The acceptance of a tender has different legal con-
sequences, depending on the wording of the original
invitation to tender. There are two possibilities, as
follows.
The process of competitive tendering came under
scrutiny in the following case.Part 3Business transactions
208
Blackpool and Fylde Aero Club Ltdv
Blackpool Borough Council(1990)
The defendant council invited the claimant club, together
with six other parties, to tender for the concession to
offer pleasure flights from the council-owned airport. The
invitation to tender required tenders to be submitted in
accordance with an elaborate procedure and stated that
tenders received after 12 noon on 17 March 1983 would
not be considered. The club’s tender was delivered
by hand and placed in the letterbox in the Town Hall at
11 am on 17 March. Unfortunately, the letterbox was not
cleared until the next day. The club’s tender was marked
late and was not considered by the council. The con-
cession was awarded to another tenderer. The club sued
for breach of a contract to consider tenders which con-
formed with the requirements specified by the council.
The Court of Appeal held that by adopting a formal ten-
dering procedure the council impliedly undertook to
consider all conforming tenders. The council’s invitation
to tender was an offer to consider all qualifying tenders
and the submission by the club of a tender within the
time limit was an acceptance. The club was entitled to
damages for breach of contract.Example 1
The Metropolitan Borough of Newtown invites tenders
for the supply of 100 tons of potatoes for the use of the
School Meals Service in the Borough from 1 January to
31 December. The acceptance of a tender creates a legally
binding contract. The successful supplier must deliver
100 tons of potatoes which the Borough must pay for.Example 2
The Metropolitan Borough of Newtown invites tenders
for the supply of potatoes, not exceeding 100 tons, for the
period 1 January to 31 December as and when required
by the School Meals Service. The acceptance of a ten-
der in this situation has the effect of creating a standing
offer on the part of the supplier to deliver potatoes if and
when orders are placed by the School Meals Service.
Each time an order is placed by the School Meals Ser-
vice it constitutes an acceptance which creates an indi-vidual contract. If the supplier refuses to fulfil the order,
he will be in breach of contract (Great Northern Rly Co
vWitham(1873)). This form of tender does not prevent
the supplier giving notice that he will not supply potatoes
in the future or the School Meals Service from not plac-
ing orders, if they decide to cut potatoes from the school
dinner menu.Harvela Investments Ltdv Royal Trust
Co of Canada Ltd(1985)
The first defendants decided to dispose of shares in
a company by sealed competitive tender. They sent
identical telexes to two prospective purchasers, the
claimants and the second defendants, inviting tenders
and promising to accept the highest offer. The claimants
bid $2,175,000, while the second defendants bid
‘$2,100,000 or $101,000 in excess of any other offer’.
The first defendants accepted the second defendants’
offer. The House of Lords held that the second defend-
ants’ ‘referential bid’ was invalid. The decision was a
practical one. The purpose of competitive tendering is to
secure a sale at the best possible price. If both parties
had submitted a referential bid, it would have been
impossible to ascertain an offer and no sale would have
resulted from the process.6 Statements of price in negotiations for the sale of
land.Where the subject matter of a proposed sale is
land, the courts are reluctant to find a definite offer to
sell unless very clearly stated.Harveyv Facey(1893)Harvey sent a telegram to Facey. ‘Will you sell us Bumper
Hall Pen? Telegraph lowest cash price.. .’ Harvey tele-
graphed his response: ‘We agree to buy Bumper Hall
Pen for £900 asked by you. Please send us your title
deeds.’ The Judicial Committee of the Privy Council held
that there was no contract. Facey’s reply to Harvey’s
initial enquiry was not an offer to sell but merely a state-
ment of the price he might be prepared to sell at if he
wished to sell. As Facey had not made an offer, Harvey’s
second telegram could not amount to an acceptance.