Question Tag: Tender

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  • 5 Marks

BCL – Apr 2022 – L1 – Q5a – Contract Law

Analyze the legal implications of a tender process where a bid was not considered due to administrative error, and whether this constitutes a breach of contract.

a) The Krachi Assembly having an Airport in its locality grants a single concession to operaters for pleasure flight from the airport. For a period of ten years that licence had been held by the Njoku club. When the concession came up for renewal, the Assembly decided to invite competitive tenders for it. Tenders were to be submitted by 12:00 pm on a given day. The Assembly’s, letter box was not cleared between the time of the club posting its tender and the closing time for the bids, with the result that the club’s tender was not considered.

The club claimed that the Assembly was in breach of a contract as it has not considered all tenders received before the deadline.

Required:

The Njoku club, in the case above, claimed that the Assembly was in breach of a contract for not considering all tenders received before the deadline. Explain. (5 marks)

The question deals with the issue of contract by tender.
Tender is a negotiating device common in the world of major commercial contracts. A company seeking to purchase a major item or service, such as a piece of equipment or some construction work, will invite tenders from those interested in supplying goods or services sought. Such invitations may be published generally, or in a trade journal, or circulated to companies likely, to be interested.
Under normal circumstances, the invitation for tender is not treated as an offer, since the company issuing it may have other criteria other than the price which they take into account in awarding the contract.

However, it is always possible that a request for tender be both specific and intended to be turned into a contract by mere acceptance, in which case, it will be an offer. The usual case is where the expression, ” Highest bidder” or “lower bidder is used, indicating a system of competitive tendering, mode which the person issuing the invitation to tender has declared himself willing to be bound by the most competitive bidding. The first issue to be addressed is to determine whether there was a contract in view of the position taken by the Njoku club.In the circumstance of this case the Njoku club is saying that the Krachi Assembly was in breach of contract to consider all tenders received before the deadline.
The complaint of Njoku club is justified because there was a contract governing the conduct of the tendering process, and it was an implied term of the contract the all bids arriving before the deadline would be considered, even though contracts are not lightly to be implied. Even though contracts are not lightly to be implied in this particular case, it is in the interest of doing substantive justice that the complaint of Njaku club, that one would agree with it that the Krachi Assembly was in breach to have considered all tenders received before the deadline, because the Assembly’s letter box was not cleared between the time the clubs tender was posted and the closing time for the bids. A notice from requesting institutions to submit tender in whichever form is not deemed as an offer to procure or supply but invitation to treat. Thus tender notices are merely intended to invite tenders and ascertain whether an acceptable offer can be obtained. It is the tender which constitutes the offer which may or may not be accepted. To say that there is breach of contract is to say in that the elementsthat lead conclusively.
(5 marks)

  • 12 Marks

BCL – Nov 2020 – L1 – Q4b – Contract Law

Assess the legal effect of a company's acceptance of a tender in a contract.

A Company known as Asempa Quarry Ltd, invited tenders for the supply of 2000 bulldozers to be delivered within seven months. Maxwell put in a tender intimating that he is prepared to supply the bulldozers at fifty thousand Ghana Cedis (GH¢50,000.00). The company accepted the tender by a letter, and subsequently gave various orders which were executed by Maxwell. The Director of Finance claims there is no valid agreement to support the payments.

Required:
i) State briefly the legal effect of the company’s actions.

(6 marks)

ii) The maxim “Caveat Emptor” and “Caveat Venditor” sound a note of caution to contracting parties.
State THREE (3) things that are required of a wary contracting party. (6 marks)

  • Acceptance in the Law of Contract follows an offer, which is a proposal by one party to the other by which he/she promises or undertakes to do or give (or refrain from doing or giving something) if the other party also does or gives a specific thing. Acceptance, therefore, is assenting to the offeror’s proposal.
  • In the instant case, Asempa Quarry Ltd invited tenders, which are valid and sufficient offers of performance, for the supply of a specific quantity of bulldozers to be delivered within seven months.
  • The issue that ought to be determined is whether the acceptance of Asempa Quarry Ltd is an acceptance in the legal sense so as to produce a binding contract.
  • There is no doubt that the tender is an offer. The company stated that it would specifically require 2000 bulldozers, and these are to be delivered in seven months.
  • Therefore, Asempa Quarry’s acceptance of the tender is an acceptance in law and creates an obligation for the company.
  • Maxwell is, therefore, bound to deliver, while Asempa Quarry Ltd is bound to accept any quantities delivered by Maxwell in any manner within the seven months.
  • That acceptance of Asempa Quarry Ltd to the offer in its legal sense is complete as soon as requisition for a definite quantity of bulldozers is made. The contract is sufficiently certain to be enforced.

(6 marks)

ii)

  • Caveat Emptor means “let the buyer beware.” It is applied to resolve disputes related to goods, services, and property. According to this principle, the onus is placed on the consumers to carry out due diligence, and the seller is not liable for any product that is damaged, defective, or does not meet the expectations of the buyer.
  • Caveat Venditor means “let the seller beware,” which imposes a greater responsibility on the sellers themselves for the goods and services that they sell. It suggests that there is an implied warranty existing in each product against defects, and the buyer need not perform due diligence to check the quality of such products. The onus is now on the sellers to make sure the buyer makes a reasonably informed choice and to compensate for defective products.
  • The following are required of a wary contracting party:
    1. Due Diligence: The buyer must thoroughly inspect the goods or services to ensure they meet the required standards and specifications before making a purchase.
    2. Clear Communication: The buyer must make known all requirements, specifications, and expectations in clear terms before the conclusion of the contract.
    3. Verification of Source: The buyer must ensure they are making the purchase from a legitimate and reliable source, especially when it is verifiable.

(3 points for 2 marks each)

  • 7 Marks

PSAF – Nov 2021 – L2 – Q4a – Public Procurement

Determine if a district assembly can cancel a procurement process and explain the conditions under which such a cancellation is allowed.

Rabina Construction Ltd purchased Tender Document from Adagya District Assembly to tender for contracts advertised by the assembly. However, in the process of preparing to submit the tender, Adagya District Assembly cancelled the procurement process before the deadline for submission of the tender. Rabina Construction, therefore, feels disappointed since it has incurred some cost in trying to respond to the tender and intends to take legal action against the assembly. Rabina Construction is therefore seeking your opinion on whether the assembly has the right to such action.

Required:
i) Determine whether Adagya District Assembly has the right to cancel the procurement process when it is still in progress?
(1 mark)

ii) Explain FOUR (4) conditions under which such right could be exercised or otherwise.
(6 marks)

i) Right to Cancel the Procurement Process:
Yes, Adagya District Assembly has the right to cancel the Procurement Proceedings in accordance with Section 12(28 a) of the Public Procurement (Amendment) Act, 2016 (Act 914).
(1 mark)

ii) Conditions for Cancellation of Procurement Proceedings:
A Procurement Entity may, for specific and fully justified reasons, cancel Procurement Proceedings before the expiry of the deadline for the submission of tenders, where:

  1. Imperfection in Tender Documents: The entity discovers an imperfection in the wording of the request for submission of tenders, which could mislead tenderers.
  2. Decision to Execute Work Internally: The procurement entity decides to carry out the work subject of the tender by itself.
  3. Budget Cuts: There is a cut in the budget intended for performing the contract.
  4. No Bid Submission: No bid has been submitted.
  5. Exceptional Circumstances or Force Majeure: Exceptional circumstances or a force majeure render normal performance of the contract impossible.
  6. Change in Economic or Technical Data: The economic or technical data of the project has fundamentally changed.
    (6 marks)

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