Contract | Formation
Study Note | DegreeDownload bitsoflaw.org
bits of law
When a service is required several contractors may be asked to give a quotation for the cost of carrying out the work (tenders). The general rule is that these requests are an invitation to treat and any tenders are offers. It is then up to the person who requires the service to decide whether to accept any of the offers.
Spencer v Harding (1870) LR 5 CP 561
The defendant sent a circular seeking tenders to buy stocks.
The plaintiff's tender was the highest but the defendant refused to sell to the plaintiff.
Had there been an offer made by the defendant?
The circular was a
mere proclamation that the defendant's were interested in negotiating a price for the sale of the stocks and to receive offers. Therefore, the plaintiff's claim failed.
Willes J noted that there was no unilateral contract because there was no specific wording such as
and we undertake to sell to the highest bidder to make the circular a binding offer.
An invitation for tenders may constitute an offer of a unilateral contract.
Blackpool & Fylde Aero Club Ltd v Blackpool Council  1 WLR 1195
The defendant invited tenders to operate flights from Blackpool airport. Tenders had to be submitted no later than noon on 17 March 1983.
The claimant posted its tender in the Town Hall letter box at 11am on 17 March 1983. Post was due to be collected at noon but the letter box was not emptied.
The defendant did not consider the claimant's tender as it was wrongly recorded as a late submission.
The claimant sued for breach of an implied promise that a tender, which was returned on time, would be considered.
The Court of Appeal upheld the claimant's claim. It was held that the invitation was an offer to consider any tender which was submitted as required. A tender submitted in the specified way would be acceptance of that offer. Therefore, there was a unilateral contract, binding the defendant to consider the claimant's tender.
It is of course true that the invitation to tender does not explicitly state that the Council will consider timely and conforming tenders. That is why one is concerned with implication. But the Council does not either say that it does not bind itself to do anything, and in the context a reasonable invitee would understand the invitation to be saying, quite clearly, that if he submitted a timely and conforming tender it would be considered, at least if any other such tender were considered...
The decision highlighted the fact that only a select few were invited to put forward tenders in a clear and that tenders were sought
in a clear, orderly and familiar procedure. It seems these factors form an important part of the reasoning in allowing the term to be implied.
However, the decision has been criticised as controversial. So it remains unclear exactly when an invitation for tenders will be subject to an implied term making it an offer to consider the tenders.