Contract Law: Tutorial Questions for Week 2

In such case, BIllionaire Ltd did establish a contract with Brenda.

The foremost evidence of the contract’s existence was the letter that Brenda
received from Billionaire Ltd to confirm the success of her tender. From
Spencer vs. Harding (1869-1870), the general rule for tender was that an
invitation to tender is an invitation to treat and not an offer. This means that
Brenda’s tender is an offer to Billionaire Ltd, which had the freedom to accept
or reject the offer. Therefore the confirmation letter from Billionaire Ltd clearly
indicated the company’s acceptance of Brenda’s tender.

However one might argue that no contract was created because of Brenda’s
letter to Billionaire Ltd regarding to the withdrawal of her tender. This
argument would be invalid because the company’s letters of 10th July 2010
clearly stated that –

• One must abide by the tender in its entirely until 10th November 2010.

• One shall neither withdraw nor amend the tender without the company’s
consent.

Although Brenda did inform the company about the financial error in her
tender, Billionaire Ltd did not permit her to amend the mistake. Therefore she
must abide her tender until 10th November 2010 and thus her request to
withdraw her tender would be invalid.

In terms of the financial error in Brenda’s offer, it was unclear whether she
could claim damages and financial losses from Billionaire Ltd. The reason is
that there were no statements regarding to the consequences of errors in the
tender. Consequently City U vs. Blue Cross Insurance Ltd (2001) could not be
applied to this case. In the absence of such statement, Brenda’s error would
be treated as a mistake and hence damages and compensations would not
be claimed from Billionaire Ltd.

Another argument against the existence of a contract between Brenda and

Billionaire Ltd relates to the treatment of Andy’s tender. Referring to Blackpool
and Flyde Aero Club vs. Blackpool Borough Council (1990), this was a
parallel contract that imposed an implied obligation on Billionaire Ltd to
consider all the tenders. This was a parallel contract for three reasons –

• The tenders were offered from a party selected by Billionaire Ltd.

• There was an absolute deadline for the submission of the tenders.

• There were procedures and compliances prescribed in the invitation to

tenders.

Respectively Billionaire Ltd has breached its contractual obligation for not
considering all the tenders. However this does not denote that there should be
a contract between Andy and the company instead because Billionaire Ltd did
have the freedom to reject or accept the tender.

If the letters of 10th July 2010 stated that the tender with the highest monthly
rental would be successful then there would be a contract between Billionaire
Ltd and Andy. This is mainly due to the collateral contract between both
parties. In this case, Andy’s submission of his tender signified his
consideration for entering the main contract. In return, Billionaire Ltd had to
keep their promise on accepting the tender with the highest monthly payment
and thus accept Andy’s tender.

Lobley Co Ltd vs. Tsang Yuk Kiu (1997) also reinforced this argument in
terms of a unilateral offer. If there were a statement on accepting the highest
bid then the invitation to submit tenders would be considered as a unilateral
offer. Once Andy and Brenda had performed their promise, which was to
submit their tenders in compliance to its terms and conditions, Billionaire Ltd
would have to accept the tender with the highest monthly payment. Although
Andy’s tender was misplaced in Billionaire Ltd’s mailroom, his tender had to
be accepted for having the highest payment and thus created a contract
between both parties.