Subject: Business Law

Imelda, Lucy, Spiro and Juan are architects in business in Ottawa as a partnership (ILSJ Architects).They have been together for 20 years and have noticed that competition has driven down their profits. They prepare bid in response to a tender from the City of Ottawa to design a new library. Spiro reaches out to the competing firms in Ottawa and strikes a deal with them whereby the other firms will make bids that exceed $3,000,000 to ensure ILSJ will win the bid at a price that will yield an acceptable profit. In exchange, he will bid too high in the next City of Ottawa tender opportunity.

They are awarded the contract on October 31, 2019 at a price of $3,000,000 and must complete the design by March 31, 2020

Unfortunately, all of the partners get ill with the new coronavirus and cannot do the work. The contract in favour of the City of Ottawa is ironclad and the partners have no defence to the contract claim. All the partners manage to recover from COVID-19, but the City awards the contract to the next lowest bidder at $4,500,000. The City sues the 4 partners for the $1,500,000 difference. At this point Lucy learns of Spiro's deal with the competitors and believes that the contract could have been completed for $2,500,000 so the City did not really suffer damages because the price of $4,500.000 is artificial.

Lucy comes to you for legal advice. What do you tell her? Identify as many issues as possible. Note that the question is not about contract law so do not raise any contract law issues in respect of the contract with the City of Ottawa. Lucy has very little in assets and cannot afford to pay a judgment. Will she have to declare bankruptcy? If so, what is the process and what issues may emerge through the bankruptcy process? What other areas of law are relevant?