Two Recent Appellate Decisions Discuss Discretion And Privilege Clauses In A Competitive Bidding Process

The courts of appeal of British Columbia and Alberta have recently released decisions dealing with the effect of discretion and privilege clauses often used by owners in calls for competitive bids.¹ Though privilege clauses and discretion clauses are different, they are related both in their purpose and in the way courts have sought to limit their effect in order to preserve the integrity of the tendering process. The way courts have done this has been to require that winning bidders must, notwithstanding any discretion or privilege clauses, be selected based on evaluation criteria that can be reasonably inferred from the tender documents themselves, as understood within the context of the needs and the reasonably ascertainable realities of the project.