What liability does a tendering contractor have where it names key personnel in its bid but replaces some of them when work commences?
Bids name the people who will run the project, and named people sometimes leave. Whether replacing them creates liability turns on what the bidder knew when it named them, and on whether the employer can prove a loss.
It depends on knowledge and loss: naming a person in good faith who later leaves raises only questions of contractual breach or warranty about the substitute, but naming a person the bidder knows is leaving, and not correcting it, can be fraudulent misrepresentation, and in every case the employer must prove a financial loss
It depends on whether the bidder knew, when it named the person, that they would not be available. If a person is named in good faith and later leaves after the contract is made, that is an ordinary project risk, and the question is whether any substitute meets the standard the contract requires, usually a replacement of equal standing, ability and experience; if the substitute falls short there may be a contractual breach, or a breach of warranty where the naming was only in a bid. If the bidder names a person it already knows is leaving, and fails to correct the representation, that can be fraudulent misrepresentation, as a court found where an architect concealed a key director's resignation until after the appointment. In every case the employer must prove a financial loss; without one, even a finding of fraud recovers little.
| Good-faith naming | An ordinary project risk; the issue is the quality of the substitute |
| Substitute falls short | Breach of contract, or breach of warranty if named only in a bid |
| Known unavailability | Naming a person known to be leaving can be fraudulent misrepresentation |
| Duty to correct | A pre-contract representation must be corrected once known to be false |
| Loss | The employer must prove a financial loss; fraud without loss recovers little |
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