TENDERS

 A tender is where goods are to be sold or work undertaken, and the person proposing it wants to investigate whether there are people prepared to buy the items or undertake the work.

Tenders are invited which are then considered, and a buyer or a worker chosen from among the tenderers. Some principles emerge, again based on the normal rules of offer and acceptance, but modified to deal with the particular situation of tenders.

Single offer tenders A statement that goods are to be sold by tender is not an offer for sale, and there is no obligation to sell to the person making the highest tender. It is, rather, an enquiry into the viability of a transaction. Spencer v Harding (1870) is an example of a single offer tender, where a sale takes place on one occasion.

Those submitting tenders make offers, from which a tender may be selected and accepted, forming a contract. There is generally no obligation to choose the highest or lowest tender, or to accept any tender at all. Standing offer tenders Where goods or services are required on an ongoing basis, from time to time, as needed, tenders may be invited. 

These again amount to offers, 34 Contract law The main contract (if one is made) is between the highest bidder and the owner of the item, but there is a second contract between the auctioneer and the highest bona fide bidder.

Barry v Davies (2000) The auctioneer withdrew two machines, worth £14,000 each, from a sale advertised ‘without reserve’, refusing to accept a bid of £200 each. The bidder sued on the collateral contract and was awarded damages of £27,600. In an auction without reserve, then, acceptance of the auctioneer’s offer to sell is made by becoming the highest bidder.

The auctioneer is in breach of contract not to sell to that bidder. However, if the sale is cancelled altogether, he can not be sued (see Harris v Nickerson, on page 32). CHAR_C02.QXD 14/9/07 10:36 Page 34 which are known as standing offers.

A tender is selected and then on each occasion when an order is placed this is an acceptance, forming a separate contract. This arose in the following case.