Yu $600,000 submitted by SoftX for the tender

Yu Cheng Jasper Jiang

Sunday, January 28th,
2018

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Mr. Aplevich

ECE290

Assignment
1

            The City of Waterloo and SoftX Programmers came into a
conflict regarding the tendering process          and
Contract A/Contract B. As the bid of $600,000 submitted by SoftX for the tender
was made irrevocable and sealed, SoftX discovers that they would lose money on
the project, since hiring additional workers would cost them more than
previously anticipated. This left SoftX in a very unpleasant situation with
them being stuck with an erroneous bid. By logical nature, SoftX attempted to
withdraw the bid, but was refused by the city, who acknowledged that the bid
may have contained an error. SoftX did not accept the contract for work by the
city, so the city contracted with the next lowest bid and sued SoftX for the
difference. Although it was SoftX who had made the mistake in the contract, the
city was aware of such issue and still attempted to carry on the offer. Doing
so, this results in a unilateral mistake which would not allow the city to
accept the offer since it affected a fundamental element of the contract law. Contract
A was automatically formed the moment the tender was submitted, but Contract B
was breached due to the unilateral mistake. The action brought by the City of
Waterloo is not likely to succeed due to the unilateral mistake of an erroneous
bid, an unformed Contract B, and the breach of the Canadian contract law.

            The City of Waterloo was aware that the bid made by SoftX
might contain an error. It is an important fact that the city knew of the
mistake made by SoftX and still proceeded with the offer. There was a precedent
case involving similar issues and mistakes between Belle River Community Arena
Inc. and W.J.C. Kauffmann Co. Ltd. Et al, which took place on May 2nd,
1977 8, 5. The issue was similar in the sense that there was a clerical
error regarding the bid, and both parties acknowledged the error. The owner
offered the contract to the next lowest bid and sued Kaufmann the difference.
When this case was taken to court, the court of appeal said, “an offeree cannot
accept an offer which is known to have been made by mistake and which affects a
fundamental term of the contract 2.” There was a 60-day period where the bid
could not be withdrawn, but it also could not be accepted since the plaintiff
was aware of the mistake. In the case with the City of Waterloo and SoftX, whether
or not there was a period of time where the bid could not be withdrawn, the city
would not be able to accept the offer by SoftX either way.

            Another similar precedent case existed between Hartog and
Colin & Shields, where Colin & Shields, who were hide merchants, discussed
selling Hartog 30,000 hare skins for 10d per skin. When the final offer was
made in writing, Colin & Shields miswrote the price as 30,000 skins for 10d
per pound, which came to about a third of the total price that was previously
discussed 3, 6. Hartog tried to hold the offer, even though he was aware of
the mistake. When taken to court, the judge found Colin & Shields to be in
favor of the case since the plaintiff must have known about the error in
writing. It was wrong to take advantage of the error as it concerned a term of
contract, which ultimately rendered the contract void 6. This precedent case
is another example of a unilateral mistake between the parties, where one party
had an error in contract and both parties acknowledged the mistake. In both
precedent cases described above, the party who made the mistake was favored in
court.

            For a contract to be legally enforceable, there are five
elements that must be present; “an offer made and accepted, mutual intent to
enter the contract, consideration, capacity, and lawful purpose 1.” If any of
these five elements are absent, the contract will not be legally enforceable.
In this case, one of the five elements are missing; an offer made and accepted.
Although an offer was made between the city and SoftX, it was never formally
accepted due to the unilateral mistake that was present. A unilateral mistake
arises when “only one party has made a mistake and the other party knows or
reasonably ought to know about it 3.” This puts the City of Waterloo in a
very awkward position as they continued to proceed with the contract, although
the mistake was acknowledged. As stated before, the city is in an incapable
position to accept the offer. Since the offer cannot be accepted by the city,
there is no longer a legal contract between the two parties. For a Contract B
to exist, there must be a Contract A, which is described as “the name given to
the contract that comes into existence between a bidder and an owner upon the
submission of a compliant bid by a contractor to an owner in response to a
tender call 4.”  Contract A was formed
when the tender was submitted. Contract B is “the construction contract itself,
which comes into existence upon the acceptance by an owner of the lowest
compliant bid made by the contractor 4.” Due to the mistake made by SoftX
which the city acknowledged, the City of Waterloo would be unable to accept the
offer. For Contract B to be in effect, the owner must have accepted the lowest
compliant bid. As described previously, the tender could not be withdrawn or
accepted, leading to a non-existent contract, which means no formal, legally
enforceable contract would be in order.

           

           

 

1 D. Aplevich. ECE
290. Class Lecture, Topic: “Lecture 4: Contracts.” Faculty of
Engineering, University of Waterloo, Waterloo, Ontario, 2017.

2 D. Aplevich. ECE
290. Class Lecture, Topic: “Lecture 8: Contracts, Recission,
Tendering.” Faculty of Engineering, University of Waterloo, Waterloo,
Ontario, 2017.

3 D. Aplevich. ECE
290. Class Lecture, Topic: “Lecture 7: Contract Mistakes.” Faculty of
Engineering, University of Waterloo, Waterloo, Ontario, 2017.

4 C. E. Hirst,
“Tendering Basics,” 2009. Online. Available: http://www.cle.bc.ca/practicepoints/bus/tendering.pdf. Accessed: 23-Jan-2018.

5 “Belle River Community Arena Inc. v. W.J.C.
Kaufmann Co. Ltd. et al.” Online. Available: http://www.schuettlaw.com/course/course%20materials/Cases/Tender%20Contracts/Mistake%20in%20Tender/1977%20OntHiCtJstc%20Belle%20River%20Community%20v%20Kaufmann.HTM Accessed: 23-Jan-2018.

6 “Hartog v Colin
& Shields” Online. Available: https://en.wikipedia.org/wiki/Hartog_v_Colin_%26_Shields Accessed: 24-Jan-2018.