what to expect from every party and how the duties should be complete. Contract A helps to avoid any obligations until a bid is actually made and chooses a person or a company that introduces a tender among the variety offered.
Contract B is the next stage of the agreement that specifies the tenderer and the duties that should be taken into consideration. As a rule, Contract B makes it possible for the tendered to be discharged from any possible obligations determined by Contract A. As soon as the tenderer agrees with the conditions defined by Contract B, all liabilities have to be determined. At the same time, Contract B cannot come into force if it is not executed by the representatives of both parties.
In the case under analysis, the parties defined the deposit as not refundable in terms of Contract A. Therefore, the Court relied on that particular point and admitted that a call for tender and all conditions were irrevocable (Fellowes, 2008). An offer was not constituted. The terms and conditions of the Agreement differed from those defined by the construction contract, and that was the reason why Contract A and Contract B contradicted each other.
It was enough to compare the conditions of the contracts and the principles according to which all actions and solutions were made. The analysis of the two contracts in terms of the Ron Engineering case shows that there was no mistake that could be implemented in the case. Its effect on the creation of the contract was minimal, and that was why it could not be considered in the case.
In general, the peculiar feature of Contract A and Contract B is their independencies and inabilities to exist separately. As soon as Contract A is signed and comes into force, Contact B has to be developed. They cannot co-exist at the same time; still, they cannot be effective without each other. This is what makes these contracts special; this is what the case of Ron Engineering explains and teaches.
Fellowes, C. (2008). The evolution of tender contracts. Management, Procurement and Law Journal. Web.
Hoffman, P.C. & Pinsonnault, G. (2014). The characterization of a procurement process as a call or request for bids or tenders under section 47 of the competition act. Canadian Competition Law Review, 27(2), 323-352.
Revay, S.G. (1997). The Ron Engineering decision: Fifteen years old and still immature. The Revay Report, 15(3), 1-5.
The Queen (Ont.) v. Ron Engineering. (1981). Web.
The Queen (Ontario) vs. Ron Engineering. (1981). Web.