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Tender Offers & Auctions
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this lecture explains Tender Offers & Auctions as a form of acceptance in contract law.
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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 the tender. They then listed a number of
requirements. There was many conditions which the tender had to comply with and had to
cover specific things. It had to be in a specific place by a particular time. It was an absolute
deadline for submission.
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