The Law of Contract - Formation - Offer and Acceptance (5)

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  • Created by: Majid
  • Created on: 20-11-13 17:56

Offer (5)

3. Tenders:Problems may arise as to what constitutes an offer, when a person or a company decides to put work out to tender, or seek offers for certain goods. This means several contractors are invited to submit several quotations. Generally speaking, such a request will amount to being an ITT, and the company is free to accept/reject any of the responses. In "Spencer v Harding", it was held that an issue of a circular 'offering' stock for sale by tender was simply a 'proclamation' that the defendants were ready to negotiate for the sale of goods, and to receive offers for the purchase of them. There was no obligation to sell to the highest bidder, or indeed any bidder at all. Two further cases in this area of Law are the principles laid in "The Harvela", where it was stated the promise to sell to the lowest tenderer is binding and in the case of "Blackpool Fylde v Blackpool Borough Council", where parties must consider all tenderers when they're submitted in a given time period.

4A. Auctions:  Another circumstance where ITT's have been recognised are in the case of "Payne v Cave", where it was held that items in auction are an ITT; each bid is an offer and acceptance only occurs when the gavel falls. 

AO2: There is an element which protects the seller as items can be removed from a sale before the gavel falls. Furthermore, the buyer is also protected in this circumstance as they have the ability to revoke their offer before acceptance takes place.

4B. Auctions without reserves:In "Warlow v Harrison", it was held that auctions without reserves without reserve each good must be sold to the highest bidder.

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