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Lecture Notes - Tender

Lecture Notes - Tender

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Published by Adam 'Fez' Ferris
Lecture notes on Tender (follow on from Offer and Acceptance)
Lecture notes on Tender (follow on from Offer and Acceptance)

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Published by: Adam 'Fez' Ferris on Mar 30, 2010
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05/30/2013

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Contract I  Lecture II
Recap: An agreement between two or more people that is intended to belegally binding in court. The agreement requires an offer and acceptance. Aninvitation to treat is not legally binding.TendersAn invitation to tender is an invitation to treat and not an offer. When thecompany responds with their tender, that tender itself is an offer and thecontact is concluded when the company decides which tender it will accept.An example: [(Carbella) Company A  Royal trust, Parties A and B  thedefendants] Company makes a seal tender offer to sell shares; however, theybind themselves to accept the highest offer. Royal Trust offers $2.1m, or$101,000 above the next highest bid, whatever that may be. The companyaccept Party Bs offer, because they say that that is highest at $2.276m. Party Aargue that their offer was higher because they said that they would offer$101,000 more than any other bid. Party B argue that the referential offer isntvalid; therefore as their actual bid was lower they are not actually entitled tobuy the shares.Comments on example: Because there is the extra commitment (being boundby the higher offer) this turns the invitation to tender (usually treated as aninvitation to treat) into an offer. H of L declared that this was a unilateral offermade by the company.Example 2: [Blackpool council v ] The defending council own an airport. Theygenerate income by charging airlines to use the airport. The claimant is aperson who previously owned a concession to use the airport. The tenderprocess as run by the council: The tenders have to be put in a sealed cleanenvelope and be received by 17
th
March at 12pm. The claimant responds andput their envelope in the councils letterbox at 11am. However, the council
 
dont clear the letterbox until 1pm so the council refused to consider theclaimants bid. C of A dismissed the councils claim that the letter was late. Byadding in the time requirement the council make an additional promise toconsider all applications that come in by the time limit  their failure to do thismeans that they are in breach of contract. This case does not convert theinvitation to tender into an offer (as in the first example); instead it creates acollateral contract around the side of the contract. There is the normal tenderprocess going on, the offers from the bidders are not bound to be accepted bythe council, however, because the time restraint has been put in place thisoperates as a collateral contract and binds the council to consider any bids thatare put in within the time restraint.Communication of an offerWhen it has been established that there is an offer, this must becommunicated to the other party.General Rules:The acceptance must
correspond
with the terms of the offer-
 
The acceptance must mirror the terms of the offer (mirror image role).So if there is an attempt to alter the terms of the offer in the responsedoes this constitute an acceptance or is it something else?Example: Defendant offers to sell his farm for £1000. The claimant respondsand says that he will buy it for £950; he then changes his mind and threedays later he says that he will buy the farm for £1000. The defendant thenrefuses to go ahead with the sale. Is there a valid acceptance of the offer?The court said that there was not an acceptance, but a counter offer (£950),which kills off the initial offer (£1000 from the defendant) and starts theprocess on new terms. Therefore, this did not constitute a valid acceptance.Example: [Stevenson v McLean] Contract to sell some iron  claimant sendsa telegram enquiring about delivery terms. In addition, claimant sends aletter saying that they are happy with the price. Is the question about thedelivery terms a counter offer? The court decided that in this case theenquiry was not a counter offer but merely a request for information. Thisis because the original offer only contained information about price and did
 
not mention delivery. Because this is a request for information the courtdecided that the original offer was still live and open to be accepted.Battle of the forms - [Butler Machine tool co. Ltd v Ex-Cell-O Corp.]Seller offers to sell machine tools to our buyer and our sellers terms of business include a price variation clause.27
th
May: Buyers send an order to the seller on the buyers terms of business  these have no price variation clause. The buyers order doescontain a tear off acknowledgement slip at the bottom of the form  thisstates that the sellers will accept the buyers order on the buyers termsand conditions.5
th
June: Sellers send the completed acknowledgement slip back to thebuyers. In addition to the acknowledgement slip they send a letter statingthat they accept the order but on their own terms and conditions (whichinclude the price variation clause)The sellers then billed the machine at an increased price (relying on theprice variation clause). The buyer refuses to pay and the case comes tocourt. Whose terms was the contract made upon? Therefore, does the pricevariation clause apply and does the buyer have to pay the increased price?Buyers order on the 27
th
is a counter-offer because it does not mirror theterms of the original offer. This then kills off the sellers original offer. Thebuyers counter offer is then accepted by the seller on 5
th
June by thecompletion of the acknowledgement slip. Bridge and Loughton state thatthe letter that accompanied the form is not an attempt to re-establishbusiness, but a reestablishment of the deal. Therefore we are dealing onthe buyers terms with no price variation clause and the buyer has to paythe original price, not the increased one.However, Denning states that we should look at the transaction as a wholeand look for the point where the parties are agreeing, because its at thatstage that the contract is formed. Denning called this process the battle of the forms. Each party is desperate to contract on their own terms. Hestates that we need to find the point at which the parties stop arguingabout terms and agree. He states that the original document is not the vital

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