Important Legal Issues Procurement Managers Need To Know About

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You’re a savvy procurement manager, just living life procuring things. But did you know that Canada has a history of lawsuits whose precedents govern how you currently conduct business? These laws and rules apply to many factors of procurement, including the competitive bidding process, the nature and location of the parties involved, the nature or origin of the goods and services, and the terms of the procurement.

The legal issues procurement managers face aren’t necessarily obvious, and although the laws have complex language—you might need a law degree to understand everything you read—it’s important to be aware of legal precedents to keep your company compliant with Canadian law. You don’t need to be on the receiving end of a fine.

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According to the Financial Post, procurement law dates back to a Supreme Court of Canada case in 1981 (The Queen (Ont.) v. Ron Engineering & Construction (Eastern) Ltd.), which helped set out obligations for procurers and suppliers. This means that the precedents are fairly new legally speaking, but that doesn’t mean they don’t have weight.

Under Canadian law, there are two legal contracts involved in procurement. The first contract is the one that establishes rules for bidding. The second contract is the one that sets out the goods or services agreed to. Both contracts are legally binding, so if you’ve opened a competitive bidding process or bid on a proposal, make sure you can fulfill your obligations or you could face claims against you.

Legal responsibility is good news for procurement managers, too. If you’ve bid on a contract and it was awarded to a non-compliant company, you may have a case for a lawsuit. So if a company sets out specific terms for competitive bidding and violates those in awarding the contract, the companies that didn’t get the contract might have a claim.

Although laws may seem like annoying obstacles to conducting procurement, laws like The Agreement on Internal Trade were enacted to prevent discrimination based on province of origin. These laws also exist to ensure an open, fair, and competitive procurement process.

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And hey, if you like reading about legal issues—who doesn’t?—there are a few other cases you could read up on to see how the courts view procurement. Business Law Blog cites M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., which found that bids must be compliant before they take effect; Martel Building Ltd. v. Canada, which found all bidders in a call for tender must be treated fairly; and Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), in which Tercon was awarded more than $3 million because it lost a bid to a company that was not compliant.

Yes, the law sounds scary—anything that comes with risk of fines or lawsuits is. But if you make yourself aware of Canadian business laws and case precedents, you can take actions that prevent you being on the receiving end of a claim.

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With a passion for everything Digital Marketing, Nick Boariu is responsible for SEM, Web Analytics, Conversion Optimization, Content Creation, and wicked design! Nick brings an array of experience with backgrounds in Film, Design, Sales, Marketing, and Entrepreneurship.