2. Valley Homes v. Ace Minerals Corp. Jones is a young, recently hired salesperson working for Valley Homes, a small company manufacturing and selling prefabricated dwellings. They sell primarily to people wanting to build their own cabins and summer homes. Jones' job consists of working out the designs with the customers, pricing that design and then working out the specifics with the engineering section, which develops plans and sets out the exact specifications for the productions of the dwelling. She then follows up with the customer, even providing a contractor to build the dwelling if needed. A large mining company, Ace Minerals Corp., as part of the development of a huge mineral deposit in northern Manitoba, had to build a townsite for the miners and their families consisting of some 50 dwellings as well as a sports and recreation complex. Under the supervision of the vice president of finance, Brown, Ace Minerals published a request for tenders for the supply and erection of these 50 homes and recreation centre. Upon request Ace provided the specifications and the other details of the tendering process including a statement that once submitted the bid could not be withdrawn before the formal opening of all the bids, and that the lowest bid would be accepted following the standard practice in the industry. Jones obtained these details and brought them to the attention of the Valley Homes executive arguing that the company had to change their method of doing business from just servicing the residential retail market and get more into the growing industrial sector. This was consistent with conversations that had recently taken place between the president of the company and major shareholders and so it was decided to submit a bid on the Ace Minerals project. Jones and Smith, the sales manager, were designated as the team to develop Valley Homes' bid. They worked for several days enlisting the help of the engineering department completing and submitting the bid on the day specified as the deadline for the submission of the bids by Ace. That evening Jones was reviewing the bid and to her horror discovered a significant error in the calculations prepared by Smith. Jones quickly redid the calculations and found to her added horror that instead of making a 15% profit on the deal they would suffer a 20% loss. On such a huge order this could be enough to bankrupt the company. On further examination it became clear that Smith had intentionally structured the error and cleverly hid it in a way that made it very difficult to find. It was only by chance that Jones had discovered the error at all. It was later learned that Smith as sales manager felt threatened by this business brought in by the upstart Jones and set out to sabotage the project to make sure things stayed the way they were. He felt that when the deal lost money Jones would be blamed and he could then get rid of Jones with the blessing of the president. Jones brought the miscalculations and conduct of Smith to the attention of the president of the company. The president called Smith into the office and confronted him with what he had done. It was at this point that Smith broke down, confessed his misconduct and explained that because of his age he felt threatened by Jones and worried that he would lose his position to her. The president fired Smith outright, and then went to the offices of the mining company. He met with Brown and presented him with a letter explaining the mistake and in a formal way revoking the bid that had been submitted the day before. Although the bids had not yet been opened, Brown declared that even though he was very sympathetic to the problems of Valley Homes, he could not interfere with the integrity of the bidding process once the bid had been accepted by the company for consideration. He said that they would simply have to wait until that afternoon when the bids would be opened to determine their fate. When the bids were opened not surprisingly, Valley Homes was the lowest bidder and their bid was then automatically accepted by Ace. The next day the president of Valley Homes and Jones met an Ace management team headed Brown, where the problem was discussed. The Ace group confirmed their position but did indicate an understanding of the difficult position that Valley Homes found themselves in. They also pointed out that they realized that it was not in their interests to see Valley Homes fail and not be able to finish the job. They therefore agreed that if the project was satisfactorily completed on time, a bonus of would be paid to Valley Homes of 1/2 the difference between their price and the next lowest bid. This would allow Valley Homes to do just a little better than break even on the job, thus avoiding bankruptcy. It was also understood that there would likely be future dealings between these two companies and because of the good relations created in this meeting Valley Homes would give Ace Minerals an especially good deal on the next project. As the project proceeded, a series of payments were made to Valley Homes all 59 days after the date specified in the contract. As is normally the case with these kinds of projects there was a clause in the contract whereby Ace would not have to pay interest on any late payments so long as payment was received by Valley within 60 days of the day payable. Eventually the project was finished on time to the satisfaction of all parities but the bonus was not paid. Valley Homes waited the specified 60 days and when the bonus was still not paid, they went to Brown's office for an explanation. They learned at this time that Brown had been replaced and they were invited to meet with the new Vice President of Finance Mr. Grey. He explained that over the months Ace had carefully monitored the project and the health of Valley Homes and had decided that they were in better financial shape than either party had anticipated. Bankruptcy was not a threat and therefore the mining company had decided not to pay the bonus. Mr. Grey went on to explain that they were entirely satisfied with the work that had been done and that Valley Homes should in no way take this failure to pay the bonus as an indication of dissatisfaction on their part with the their company, the personal, or the quality or timeliness of the work performed. In fact Grey's final comment was that he hoped that the two companies would have many years of cooperative ventures in the future. 7 | P a g e Discuss the options available to Valley homes in these circumstances