Reference no: EM133935875

Question

The Happy Go Lucky Drilling Company ("Happy Drilling") was setting up a work camp in northern Alberta. In order to house its workers, it wanted to have a village of modular homes constructed. A Request for Bids was published setting out the detailed specifications for the project. Bids were required to be submitted in a sealed envelope not later than March 31. The Request for Bids stated that once the bids were submitted, they could not be withdrawn for any reason and that Happy Drilling would select the lowest qualified bid. Quality Modular Homes ("Quality Homes") was in the business of constructing modular homes at their plant in Calgary and then shipping them to be reassembled in remote locations. Business had been poor for the past year due to a downturn in the Alberta economy. Quality Homes really wanted to get this contract as it would provide months of work for Quality Homes and would help to keep the company afloat. The VP of Sales, Dougie, was placed in charge of putting together a competitive bid. His bid team included Stanford, Ahmed and Hilary. Stanford and Ahmed had long been vying for the attention of Hilary. Hilary was flattered to be the center of attention but did not give any indication that she was going to "choose" one of the men. As a recent of U of L grad, Hilary's future was promising indeed and she was focused on her career and was not interested in drama. Stanford, Ahmed and Hilary worked long and hard on the bid and put together a comprehensive package for Dougie to review and present to the Executive Management Team (EMT). Their recommended bid was for $4.5 million, which would net a profit of $250,000 for Quality Homes. They were going to present the final bid package to Dougie Tuesday morning. Monday evening was a dismal night for Stanford because he learned that Hilary had in fact chosen. She chose Ahmed! How could she have chosen Ahmed?! Stanford's smoldering good looks had failed him, again. He knew that he could not work with Ahmed and Hilary again because he did not want to be the object of their pity and perceived ridicule. Late that night, Stanford went into the office and made some changes to the final bid documents. After his changes, the bid was now going to be for $4.0 million which would not only result in no profit for Quality Homes but in fact would 2 | Page result in a $250,000 loss. Stanford hoped that Ahmed and Hilary would be blamed for the incorrect bid and that they would both be fired. Tuesday morning, Dougie presented the final bid proposal to the EMT unaware that the bid was grossly low and would result in a loss to Quality Homes. The EMT authorized Dougie to submit the bid and Dougie did so on March 30. Unable to contain his disappointment with Hilary's choice, Stanford told Hilary and Ahmed what he had done and that they would all be fired for it. Ahmed told Dougie who immediately contacted Happy Drilling and spoke to Darrell, the man in charge of the bid process and told him of the erroneous bid. Darrell said that once sealed bids had been received, they could not be withdrawn or modified and that Happy Drilling was obliged to award the contract to the lowest qualified bidder. Dougie said that Quality Homes would actually lose money on the deal and that if that happened, the company would likely have to file for bankruptcy. Darrell said that if indeed Quality Homes "won" the bid, Darrell would have to hold them to their bid amount but would give them a $150,000 bonus if they finished the project on time. On April 1, Happy Drilling opened all the bids and not surprisingly Quality Homes had the lowest qualified bid and was awarded the contract. Stanford was fired for his improper actions and Quality Homes commenced plans to carry out its contractual obligations with Happy Drilling. Due to an unexpected decrease in labour and building material costs, Quality Homes was able to finish the project on time and at cost. While they made no money, they also did not lose any money. Every day, Dougie checked the mail for the promised $150,000 cheque from Happy Drilling and after 60 days of disappointment, he called Darrell. Darrell said the since Quality Homes did not go bankrupt and did not lose money, Happy Drilling would not pay the promised bonus but did promise to give them a good contract on their next project. Dougie is mad - hopping mad in fact! He wants your advice on the following:

1. Can Quality Homes sue Happy Drilling to get the unpaid $150,000 bonus?

2. Can Quality Homes force Happy Drilling to honour their promise of giving them a "good contract" for the next project?

3. Does Quality Homes have a cause of action against the forlorn and sneaky Stanford?

4. After considering the legal position of all parties, what is your recommendation for Quality Homes and why?