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Contracts - A Duty of Fairness?. Canada Forgings Inc. v. Atomic Energy of Canada Limited
In Canada Forgings Inc. v. Atomic Energy of Canada Limited (Ont CA, 2024) the Ontario Court of Appeal dismissed - but did consider (which I find unusual, it suggests a duty of fairness in procurement situations) - a 'fairness' argument in a procurement contract lawsuit, here in the context of assessing the adequacy of trial 'reasons for judgment':[3] ... In April 2009, the appellant moved to add a procurement law claim for an alleged breach of the duty of fairness. ...
[4] The two primary issues at trial were 1) whether the appellant’s procurement law claim was barred by the two-year limitations period, and 2) whether, in breach of an alleged duty of fairness under procurement law, AECL was liable for “steering” the end fitting forgings work away from the appellant towards one of its competitors, Patriot Forge Co. (“Patriot”). ....
[5] The trial judge dismissed the action on the basis that the duty of fairness claim was discoverable prior to April 2007, two years before the appellant amended its statement of claim to add a procurement law claim against the respondent, and was therefore statute-barred. ....
....
[41] The bottom line is, there can be no breach of a duty of fairness in procurement law when there is no Contract A, and I would reject the appellant’s submission that the trial judge’s reasons offered only a “conclusory” statement on this point. The reasons clearly explain why the trial judge rejected the appellant’s argument. He specifically considered the evidence the appellant relied upon in support of its position that the Bruce Tender was “extended” beyond its stated expiry in April 2005, and expressly found that there was no basis for that conclusion, since “AECL’s procurement department [had] internally discussed the need to address the now expired major bids received in respect of the Bruce Project”. As the trial judge observed, the appellant “was not a party to the original Bruce Tender – nor would it have been party to any Contract A formed in relation to the Bruce Tender”. The trial judge’s reasons explain how he reached this finding and his conclusion that, since the tendering period expired in April 2005 and was not extended or modified to “sweep” the appellant into the process, AECL owed no duty of fairness, implied or otherwise, to the appellant.
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