A tender is considered as an invitation to treat. As opposed to an offer, an invitation to treat is not made with the intention that it is to become binding as soon as the person to whom it is addressed simply communicates his agreement with the terms; although, it is not always simple to differentiate between the two. Kayo Takers Investments v Beneath Properties Ltd. 1993 Cancel 289 BCC (CA), Tenders are generally placed in the category of invitation to treat, where a party is merely being invited to make a bid which constitutes the offer and the party issuing the invitation s merely seeking offers.Order now
Typically, the party issuing the invitation for tenders is not bound to accept any submitted tender, unless the invitation for tenders indicates very clearly that the party seeking the tender binds himself to accept a particular offer. While the party inviting tenders is not bound to accept any submitted tender unless it is specifically stated, there are circumstances under which a submitted tender must be considered by the party inviting the tenders. Harvey Investments Ltd. Royal Trust Company of Canada (C. I. ) Ltd. And Others AC 207 (CA) The Canadian courts have developed the concept of Contract A and Contract B to deal with issues arising out of invitations to tender. Contract A, also known as the process contract, is the contract that arises between the tendered and the tendered upon submission of a compliant bid. Contract A is not, however, automatic; it only arises where the parties intended to initiate contractual relations by submission of a bid.
Whether contract A is formed depends of the precise language and intention of the tender call. The Court will look only to the substance of the transaction in the context f the procurement documents in order to determine whether the parties intended to enter into contractual relations. The courts have recognized several factors or terms indicative of an intent to form Contract A, principal among them being the irrevocably of the bid.
The corollary term is the obligation of both parties to enter into a contract (Contract B) upon the acceptance of the tender. Moreover, the tendered is expected to treat all bids in accordance with the request for tender documents and not to make decisions contrary to such documents. Tenders are required to act fairly and in good faith. The emphasis is on the notion that awards should be made with compliant bids and that compliant bids should be assessed based on representations made in the invitation to tender and during the process contract phase.
Contract B is the ultimate contract entered into with the successful bidder upon acceptance of the bid. Terror Contractors Ltd v British Columbia (Ministry of Transportation and Highways 2006 BCC 499 (CA) Powder Mountain Resorts Ltd v British Columbia 1999 cancel 3649 BCC (CA)I Analysts: ISRC indicated in its bid documents that it would be considering bids according to price and technical competence. Thus, this made it clear that the process of bid award would involve the analysis of these two components in the submitted bid.