It pleasing that the opportunity has arisen for the court to review the
existing cases concerning questions, and in Barry v Davies it was said that
the decision in Warlow v Harrison, although not technically binding on the
court, was worthy of ‘very great respect’.
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).