Business

Tender: An invitation to treat

A company, or local authority, might wish certain work to be done, or goods delivered. They will invite people to make offers (tenders) and then accept only the tender that they find most attractive. In most cases this invitation for tenders is considered as just that.

In the case of Spencer v Harding, it was held that a circular distributed to potential customers offering the defendant’s stock for sale was not in fact an offer, but merely an invitation to buyers in general to make their offers, which could then be accepted or rejected by the defendant. This was despite the defendant using the word offer in the circular. However, certain requests for tenders may be regarded as offers.

In the case of Spencer v Harding, the defendants offered to sell by tender their stock to potential customers and the court held that they had not undertaken to sell to the person who made the highest tender, but were inviting offers which they could then accept or reject as they saw appropriate.

Tender: Offer

In the case of Harvela Investments Ltd v Royal Trust Co of Canada (CI) Ltd, the defendants invited two persons to make a bid for a certain plot of land. They had instructed them to make a sealed bid and made it clear that they were going to accept the highest tender. It was held that the invitation to apply for the shares was an offer capable of acceptance. Here the defendants had clearly indicated that they were prepared to accept the highest bid and the general rule was thus displaced.

the court held that this was an offer which was accepted by the person who made the highest tender and that the defendants were in breach of contract by not doing so.