By submitting a bid of $600,000, SoftX entered into a contract A, asdefined by the new laws that were formulated because of the Ron Engineering case (1).
This meantthat they had an obligation to enter into Contract B, which is the formalagreement signed by both parties. In addition, the seal ensured that the bidcouldn’t be revoked, which made it illegal for SoftX to withdraw the bid. However, there do exist some exceptions that allow withdrawal of the bidbased on certain conditions that the law considers. A contract A is only initiated if it can be proven that both the partiesintended to perform contractual obligations.
In this case, a call for tenderswas sent out by the City and SoftX submitted the bid which was accepted by theCity and sealed under the crown. It was much later that SoftX realized that thetotal cost for this project would sum up to a higher amount that they had bidfor. This proves the intent of both parties to enter contract A and fulfil allobligations.In case of a mistake in the contract, for the contract to be withdrawable,the promised amount must be grossly disproportionate to the reasonable amountfor the work to be done. In this case, the $100,000 difference is approximately only 17% and is hence, not disproportionate enough.As in the case of Toronto Transit Commission vs Gottardo ConstructionLtd (2), while it’s proven that the parties did enter a Contract A and theunilateral mistake made was not considered to be grossly disproportionate, thecontract cannot be withdrawn.