Excluding liability in a procurement process

The Canadian Supreme Court rejected an exclusion clause that sought to exclude liability for all claims by unsuccessful bidders "for compensation of any kind whatsoever, as a result of participating in this RFP".

Although Canadian decisions are not binding in Australia, this case is likely to influence the drafting of RFP exclusion clauses and the interpretation of those clauses by Australian courts in the future

Principals and government entities involved in procurement should undertake an urgent review of their Requests for Proposals (RFPs) following a decision recently handed down by the Supreme Court of Canada in Tercon Contractors Ltd v British Columbia (Transportation and Highways 2010 SCC 4). The decision sheds new light on the precise wording required to exclude unsuccessful bidders from successfully recovering losses incurred in a procurement process.

Broadly, the Canadian Supreme Court rejected an exclusion clause that sought to exclude liability for all claims by unsuccessful bidders "for compensation of any kind whatsoever, as a result of participating in this RFP".

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