# How Does the Duty of Good Faith Limit the Power of a Privilege Clause in an Rfp? ▴ Question

**Published:** 2025-08-06
**Categories:** Question

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![Luminous teal indicator on a water-speckled digital asset interface. This signifies high-fidelity execution and algorithmic trading navigating market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-best-execution-prime-os.jpg)

![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](https://options.greeks.live/wp-content/uploads/2025/07/institutional-rfq-protocol-engine-for-high-fidelity-digital-asset-derivatives.jpg)

## Concept

The architecture of a [Request for Proposal](https://prime.greeks.live/area/request-for-proposal/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (RFP) is a system designed to manage risk and information flow. Within this system, the privilege clause and the [duty of good faith](https://prime.greeks.live/area/duty-of-good-faith/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) function as two fundamental, interacting protocols. A privilege clause is an explicit term engineered to provide the RFP issuer with maximum discretion.

It typically states that the issuer is not obligated to accept the lowest-priced bid or any bid at all. This clause is a mechanism for retaining control, allowing the issuer to account for variables beyond price, such as solution quality, bidder experience, or strategic alignment, without being automatically bound to the most economically advantageous offer on paper.

Juxtaposed with this is the duty of good faith and [fair dealing](https://prime.greeks.live/area/fair-dealing/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), an implicit obligation recognized by courts to ensure the integrity of the bidding process itself. This duty is a foundational layer of the procurement system. It arises from the moment a bidder submits a compliant proposal, creating a preliminary contract known as “[Contract A](https://prime.greeks.live/area/contract-a/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)”. This initial contract governs the conduct of the parties during the evaluation period.

The duty of [good faith](https://prime.greeks.live/area/good-faith/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) mandates that the issuer must treat all compliant bidders fairly, equitably, and consistently with the rules established in the [RFP documents](https://prime.greeks.live/area/rfp-documents/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). This protocol ensures that the competition, which bidders invest significant resources to enter, is legitimate.

> The duty of good faith acts as a legal and ethical governor on the broad discretionary power granted by a privilege clause, ensuring the integrity of the competitive bidding process.

The core tension emerges at the intersection of these two principles. The [privilege clause](https://prime.greeks.live/area/privilege-clause/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) provides discretionary power, while the duty of good faith imposes a standard of conduct on the exercise of that power. An issuer cannot use a privilege clause to justify a process that is fundamentally unfair.

For instance, engaging in [bid shopping](https://prime.greeks.live/area/bid-shopping/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (using one bidder’s price to negotiate a lower price from another) or relying on [undisclosed evaluation criteria](https://prime.greeks.live/area/undisclosed-evaluation-criteria/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) to select a winner would be considered a breach of the duty of good faith, rendering the privilege clause ineffective as a defense for such actions. The legal system has consistently affirmed that the discretion granted by a privilege clause is not absolute; it is always subject to the implied obligation of fairness and good faith that underpins the entire RFP structure.

![An intricate, transparent digital asset derivatives engine visualizes market microstructure and liquidity pool dynamics. Its precise components signify high-fidelity execution via FIX Protocol, facilitating RFQ protocols for block trade and multi-leg spread strategies within an institutional-grade Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-digital-asset-derivatives-rfq-liquidity-ecosystem.jpg)

![A precise mechanical instrument with intersecting transparent and opaque hands, representing the intricate market microstructure of institutional digital asset derivatives. This visual metaphor highlights dynamic price discovery and bid-ask spread dynamics within RFQ protocols, emphasizing high-fidelity execution and latent liquidity through a robust Prime RFQ for atomic settlement](https://options.greeks.live/wp-content/uploads/2025/07/precision-engineering-driving-institutional-digital-asset-derivatives-execution-across-advanced-rfq-protocols-and-prime-brokerage-frameworks.jpg)

## Strategy

From a strategic standpoint, the interplay between a privilege clause and the duty of good faith defines the risk landscape for both the entity issuing the [RFP](https://prime.greeks.live/area/rfp/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) and the participating bidders. A well-constructed procurement strategy involves calibrating these elements to achieve a desired outcome while minimizing legal and reputational risk.

![A central dark nexus with intersecting data conduits and swirling translucent elements depicts a sophisticated RFQ protocol's intelligence layer. This visualizes dynamic market microstructure, precise price discovery, and high-fidelity execution for institutional digital asset derivatives, optimizing capital efficiency and mitigating counterparty risk](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-engine-visualizing-high-fidelity-execution-and-market-microstructure-dynamics.jpg)

## Architecting the Procurement Protocol

For an issuer, the objective is to design an RFP that maximizes flexibility without breaching the duty of fair dealing. The privilege clause is a key component of this design. A broadly worded clause is a tool to protect the issuer from being locked into an undesirable contract ([Contract B](https://prime.greeks.live/area/contract-b/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)) with a bidder who, despite submitting the lowest price, may be unsuitable for other valid business reasons. However, an over-reliance on this clause can be a strategic error.

Courts will scrutinize the issuer’s conduct during the evaluation process. If the evaluation is inconsistent with the criteria laid out in the RFP, or if a bidder is disqualified for reasons that are arbitrary or undisclosed, the privilege clause will likely offer no protection against a claim for damages from an aggrieved bidder.

The optimal strategy for an issuer involves several key actions:

- **Transparent [Evaluation Criteria](https://prime.greeks.live/area/evaluation-criteria/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)** ▴ Clearly defining all evaluation criteria and their relative importance within the RFP documents. This aligns the issuer’s discretion with a transparent framework, making the subsequent decision-making process defensible.

- **Consistent Process Application** ▴ Applying the evaluation rules and communication protocols uniformly to all bidders. Any deviation that provides one bidder an advantage over others can be construed as a breach of fairness.

- **Documented Decision Making** ▴ Maintaining a clear and contemporaneous record of the evaluation process, detailing how the winning bid was selected based on the stated criteria. This creates an evidentiary trail that substantiates the fair exercise of discretion.

![A precisely engineered system features layered grey and beige plates, representing distinct liquidity pools or market segments, connected by a central dark blue RFQ protocol hub. Transparent teal bars, symbolizing multi-leg options spreads or algorithmic trading pathways, intersect through this core, facilitating price discovery and high-fidelity execution of digital asset derivatives via an institutional-grade Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-engine-facilitating-high-fidelity-multi-leg-options-spread-execution-best-price-discovery-and-latent-liquidity-access-for-prime-brokerage.jpg)

## How Should Bidders Assess RFP Risk?

For a bidder, the presence of a strong privilege clause introduces a significant element of risk. The investment in preparing a comprehensive proposal could be lost if the issuer exercises its discretion to cancel the process or select a competitor for reasons unrelated to the proposal’s merits. A bidder’s strategy must therefore involve a thorough risk assessment of the RFP itself.

> A bidder must analyze the RFP’s structure to determine if the issuer’s stated discretion is balanced by a commitment to a fair and transparent evaluation process.

Bidders should look for signs of a well-architected, fair process. These include detailed and objective evaluation criteria, clear communication channels for questions, and a professional and transparently managed procurement authority. Conversely, red flags include vaguely worded RFPs, a history of cancelled procurements by the issuer, or evaluation criteria that seem subjective or designed to favor a pre-selected incumbent. The table below outlines a simplified risk assessment framework for bidders confronting a privilege clause.

| Risk Factor | Low Risk Indicators (Fair Process Likely) | High Risk Indicators (Potential for Unfairness) |
| --- | --- | --- |
| Evaluation Criteria | Criteria are detailed, objective, and weighted. | Criteria are vague, subjective, or undisclosed. |
| Issuer’s History | Consistent history of fair contract awards. | History of cancelled RFPs or disputes with bidders. |
| Communication Protocol | Formal, documented Q&A process open to all bidders. | Informal or private communications with select bidders. |
| Compliance Requirements | Clear distinction between mandatory and desirable requirements. | Ambiguous rules regarding bid compliance and waiver of defects. |

![A sleek, modular institutional grade system with glowing teal conduits represents advanced RFQ protocol pathways. This illustrates high-fidelity execution for digital asset derivatives, facilitating private quotation and efficient liquidity aggregation](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-ecosystem-powering-high-fidelity-rfq-execution-and-optimal-liquidity-discovery.jpg)

## The Evolving Legal Landscape

It is important to recognize that the legal interpretation of these duties continues to evolve. Canadian courts, in particular, have established a robust framework beginning with the [Ron Engineering](https://prime.greeks.live/area/ron-engineering/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) case, which introduced the Contract A/Contract B model. Subsequent rulings have consistently reinforced that the privilege clause does not override the fundamental duty of fairness. This legal precedent means that both issuers and bidders must operate with the understanding that the entire procurement process is governed by an implied duty of good faith, which acts as a check on the explicit contractual rights defined in the RFP documents.

![A sophisticated proprietary system module featuring precision-engineered components, symbolizing an institutional-grade Prime RFQ for digital asset derivatives. Its intricate design represents market microstructure analysis, RFQ protocol integration, and high-fidelity execution capabilities, optimizing liquidity aggregation and price discovery for block trades within a multi-leg spread environment](https://options.greeks.live/wp-content/uploads/2025/07/institutional-grade-proprietary-architecture-driving-high-fidelity-digital-asset-derivatives-execution-via-rfq-protocols-and-optimized-market-microstructure-dynamics.jpg)

![Three metallic, circular mechanisms represent a calibrated system for institutional-grade digital asset derivatives trading. The central dial signifies price discovery and algorithmic precision within RFQ protocols](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-and-execution-precision.jpg)

## Execution

In operational terms, the limitation imposed by the duty of good faith on a privilege clause is demonstrated through specific actions an issuer might take during the procurement lifecycle. Executing a defensible RFP process requires a granular understanding of the conduct that courts have identified as breaching the duty of fair dealing. The privilege clause is not a shield against liability when the integrity of the competitive process has been compromised.

![Diagonal composition of sleek metallic infrastructure with a bright green data stream alongside a multi-toned teal geometric block. This visualizes High-Fidelity Execution for Digital Asset Derivatives, facilitating RFQ Price Discovery within deep Liquidity Pools, critical for institutional Block Trades and Multi-Leg Spreads on a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/high-fidelity-digital-asset-derivatives-rfq-execution-optimization-leveraging-proprietary-institutional-prime-os-for-optimal-price-discovery-and-latency-reduction.jpg)

## What Specific Actions Breach the Duty of Good Faith?

The duty of good faith is breached when an issuer’s actions undermine the fairness and integrity of the bidding process that all participants agreed to upon submission. The discretion afforded by a privilege clause cannot be exercised in a manner that is arbitrary, capricious, or inconsistent with the established rules of the RFP.

Key categories of prohibited conduct include:

- **Use of Undisclosed Criteria** ▴ This is perhaps the most common breach. An issuer cannot award a contract based on a preference or criterion that was not communicated to all bidders in the RFP documents. For example, if an issuer decides to award a contract to a local bidder for economic development reasons, that preference must have been stated as an evaluation criterion in the RFP. Selecting a winner based on this hidden preference would be a breach of good faith toward other bidders who invested resources based on the published rules.

- **Bid Shopping** ▴ This practice involves using the price submitted by one bidder to pressure another bidder to lower their price. It fundamentally corrupts the sealed-bid process and is a clear violation of the duty of fairness to the bidder whose price was used as leverage.

- **Accepting a Materially Non-Compliant Bid** ▴ While issuers often include clauses allowing them to waive minor irregularities, accepting a bid that fails to meet a mandatory and material requirement of the RFP is unfair to all other bidders who submitted compliant proposals. Doing so effectively changes the rules of the competition after it has concluded, giving the non-compliant bidder an unfair advantage.

- **Biased Evaluation** ▴ An evaluation committee must conduct its assessment impartially and based solely on the advertised criteria. If a committee is biased in favor of one bidder or against another, the resulting decision is a breach of the duty of good faith.

> Executing a legally sound procurement process means ensuring every discretionary decision permitted by a privilege clause can be traced back to the transparent rules and criteria defined in the RFP.

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## Modeling Breach Scenarios

To understand the practical consequences, we can model several scenarios where an issuer might attempt to invoke a privilege clause and the likely judicial interpretation of that action. This analysis demonstrates how the duty of good faith operates as a limiting factor in practice.

| Issuer Action | Stated Justification (Invoking Privilege Clause) | Likely Breach of Good Faith? | Operational Rationale for the Finding |
| --- | --- | --- | --- |
| Awarding contract to Bidder B (price $1.2M) over Bidder A (price $1.0M). | “We are not required to accept the lowest bid; Bidder B offers superior quality.” | Potentially No | If “quality” was a clearly defined and weighted evaluation criterion in the RFP, and the evaluation record documents how Bidder B scored higher on that metric, this is a valid exercise of discretion. |
| Awarding contract to Bidder C, whose bid did not include a mandatory security certification. | “We have the right to waive irregularities in any bid.” | Yes | The failure to meet a mandatory requirement is a material non-compliance, not a mere irregularity. Waiving it is unfair to other bidders who incurred costs to meet the requirement. |
| Negotiating with Bidder D to match the lower price submitted by Bidder E. | “We have the right to negotiate with any bidder to achieve the best value.” | Yes | This is classic bid shopping. The process is no longer a fair competition based on sealed bids. It leverages one compliant bid to the detriment of its owner. |
| Cancelling the RFP after all bids exceeded the budget. | “We reserve the right not to award a contract.” | No | A privilege clause is generally effective in allowing an owner to cancel a procurement for legitimate business reasons, such as budget constraints, provided this is not done in bad faith (e.g. to re-tender the same work on different terms to favor a specific party). |

The execution of a procurement process under these rules requires a disciplined, systems-oriented approach. The RFP document itself is the source code for the competition. The privilege clause is a powerful function within that code, but its execution is constrained by the overarching operating system of contract law, which mandates good faith and fair dealing to ensure the system as a whole remains viable and trustworthy for all participants.

![Sleek, modular infrastructure for institutional digital asset derivatives trading. Its intersecting elements symbolize integrated RFQ protocols, facilitating high-fidelity execution and precise price discovery across complex multi-leg spreads](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-system-optimizing-high-fidelity-block-trade-liquidity-and-multi-leg-spread-precision.jpg)

## References

- Swan, Angela, and Jakub Adamski. Canadian Contract Law. LexisNexis Canada, 2021.

- Marston, D.L. Law of Tendering. Carswell, 1997.

- The Queen in Right of Ontario v. Ron Engineering & Construction (Eastern) Ltd. 1 S.C.R. 111.

- M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd. 1 S.C.R. 619.

- Rich, John. “The Legal Implications of Privilege Clauses in Tendering.” Journal of Construction Law and Practice, vol. 12, no. 2, 2018, pp. 45-62.

- Sandori, Paul, and William M. Pigott. Bidding and Tendering ▴ What Is the Law? 5th ed. LexisNexis, 2017.

- “The Duty of Good Faith in Tendering.” Canadian Bar Association, National Construction and Infrastructure Law Section, 2020.

- Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 1 S.C.R. 69, 2010 SCC 4.

![A cutaway view reveals the intricate core of an institutional-grade digital asset derivatives execution engine. The central price discovery aperture, flanked by pre-trade analytics layers, represents high-fidelity execution capabilities for multi-leg spread and private quotation via RFQ protocols for Bitcoin options](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-prime-os-rfq-protocol-engine-for-high-fidelity-execution-and-price-discovery-on-volatility-surface.jpg)

## Reflection

![Angularly connected segments portray distinct liquidity pools and RFQ protocols. A speckled grey section highlights granular market microstructure and aggregated inquiry complexities for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-efficiency.jpg)

## Calibrating Discretion and Integrity

The analysis of privilege clauses and the duty of good faith moves our understanding of procurement from a simple transactional process to a complex system of risk allocation and procedural integrity. The core challenge for any organization is embedding these legal principles into its operational DNA. How does your current procurement architecture balance the need for discretionary control with the mandate for procedural fairness? Is this balance explicitly designed and documented, or is it an assumed outcome of conventional practice?

Viewing the RFP as a protocol forces a deeper inquiry. A protocol’s strength lies in its predictability and the trust participants place in its consistent application. When a privilege clause is perceived as a tool for arbitrary decision-making, it degrades trust in the system, potentially reducing the quality and quantity of future responses. The ultimate strategic advantage may lie in designing a procurement system so transparently fair that it attracts the most competitive and innovative bidders, secure in the knowledge that their investment will be evaluated within a framework of unimpeachable integrity.

![Intersecting digital architecture with glowing conduits symbolizes Principal's operational framework. An RFQ engine ensures high-fidelity execution of Institutional Digital Asset Derivatives, facilitating block trades, multi-leg spreads](https://options.greeks.live/wp-content/uploads/2025/07/principal-digital-asset-derivatives-rfq-engine-high-fidelity-execution.jpg)

## Glossary

<a href="https://prime.greeks.live/area/request-for-proposal/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precision algorithmic core with layered rings on a reflective surface signifies high-fidelity execution for institutional digital asset derivatives. It optimizes RFQ protocols for price discovery, channeling dark liquidity within a robust Prime RFQ for capital efficiency](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-optimized-for-precision.jpg)

## Request for Proposal

Meaning ▴ A Request for Proposal (RFP) is a formal, structured document issued by an organization to solicit detailed, comprehensive proposals from prospective vendors or service providers for a specific project, product, or service. </a><a href="https://prime.greeks.live/area/duty-of-good-faith/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Sleek, domed institutional-grade interface with glowing green and blue indicators highlights active RFQ protocols and price discovery. This signifies high-fidelity execution within a Prime RFQ for digital asset derivatives, ensuring real-time liquidity and capital efficiency](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-prime-os-execution-interface.jpg)

## Duty of Good Faith

Meaning ▴ The Duty of Good Faith is a fundamental legal and ethical principle requiring parties in a contract or commercial interaction to act honestly and fairly towards each other. </a><a href="https://prime.greeks.live/area/fair-dealing/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A central, intricate blue mechanism, evocative of an Execution Management System EMS or Prime RFQ, embodies algorithmic trading. Transparent rings signify dynamic liquidity pools and price discovery for institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/precision-engineered-institutional-digital-asset-derivatives-framework-driving-high-fidelity-rfq-execution-and-optimized-market-microstructure-for-capital-efficiency.jpg)

## Fair Dealing

Meaning ▴ Fair Dealing, within the operational and ethical framework of crypto investing and institutional trading, refers to the principle that all market participants, particularly liquidity providers and trading platforms, must treat clients equitably and transparently. </a><a href="https://prime.greeks.live/area/contract-a/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sophisticated, symmetrical apparatus depicts an institutional-grade RFQ protocol hub for digital asset derivatives, where radiating panels symbolize liquidity aggregation across diverse market makers. Central beams illustrate real-time price discovery and high-fidelity execution of complex multi-leg spreads, ensuring atomic settlement within a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-grade-rfq-protocol-facilitating-atomic-settlement-and-high-fidelity-execution-of-multi-leg-spreads.jpg)

## Contract A

Meaning ▴ In the context of a Request for Quote (RFQ) process, "Contract A" signifies the preliminary, legally binding agreement formed when a dealer submits a firm, executable price quote in response to a client's specific request. </a><a href="https://prime.greeks.live/area/rfp-documents/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Close-up reveals robust metallic components of an institutional-grade execution management system. Precision-engineered surfaces and central pivot signify high-fidelity execution for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-grade-digital-asset-derivatives-rfq-execution-precision-optimizing-market-microstructure-for-best-execution-and-prime-os.jpg)

## Rfp Documents

Meaning ▴ RFP documents refer to the complete set of materials provided by an organization when issuing a Request for Proposal (RFP), detailing its needs and soliciting bids from vendors. </a><a href="https://prime.greeks.live/area/good-faith/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Sleek, abstract system interface with glowing green lines symbolizing RFQ pathways and high-fidelity execution. This visualizes market microstructure for institutional digital asset derivatives, emphasizing private quotation and dark liquidity within a Prime RFQ framework, enabling best execution and capital efficiency](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-protocol-for-institutional-digital-asset-derivatives.jpg)

## Good Faith

Meaning ▴ Good Faith, within the intricate and often trust-minimized architecture of crypto financial systems, denotes the principle of honest intent, fair dealing, and transparent conduct in all participant interactions and contractual agreements. </a><a href="https://prime.greeks.live/area/privilege-clause/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![An abstract visual depicts a central intelligent execution hub, symbolizing the core of a Principal's operational framework. Two intersecting planes represent multi-leg spread strategies and cross-asset liquidity pools, enabling private quotation and aggregated inquiry for institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-protocol-engine-for-institutional-digital-asset-derivatives.jpg)

## Privilege Clause

Meaning ▴ A Privilege Clause refers to a specific provision within a legal agreement that grants particular rights, exemptions, or preferential treatment to one or more parties, often contingent upon certain conditions being met. </a><a href="https://prime.greeks.live/area/undisclosed-evaluation-criteria/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precision-engineered metallic component with a central circular mechanism, secured by fasteners, embodies a Prime RFQ engine. It drives institutional liquidity and high-fidelity execution for digital asset derivatives, facilitating atomic settlement of block trades and private quotation within market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/precision-engineered-institutional-digital-asset-derivatives-platform-rfq-engine-for-high-fidelity-execution-and-atomic-settlement-of-block-trades.jpg)

## Undisclosed Evaluation Criteria

Meaning ▴ Undisclosed Evaluation Criteria refers to specific standards or benchmarks used by an entity to assess proposals, bids, or candidates, which are not publicly communicated to all participants in a solicitation process. </a><a href="https://prime.greeks.live/area/bid-shopping/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Geometric planes, light and dark, interlock around a central hexagonal core. This abstract visualization depicts an institutional-grade RFQ protocol engine, optimizing market microstructure for price discovery and high-fidelity execution of digital asset derivatives including Bitcoin options and multi-leg spreads within a Prime RFQ framework, ensuring atomic settlement](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-engine-architecture.jpg)

## Bid Shopping

Meaning ▴ Bid Shopping, in the context of crypto request for quote (RFQ) systems and institutional options trading, refers to the practice where a market participant, having received an initial price quote for a desired trade, subsequently uses that quote to solicit better terms from other liquidity providers. </a><a href="https://prime.greeks.live/area/rfp/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sophisticated apparatus, potentially a price discovery or volatility surface calibration tool. A blue needle with sphere and clamp symbolizes high-fidelity execution pathways and RFQ protocol integration within a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-protocol-institutional-digital-asset-derivatives-execution.jpg)

## Rfp

Meaning ▴ An RFP, or Request for Proposal, within the context of crypto and broader financial technology, is a formal, structured document issued by an organization to solicit detailed, written proposals from prospective vendors for the provision of a specific product, service, or solution. </a><a href="https://prime.greeks.live/area/contract-b/?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)

## Contract B

Meaning ▴ In the architecture of complex crypto financial transactions, 'Contract B' designates a secondary or ancillary agreement that precisely defines bespoke conditions, collateral arrangements, or specific execution parameters that augment a primary transaction, often referred to as 'Contract A. </a><a href="https://prime.greeks.live/area/evaluation-criteria/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstract geometric forms depict a Prime RFQ for institutional digital asset derivatives. A central RFQ engine drives block trades and price discovery with high-fidelity execution](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-optimizing-market-microstructure-for-high-fidelity-execution.jpg)

## Evaluation Criteria

Meaning ▴ Evaluation Criteria, within the context of crypto Request for Quote (RFQ) processes and vendor selection for institutional trading infrastructure, represent the predefined, measurable standards or benchmarks against which potential counterparties, technology solutions, or service providers are rigorously assessed. </a><a href="https://prime.greeks.live/area/ron-engineering/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A central split circular mechanism, half teal with liquid droplets, intersects four reflective angular planes. This abstractly depicts an institutional RFQ protocol for digital asset options, enabling principal-led liquidity provision and block trade execution with high-fidelity price discovery within a low-latency market microstructure, ensuring capital efficiency and atomic settlement](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-rfq-protocol-core-system-for-high-fidelity-execution-and-aggregated-liquidity.jpg)

## Ron Engineering

Meaning ▴ "Ron Engineering" is not a recognized or standardized term within the lexicon of systems architecture, crypto, crypto investing, institutional options trading, or related financial technology domains. </a>

**Tags:** [Ron Engineering](https://options.greeks.live/area/ron-engineering/), [Bid Shopping](https://options.greeks.live/area/bid-shopping/), [Contract A](https://options.greeks.live/area/contract-a/), [Duty of Good Faith](https://options.greeks.live/area/duty-of-good-faith/), [Tender Law](https://options.greeks.live/area/tender-law/), [RFP Documents](https://options.greeks.live/area/rfp-documents/)	

## Discover More

- 
### [How Can an Rfp Issuer Draft a Privilege Clause to Maximize Flexibility without Inviting Legal Challenges?](https://options.greeks.live/question/how-can-an-rfp-issuer-draft-a-privilege-clause-to-maximize-flexibility-without-inviting-legal-challenges/)
![A proprietary Prime RFQ platform featuring extending blue/teal components, representing a multi-leg options strategy or complex RFQ spread. The labeled band 'F331 46 1' denotes a specific strike price or option series within an aggregated inquiry for high-fidelity execution, showcasing granular market microstructure data points.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-protocol-1.jpg)

Drafting a privilege clause requires articulating specific, foreseeable rights to maintain flexibility and withstand legal challenges.

- 
### [Does the Duty of Good Faith Apply Differently in Public Sector versus Private Sector Rfp Processes?](https://options.greeks.live/question/does-the-duty-of-good-faith-apply-differently-in-public-sector-versus-private-sector-rfp-processes/)
![A central, multifaceted RFQ engine processes aggregated inquiries via precise execution pathways and robust capital conduits. This institutional-grade system optimizes liquidity aggregation, enabling high-fidelity execution and atomic settlement for digital asset derivatives.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-rfq-protocol-engine-high-fidelity-digital-asset-execution.jpg)

The duty of good faith applies as a rigid procedural mandate in public RFPs and a flexible commercial standard in private RFPs.

- 
### [What Is the “Contract A” Theory and How Does It Apply to the Rfp Process?](https://options.greeks.live/question/what-is-the-contract-a-theory-and-how-does-it-apply-to-the-rfp-process/)
![A precise teal instrument, symbolizing high-fidelity execution and price discovery, intersects angular market microstructure elements. These structured planes represent a Principal's operational framework for digital asset derivatives, resting upon a reflective liquidity pool for aggregated inquiry via RFQ protocols.](https://options.greeks.live/wp-content/uploads/2025/07/precision-engineered-institutional-digital-asset-derivatives-trading-platform-underpinning-rfq-protocol-liquidity-aggregation-and-high-fidelity-execution.jpg)

The "Contract A" theory establishes a binding procedural contract upon the submission of a compliant RFP bid, ensuring a fair and enforceable procurement process.

- 
### [What Is the Difference between a Binding RFP and a Non-Binding RFP in Canada?](https://options.greeks.live/question/what-is-the-difference-between-a-binding-rfp-and-a-non-binding-rfp-in-canada/)
![Abstract depiction of an advanced institutional trading system, featuring a prominent sensor for real-time price discovery and an intelligence layer. Visible circuitry signifies algorithmic trading capabilities, low-latency execution, and robust FIX protocol integration for digital asset derivatives. This represents a principal's operational framework for optimized RFQ protocols and atomic settlement.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-prime-os-high-fidelity-rfq-protocols.jpg)

A binding RFP in Canada creates a process contract (Contract A), while a non-binding RFP functions as a flexible invitation to negotiate.

- 
### [What Specific Language in an Rfp Is Most Likely to Lead a Court to Conclude a Binding Contract a Exists?](https://options.greeks.live/question/what-specific-language-in-an-rfp-is-most-likely-to-lead-a-court-to-conclude-a-binding-contract-a-exists/)
![A dark, reflective surface features a segmented circular mechanism, reminiscent of an RFQ aggregation engine or liquidity pool. Specks suggest market microstructure dynamics or data latency. This represents an institutional grade Prime RFQ facilitating high-fidelity execution of digital asset derivatives, optimizing price discovery for block trades through an intelligence layer.](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-options-rfq-execution-microstructure-prime-os.jpg)

Language creating a binding contract includes irrevocable bids, mandatory compliance, and defined award criteria, forming a process contract.

- 
### [How Does the Implied Duty of Fairness Constrain an Rfp Issuer’s Evaluation Process?](https://options.greeks.live/question/how-does-the-implied-duty-of-fairness-constrain-an-rfp-issuers-evaluation-process/)
![Sleek Prime RFQ interface for institutional digital asset derivatives. An elongated panel displays dynamic numeric readouts, symbolizing multi-leg spread execution and real-time market microstructure. A transparent sphere signifies RFQ protocol private quotation and implied volatility, emphasizing atomic settlement and low latency.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-prime-os-rfq-options.jpg)

The implied duty of fairness constrains an RFP issuer by creating a binding process contract that mandates transparent, objective evaluation based solely on pre-disclosed criteria.

- 
### [How Can an Rfp’S Exculpatory Clauses Affect a Bidder’s Ability to Sue for Improper Cancellation?](https://options.greeks.live/question/how-can-an-rfps-exculpatory-clauses-affect-a-bidders-ability-to-sue-for-improper-cancellation/)
![Precision-engineered multi-vane system with opaque, reflective, and translucent teal blades. This visualizes Institutional Grade Digital Asset Derivatives Market Microstructure, driving High-Fidelity Execution via RFQ protocols, optimizing Liquidity Pool aggregation, and Multi-Leg Spread management on a Prime RFQ.](https://options.greeks.live/wp-content/uploads/2025/07/precision-engineered-multi-vane-system-illustrating-institutional-digital-asset-derivatives-rfq-protocols-market-microstructure-optimized-liquidity-aggregation-prime-os-high-fidelity-execution.jpg)

Exculpatory clauses limit a bidder's recourse, but can be overridden by courts if a cancellation is proven arbitrary or in bad faith.

- 
### [How Does the Contract a and Contract B Framework Impact Rfp Processes?](https://options.greeks.live/question/how-does-the-contract-a-and-contract-b-framework-impact-rfp-processes/)
![A central crystalline RFQ engine processes complex algorithmic trading signals, linking to a deep liquidity pool. It projects precise, high-fidelity execution for institutional digital asset derivatives, optimizing price discovery and mitigating adverse selection.](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-protocols-high-fidelity-digital-asset-derivatives-execution.jpg)

The Contract A/B framework transforms an RFP into a binding process contract, mandating owner fairness and bidder bid irrevocability.

- 
### [How Can a Privilege Clause in an Rfp Introduce Legal Risk?](https://options.greeks.live/question/how-can-a-privilege-clause-in-an-rfp-introduce-legal-risk/)
![A robust, dark metallic platform, indicative of an institutional-grade execution management system. Its precise, machined components suggest high-fidelity execution for digital asset derivatives via RFQ protocols. The textured surface implies granular market microstructure data, supporting price discovery and atomic settlement for block trades within a prime brokerage framework.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-platform-high-fidelity-price-discovery-and-atomic-settlement-infrastructure.jpg)

A privilege clause in an RFP introduces legal risk by creating a tension between the procuring entity's desire for discretion and its legal duty to treat all bidders fairly and in good faith.

---

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---

**Original URL:** https://options.greeks.live/question/how-does-the-duty-of-good-faith-limit-the-power-of-a-privilege-clause-in-an-rfp/
