# How Can an Exclusion of Liability Clause in an Rfp Be Legally Challenged? ▴ Question

**Published:** 2025-08-09
**Categories:** Question

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## Concept

An [exclusion of liability](https://prime.greeks.live/area/exclusion-of-liability/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) clause within a Request for Proposal (RFP) represents a deliberate allocation of risk. From the issuer’s perspective, it is a shield, an instrument designed to foreclose potential claims for compensation arising from the [procurement process](https://prime.greeks.live/question/what-are-the-primary-legal-differences-between-a-tender-process-and-an-rfp-process-in-public-sector-procurement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) itself. This includes liabilities for alleged inaccuracies in the RFP documents, mistakes in the evaluation process, or the costs bidders incur in preparing their submissions. The core intent is to create a controlled environment where the issuer retains maximum discretion while minimizing its financial exposure.

A bidder, conversely, encounters this clause as a significant hurdle. It introduces an element of asymmetry into the process, demanding substantial investment in a proposal while simultaneously asking the bidder to waive rights to recourse if the process is flawed.

The fundamental tension originates from the dual nature of an RFP. While it is a solicitation for bids, in many legal jurisdictions, its issuance and the subsequent submission of a compliant proposal create a preliminary contract, often termed “Contract A”. This initial contract governs the bidding process itself, implying duties of fairness and good faith upon the issuer. The primary contract for the actual work, “Contract B,” is only awarded later.

An [exclusion clause](https://prime.greeks.live/question/under-what-circumstances-might-a-court-invalidate-a-seemingly-watertight-privilege-or-exclusion-clause-in-an-rfp/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) attempts to modify or entirely negate the implied terms of Contract A. It forces a prospective bidder to question the very foundation of the engagement ▴ is this a fair competition governed by implicit rules of good faith, or is it a process where the issuer has unilaterally absolved itself of responsibility for adhering to its own stated rules? This initial analysis of the clause’s scope and enforceability is a critical first step for any potential bidder before committing resources to a response.

> The enforceability of an exclusion clause hinges on a delicate balance between contractual freedom and the judiciary’s refusal to permit a party to benefit from its own misconduct in a flawed bidding process.

Challenging such a clause is not merely a matter of disagreement; it is an assertion that the clause oversteps the bounds of legal and commercial reasonableness. The legal system provides specific avenues for these challenges, recognizing that an unfettered ability to exclude liability could undermine the integrity of the entire competitive bidding system. Courts scrutinize these clauses with a skeptical eye, particularly when they are broad, ambiguous, or appear to shield the issuer from the consequences of acting in bad faith or breaching a fundamental term of the RFP. The success of a challenge depends on demonstrating that the clause, as applied to the specific facts of the case, is legally untenable.

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## Strategy

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## Foundations of a Legal Challenge

A legal challenge to an exclusion of liability clause is built upon established principles of contract law that act as a check on the power of the drafting party. These doctrines are not designed to eliminate risk for bidders but to ensure a level of fairness and integrity in the procurement process. The primary strategic avenues involve demonstrating that the clause is either improperly constructed, contrary to public interest, or being used to shield conduct that the law will not protect.

One of the most potent tools is the doctrine of _[contra proferentem](https://prime.greeks.live/area/contra-proferentem/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)_, which dictates that any ambiguity in the wording of a clause will be interpreted against the party that drafted it ▴ in this case, the RFP issuer. If a clause is vaguely worded, a bidder can argue that it does not clearly and unequivocally cover the specific breach that occurred. For instance, a general clause disclaiming liability for “any costs incurred during the RFP process” might be interpreted narrowly and not apply to a situation where the issuer awarded the contract to a non-compliant bidder, a fundamental breach of the process rules.

The Supreme Court of Canada’s decision in _Tercon Contractors Ltd. v. British Columbia_ serves as a landmark example, where the court found that an exclusion clause did not protect the province when it awarded a contract to an ineligible bidder, as this violated the foundational rules of the RFP.

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## Unconscionability and Public Policy

Another strategic pillar is the argument of unconscionability. This legal concept addresses situations where a contract or clause is so one-sided and unfair that it shocks the conscience of the court. A challenge based on unconscionability typically requires showing two things:

- **Procedural Unconscionability** ▴ This relates to the “bargaining naughtiness” in the contract formation process. In an RFP context, this is often inherent, as the terms are presented on a take-it-or-leave-it basis with no opportunity for negotiation. The bidder has a significant disparity in bargaining power compared to the issuer. 

- **Substantive Unconscionability** ▴ This focuses on the harshness of the terms themselves. An exclusion clause that attempts to absolve the issuer of liability for [gross negligence](https://prime.greeks.live/area/gross-negligence/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) or intentional misconduct would likely be considered substantively unconscionable. 

Closely related is the [public policy](https://prime.greeks.live/question/how-can-an-institution-quantitatively-measure-the-fairness-of-a-liquidity-providers-last-look-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) argument. Courts may refuse to enforce a clause if doing so would be detrimental to the public interest. For example, if an RFP is for a public works project involving public safety, a clause that attempts to exclude liability for negligence that could lead to dangerous construction might be voided on public policy grounds. The integrity and fairness of the public procurement process itself is often considered a matter of public policy. 

> A core legal strategy involves framing the issuer’s breach not as a mere administrative error, but as a violation of the fundamental pillars of the bidding contract itself.

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## Distinguishing Degrees of Culpability

A critical element of any challenge strategy is to characterize the issuer’s conduct correctly. The law draws sharp distinctions between different levels of fault, and exclusion clauses that may be effective against claims of simple negligence often fail when confronted with more severe misconduct. Courts are highly reluctant to allow a party to contract out of liability for its own gross negligence or intentional wrongdoing. Therefore, framing the issuer’s actions appropriately is paramount.

### Table 1 ▴ Levels of Culpability

| Level of Fault | Definition | Impact on Exclusion Clause |
| --- | --- | --- |
| Ordinary Negligence | Failure to exercise the degree of care that a reasonably prudent person would exercise under similar circumstances. An administrative error or oversight in evaluation. | Most likely to be covered by a well-drafted exclusion clause, provided the clause is clear and reasonable. |
| Gross Negligence | A conscious and voluntary disregard of the need to use reasonable care, which is likely to cause foreseeable grave injury or harm. A reckless departure from the RFP’s evaluation criteria. | Significantly less likely to be covered. Many jurisdictions hold that excluding liability for gross negligence is against public policy. |
| Willful Misconduct / Intentional Breach | An intentional act or omission, with knowledge that the act would probably result in injury or damage, or with reckless disregard of the consequences. Deliberately awarding a contract to a favored but non-compliant bidder. | Generally unenforceable. Courts will not permit a party to intentionally breach its contractual obligations and then hide behind an exclusion clause. |

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## Execution

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## The Procedural Gauntlet

Successfully challenging an exclusion clause requires navigating a series of procedural steps, each with its own strategic considerations. The timing and forum of the challenge are critical decisions that can dictate the outcome. Action must be precise and grounded in a clear legal theory supported by robust evidence.

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## Pre-Submission and Pre-Award Protests

The first opportunity to challenge a clause often arises before a proposal is even submitted. Most procurement frameworks, particularly in the public sector, allow for a formal process to ask questions or request clarifications about the RFP. This can be used strategically to put the issuer on notice about a potentially problematic clause.

- **Formal Questions** ▴ A bidder can submit a question highlighting the ambiguity or perceived unfairness of the exclusion clause. The issuer’s response, or lack thereof, becomes part of the official record. 

- **Request for Amendment** ▴ A more direct approach is to formally request that the issuer amend or remove the clause, explaining why it is considered unreasonable or contrary to standard industry practice. 

- **Formal Protest** ▴ If the issuer refuses to amend the clause, a bidder may have grounds for a [pre-bid protest](https://prime.greeks.live/area/pre-bid-protest/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) to a relevant authority (e.g. a government procurement board). The argument would be that the clause makes the entire RFP process unfair or unlawful, rendering a fair competition impossible. 

Executing a pre-award challenge is a delicate balancing act. It can signal to the issuer that the bidder is diligent and legally sophisticated. However, it can also risk antagonizing the issuer before the evaluation process has even begun. The decision to proceed depends on the severity of the clause and the bidder’s willingness to risk the business opportunity.

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## Post-Award Litigation and Evidence

If a bidder participates in the RFP, loses, and believes the process was flawed in a way that should not be protected by the exclusion clause, the next step is litigation. This involves filing a lawsuit, typically for breach of the “Contract A” bidding contract. The exclusion clause will then be raised by the issuer as a defense, and the court will have to rule on its enforceability. Success in this phase depends entirely on the quality of the evidence presented to the court.

> The objective in litigation is to demonstrate that the issuer’s actions constituted a fundamental breach that vitiates the protections of the exclusion clause.

The evidentiary record must be meticulously assembled to prove not just that the bidder lost, but that it lost because the issuer violated the rules of the RFP in a manner that the law should not condone. This requires a focused effort to gather and present compelling proof of the issuer’s misconduct.

### Table 2 ▴ Evidentiary Framework for a Challenge

| Evidence Type | Purpose and Strategic Value |
| --- | --- |
| The RFP Document | The foundational document. Used to establish the “rules of the game” that the issuer set for itself and subsequently violated. Any ambiguities are highlighted for contra proferentem arguments. |
| Bidder’s Proposal | Demonstrates the bidder’s compliance with all mandatory requirements of the RFP, establishing it as an eligible and qualified participant that was entitled to fair consideration. |
| Winning Proposal (if obtainable) | The “smoking gun” if it can be proven to be non-compliant. Evidence of non-compliance is the strongest basis for arguing a fundamental breach, as seen in the Tercon case. |
| Issuer Communications | All correspondence, including answers to questions, addenda, and debriefing notes. Can reveal inconsistencies in the issuer’s conduct or provide evidence of unfair treatment. |
| Expert Testimony | Industry experts can testify about standard procurement practices and the commercial reasonableness (or unreasonableness) of the exclusion clause itself. |
| Internal Bidder Records | Memos, emails, and financial records detailing the cost of proposal preparation. This is essential for proving damages if the challenge is successful and the court awards compensation for bid costs. |

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## References

- Whitelaw Twining. “SCC Decision on Tendering Law and Exclusion Clauses.” 2010.

- Blair Enns. “The Legal Implications of Issuing an RFP.” Win Without Pitching.

- FigsFlow. “What Could Be Fair & Reasonable Exclusions When Defining Limitation of Liability?” 2025.

- Bill Preston. “INVITATIONS TO BID I CLAIMS EXCLUSION CLAUSES.” 2010.

- Stevens & Bolton LLP. “Limiting liability in commercial contracts.” 2019.

- Harris, Robert. The Law of Tendering. Thomson Reuters Canada, 2018.

- Fridman, G.H.L. The Law of Contract in Canada. 6th ed. Carswell, 2011.

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## Reflection

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## Beyond the Clause a System of Integrity

Understanding the legal mechanics for challenging an exclusion clause is a necessary tactical skill. It provides a framework for recourse and defense in a high-stakes procurement environment. Yet, the presence and nature of such a clause offer a deeper insight.

It is a data point that speaks to the issuer’s institutional posture on risk, fairness, and partnership. A procurement process laden with overly aggressive, one-sided clauses may signal a future contractual relationship that will be similarly adversarial.

Therefore, the analysis of an exclusion clause transcends a simple go/no-go decision on a bid. It becomes an input into a broader strategic assessment of the counterparty. The decision to challenge, to accept, or to walk away from an RFP is not just a legal or financial calculation; it is a reflection of an organization’s own risk tolerance and its definition of a sustainable business relationship. The ultimate operational advantage lies not in winning every legal battle, but in developing an institutional intelligence that can accurately read these signals and choose the engagements that align with its own principles of integrity and commercial prudence.

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## Glossary

<a href="https://prime.greeks.live/area/exclusion-of-liability/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Exclusion of Liability

Meaning ▴ Exclusion of Liability refers to a contractual provision that legally limits or negates one party's responsibility for specific types of losses, damages, or claims arising from their performance or non-performance under an agreement. </a><a href="https://prime.greeks.live/question/what-are-the-primary-legal-differences-between-a-tender-process-and-an-rfp-process-in-public-sector-procurement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Procurement Process

A tender creates a binding process contract upon bid submission; an RFP initiates a flexible, non-binding negotiation. </a><a href="https://prime.greeks.live/question/under-what-circumstances-might-a-court-invalidate-a-seemingly-watertight-privilege-or-exclusion-clause-in-an-rfp/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Exclusion Clause

A court may invalidate a watertight RFP clause if it is unconscionable, ambiguous, or contrary to public policy. </a><a href="https://prime.greeks.live/area/contra-proferentem/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A translucent blue sphere is precisely centered within beige, dark, and teal channels. This depicts RFQ protocol for digital asset derivatives, enabling high-fidelity execution of a block trade within a controlled market microstructure, ensuring atomic settlement and price discovery on a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/precision-execution-pathway-for-institutional-digital-asset-derivatives-leveraging-rfq-protocols-and-high-fidelity-market-microstructure.jpg)

## Contra Proferentem

Meaning ▴ Contra Proferentem represents a fundamental legal doctrine dictating that any ambiguity within a contractual term must be interpreted against the party who drafted that specific term. </a><a href="https://prime.greeks.live/area/gross-negligence/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Gross Negligence

Meaning ▴ Gross Negligence defines an extreme failure in the exercise of due care or a severe disregard for established duties, resulting in foreseeable and substantial harm within an operational or fiduciary context. </a><a href="https://prime.greeks.live/question/how-can-an-institution-quantitatively-measure-the-fairness-of-a-liquidity-providers-last-look-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Public Policy

Quantifying last look fairness involves analyzing rejection symmetry, hold times, and slippage to ensure execution integrity. </a><a href="https://prime.greeks.live/area/pre-bid-protest/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![The image depicts two intersecting structural beams, symbolizing a robust Prime RFQ framework for institutional digital asset derivatives. These elements represent interconnected liquidity pools and execution pathways, crucial for high-fidelity execution and atomic settlement within market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-cross-market-execution-architecture-for-digital-assets.jpg)

## Pre-Bid Protest

Meaning ▴ A Pre-Bid Protest constitutes a formal challenge initiated by an interested party, typically a prospective bidder, against the terms, conditions, or specifications of a procurement solicitation prior to the designated deadline for bid submission. </a>

**Tags:** [Pre-Bid Protest](https://options.greeks.live/area/pre-bid-protest/), [Public Policy in Contracts](https://options.greeks.live/area/public-policy-in-contracts/), [Unconscionability Doctrine](https://options.greeks.live/area/unconscionability-doctrine/), [Gross Negligence in Procurement](https://options.greeks.live/area/gross-negligence-in-procurement/), [Breach of Contract A](https://options.greeks.live/area/breach-of-contract-a/), [RFP Challenge](https://options.greeks.live/area/rfp-challenge/)	

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### [How Does the FAA Interact with State Laws on Unconscionability?](https://options.greeks.live/question/how-does-the-faa-interact-with-state-laws-on-unconscionability/)
![A sleek, precision-engineered device with a split-screen interface displaying implied volatility and price discovery data for digital asset derivatives. This institutional grade module optimizes RFQ protocols, ensuring high-fidelity execution and capital efficiency within market microstructure for multi-leg spreads.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-module.jpg)

The interaction is a dual-layered federal preemption, where the Airline Deregulation Act governs the substance and the Federal Arbitration Act controls the forum.

- 
### [Can an Issuer Use an Exclusion Clause to Avoid Liability for Providing Inaccurate Information in an Rfp?](https://options.greeks.live/question/can-an-issuer-use-an-exclusion-clause-to-avoid-liability-for-providing-inaccurate-information-in-an-rfp/)
![A sleek, angled object, featuring a dark blue sphere, cream disc, and multi-part base, embodies a Principal's operational framework. This represents an institutional-grade RFQ protocol for digital asset derivatives, facilitating high-fidelity execution and price discovery within market microstructure, optimizing capital efficiency.](https://options.greeks.live/wp-content/uploads/2025/08/prime-os-rfq-for-institutional-digital-asset-derivatives-execution.jpg)

An issuer's ability to use an exclusion clause for inaccurate RFP data is limited by judicial oversight of fairness and public policy.

- 
### [How Does the Concept of Contract a and Contract B Affect Liability in the Rfp Process?](https://options.greeks.live/question/how-does-the-concept-of-contract-a-and-contract-b-affect-liability-in-the-rfp-process/)
![A dark central hub with three reflective, translucent blades extending. This represents a Principal's operational framework for digital asset derivatives, processing aggregated liquidity and multi-leg spread inquiries. The intricate core signifies high-fidelity execution and algorithmic trading for price discovery within RFQ protocols, mitigating counterparty risk.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-rfq-protocol-engine-for-high-fidelity-digital-asset-derivatives.jpg)

The Contract A/B framework makes liability in RFPs a function of process integrity, binding owners to fairness and bidders to their submissions.

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---

**Original URL:** https://options.greeks.live/question/how-can-an-exclusion-of-liability-clause-in-an-rfp-be-legally-challenged/
