The appellant, a prime contractor, carried the respondent subcontractor's low bid for electrical work in its successful tender for a hospital construction project.
The appellant had assured the respondent that its non-IBEW union affiliation would not be an issue.
However, after the Ontario Labour Relations Board ruled that the appellant was bound to use only IBEW-affiliated subcontractors, the appellant refused to enter into a subcontract with the respondent and awarded the work to an IBEW subcontractor at the respondent's bid price.
The Supreme Court of Canada held that a Contract A was formed when the appellant carried the respondent's bid, obligating the appellant to award the subcontract absent a reasonable objection.
The appellant's objection was unreasonable given its prior assurances and knowledge of the union issue.
The Court dismissed the appeal on liability and allowed the respondent's cross-appeal on damages, awarding $365,143 for lost profits.
