Reaction Distributing Inc. v. Algonquin Highlands (Township), 2019 ONCA 433
The Ontario Court of Appeal’s recent decision in Reaction Distributing Inc. v. Algonquin Highlands (Township), 2019 ONCA 433, suggests that substance may triumph over form when it comes to compliance with the contractual requirements of a tendering process. Tenders cannot be lawfully disqualified from tender processes for irregularities if they remain substantially compliant with the tender contract’s material terms. As this decision illustrates, such disqualifications may count as a breach of the underlying tendering contract and lead to a successful lawsuit for damages.
This dispute centered on a tender submitted by Reaction Distributing Inc. (“Reaction”) for work from the Township of Algonquin Highlands (the “Township”). Reaction submitted its tender to the Township in a box. The box was not labelled with Reaction’s name, nor was it labelled with a return address. This form of delivery contravened the contractual tender terms requiring the tender to be delivered in a sealed envelope. Even if the box had satisfied the sealed envelope requirement, it also violated the Township’s contractual tender terms that required the sealed envelope to be labelled with a name and return address.
The Township disqualified Reaction’s tender on the grounds that the unlabelled box was non-compliant with the tender contract, despite the fact that the contract had a provision that permitted the municipality to waive any non-compliance. The Township awarded the contract to the only other company who submitted a tender. Had Reaction’s tender been considered by the Township, Reaction’s tender would have been the lowest and it would have won the work.
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