48 3: Formation of contract I Part B The law of obligations
British Steel Corpn v Cleveland Bridge and Engineering Co Ltd 1984
The facts: The defendants asked the claimants to supply nodes for a complex steel lattice-work frame, and
sent the claimants a letter of intent, stating their intention to place an order on their standard terms. The
claimants stated that they were unwilling to contract on such terms, but started work, and eventually
completed and delivered all the nodes. They sued for the value of the nodes and the defendants counter-
claimed for damages for late delivery.
Decision: Since the parties had not reached agreement over such matters as late delivery, there was no
contract, and so there could be no question of damages for late delivery. However, since the claimants had
undertaken work at the request of the defendants and the defendants had accepted this work, the
claimants were entitled to a reasonable remuneration for services rendered.7.4 Acceptance of a tender
As we saw earlier, an invitation for tenders is an invitation to treat. There are two distinct types of tender.(a) A tender to perform one task, such as building a new hospital, is an offer which can be accepted.
(b) A tender to supply or perform a series of things, such as the supply of vegetables daily to a
restaurant, is not accepted until an order is placed. It is a standing offer. Each order placed by the
offeree is an individual act of acceptance creating a separate contract. Until orders are placed there
is no contract and the tenderer can terminate their standing offer.Great Northern Railways v Witham 1873
The facts: The defendant tendered successfully for the supply of stores to the claimant over a
period of one year. In his tender he undertook 'to supply ... such quantities as the company may
order from time to time'. After making some deliveries he refused to fulfil an order which the
claimant had given.
Decision: He was in breach of contract in refusing to fulfil the order given but might revoke his
tender and need not then fulfil any future orders within the remainder of the 12 month period.7.5 Counter-offers and requests for information
A counter-offer does not constitute acceptance; it is the making of a new offer which may in turn be
accepted or rejected. Nor is a request for further information an acceptance. In Neale v Merrett 1930 an
offer to sell land at £280 was accepted, but payment consisted of £80 and an undertaking to pay the
balance by instalments. 'Acceptance' amounted to a counter offer since it varied the method of payment.8 Communication of acceptance
The general rule is that acceptance must be communicated to the offeror and that it is not effective (and
hence there is no contract) until this has been done. However this rule does not apply in all cases.8.1 Waiver of communication
The offeror may dispense with the need for communication of acceptance. Such a waiver may be express
or may be inferred from the circumstances. In Carlill v Carbolic Smoke Ball Co 1893, it was held that it
was sufficient for the claimant to act on the offer without notifying her acceptance of it. This was an
example of a unilateral contract, where the offer takes the form of a promise to pay money in return for
an act.FAST FORWARD