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Agreement- Tender Offers & Auctions
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This lecture explains Tender Offers & Auctions as a form of agreement in contract law.
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L5. Agreement: Tender Offers & AuctionsTender Offers
Tender offers are quite specialised contractual circumstances. A request for
tenders is a negotiating device and it’s used to enable parties hoping to buy
a major purchase of a major item or service. So tenders are often used by
central and local government or perhaps, even by a university or a
large company.
Legally, when talking about tender offers, the law says that if the requester
(the person who’s inviting tenders) to the company, the universe, the
local government, they invite those tenders from parties who are interested
in supplying the goods or services and that this action of inviting parties to
tender is as a general rule deemed to be an invitation to treat.
It is an invitation to treat the interest of parties, to make the offers which will
then be considered and the requester is free to accept or reject any tender.
They are even able to reject the most competitive tender.
The authority for this is the case of Spencer and Harding. In this case, a
circular was sent out and stock was offered for sale by way of tender. The
plaintiffs submitted the highest bid but the defendants would not accept it.
Therefore, there was a dispute and they went to court and the court held
there was no contract. The court said the circular was simply a proclamation
of intention and it was just an invitation to treat the tender offers. The
tenders were actually offers which the defendants were free to accept or
reject as they chose.
Generally speaking, a tender is an ITT and this comes from the case of
Spencer v Harding (1870).
Cases
Blackpool Aero Club v Blackpool Borough Council
Blackpool Aero Club and 6 other flying clubs were invited by the council too
tender for a concession to operate and purchase flights over Blackpool. They
said the the tenders had to be submitted in a particular form by a deadline of
12:00 noon on a specified date. The club took a great deal of time and effort
to put together their tender, and it was delivered to the designated box at
11am on the day in question. The council said they didn’t receive the tender
but this was because the council picked everything up earlier the day and
didn’t go back to check at the noon deadline to see if any other tenders had
been received. So as a result of that, the clubs tender was never considered
by the council. As a result of that, the Blackpool Aero Club sought damages
breach of contract, on the basis that the council had made a promise that all
tenders submitted before the deadline would at least be considered. Their
argument was not that they should have won the tender but the fact that
their tender wasn’t even considered.
This went to court and the court that an ITT could give rise to a binding
contractual obligation to consider tenders, conforming to the conditions of
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