The Supreme Court of Canada (SCC) has ruled that the B.C. Ministry of Transportation breached the provisions of its tender contract with Tercon Contractors Ltd., when it accepted and awarded a contract to an ineligible bidder.

Tercon Contractors Ltd. v. British Columbia is the most important tendering decision of the last 10 years and has significant implications for owners and contractors,” says Sharon Vogel, a partner in the Toronto office of Borden Ladner Gervais LLP. “And even though the decision deals with a public-sector procurement, it is applicable to the private sector as well.”

Although the decision of the SCC was a split (5-4) decision, the court upheld the right of public agencies to include a broad “exclusion of liability” in tender documents.

“Considering how seriously the court split, you have to question whether the case provides helpful guidance for the future,” says Vogel. “To the contrary, we may well see an upsurge in tendering disputes because the uncertainty raises the prospect of getting around exclusion clauses.”