Problem Scenarios on Contract Law

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Date added: 17-06-26

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Law of contracts
Table of Contents Facts of the case Issues of the case:- Relevant Laws:- Application of law:- Suggestions:- References

Facts of the case

Alice is the owner of the block of land in the region of the central coast and recently got her architect’s plan for developing that site for the child care facility approved by the local council. Alice sends a letter to four builders i.e Bazza, Cassy, Davo and Edna to tender for the job for the construction of a new building of child care facility. She knew the four builders as she had commercially developed the buildings in the past, so asked them to provide the tender. She writes a letter to all the four builders individually, with the attachment of a site and the list of the materials.
  1. The tender must be to build the structure according to the architects plan.
  2. You must agree to use the material as dictated in the architect plan.
  3. You must prepare to commence work on 1Dec.2015 and the work must be completed by 1 june2017.
  4. Your tender must be received by close of business, 25 may 2015 and remain open for acceptance until 1 Aug. 2015.
  5. Your tender is subject to contract.
  6. My obligations are subject to finance.
  7. The contract is subject to the issuing of a child care facility from the relevant government department.
  8. We will use reasonable endeavors to finalize any further terms that may be required.
  9. All tender will be confidential.
I will undertake and bind myself to accept the best tender that complies with these terms. Bazza quoted $300,000 for the completion of a job by 1 June, 2017. Cassy quoted $400,000 or $50,000 less than the lowest quoted price for the work which is to be finished by 1 June, 2017. Davo quoted $500,000 for the completion of work by 1 June, 2016 and further stated that I do not use any sub contractors all the trade people on the site will employed which personally choosen by me for their skills. Edna quoted $280,000 for the completion of the job by 1 June,2017 and posted her tender in the evening of 25 May,2015 which arrives at Alice’s premises the very next day. Alice chooses Cassy’s quotation by comparing the prices of all the three builders and nothing else she compared. Bazza had obtained quotes from various trades people. For the purpose of brokering, he got quotes from 5 bricklayers and told them he will quote the average of all 5 and one bricklayer agreed to do the job for a price below the cost of another four. In such circumstances, he offered lowest quotes. The bricklayer told him now that he cannot do the job at the original quoted price. Bazza thought if he contracted with Alice at his quoted price In the tender, he would not profit.

Issues of the case:-

  1. Whether Bazza can take action against the bricklayer for not quoting the price properly or rather not agreeing to do the job at the original quoted price?
  2. Whether Bazza has any option to change the original quoted price?
  3. Whether Alice entered into a contract with anyone?
  4. If Alice has contracted with anyone, then with whom?

Relevant Laws:-

According to the Australian Law a quotation for the tender is just invitation to enter into a contract between the parties, i.e. one party who demands for the quotation and the other party who submits the quotation. According to the conditions of the contract under Australian law there must be an offer and acceptance. When both the parties agreed to do with the contract, the doctrine of promissory estoppels applies.[1] The estoppels is that when one party promises other party to act upon any part then the party who made the promise will not be allowed to go behind the promise.[2] According to the law in Australia the person cannot be allowed to change the original quoted price. The person giving quotation must use his skills and experiences at the time of quoting prices in the tender because after that the person is not allowed to change the original quoted price . According to the Australian law private sector and government agencies will invite tenders through the process specified by the Australian government known as tender process . It is important for the individuals and entities who invite tenders to understand the law which regulates the tender process. The services under the Australian law are exchanged by the medium of a contract. The important principle law, contract law is a contract is made where a reasonable offer made by one party and the same offer is accepted by the other party who are capable to contract.[3] Another important principle is that there must be a common intention of both the parties to enter into a contract. Before entering into a contract, a government enterprise or the private sector requires to follow the law regulates the tender process. The First step for the tender process is to “issue a request for tender”. Request for tender is nothing but just a notice inviting contractors who satisfies the conditions to meet the requirements of the tender and other requested documents. (1) Persons interested in providing those services, submits a tender which are also known as bid , offer, quotaion etc. (2) The objective of tendering process is to locate a preferred supplier which results into a contractual relationship for the purpose of the supply of services. It is important to mention here that the tendering process continues to the contractual relationship. A request for tender, for the purpose of formation of contract is not an offer, it is just an invitation to enter into a contract or we can say that it is just a request to negotiate or an offer with a possibility of contract.[4]

Application of law:-

  1. Whether Bazza can take action against bricklayer for not quoting the price properly or rather not agreed to do the job at the original prices- That according to the Australian law, notice inviting tenders has been just an invitation to enter into a contract but not a mere contract but once the offer accepted both the parties bound by the contract. According to the present situation Bazza quoted tenders from the 5 bricklayers and told them that he would use a combination of their quotes to then quote a price for the job with Alice. As Bazza told the bricklayers that he would use their quotations to quote the price for the job with Alice and he received the quotations from the bricklayers, the relationship of offer and acceptance came into existence. As the bricklayers promise to Bazza to work on the quoted prices and on rely upon that quotations Bazza submits a tender to do a job with Alice. But when the tender submits one of the bricklayer refuses to doing work for the quoted price which results to loss in the work done for Alice if he has to enter into a contract with her. So, according to the Australian law, that bricklayer is liable under the doctrine of promissory estoppels. The definition of promissory estoppels defined as the when one party promises the other party to act upon any part and that party after relying upon that promises, acts further that the person who made the promise is liable under the doctrine of promissory estoppels. Bazza can take actions according to the promissory estoppels under Australian law.
  2. Whether Bazza has any option to change the original quoted price- That according to the Australian law, Bazza has no option to change the original quoted price as it is the well settled law that the person giving quotations must use their skills and experiences at the time of giving the prices.
  3. Whether Alice has entered into a contract with anyone- As according to the Australian law the tendering process precedes into the contractual relationship. The request for tender is we say that the step for the formation of a contract. The request for tender is an invitation to treat or an offer with a contract in mind. Means we can say that once the offer is accepted by the party, then it comes under the Cateogary of contract if it meets the requirements of the contract. In the present situation Alice invites the tenders from the four builders i.e. Bazza, Cassy, Davo and Edna and wrote them letters inviting tenders with some conditions.[5] All the four builders submit his tenders with the conditions requiring in the letter. According to the Australian law once the party offers the other party to enter into a contract and the other party accepts it, then the contract came into existence. Same is the position with the persons inviting tenders and person submit tenders. The person inviting tenders is the party who offers. As according to the law invitation to tenders is not a contract, but a mere step towards the contract. In the procedure of invitation of tenders the person whose quotation is accepted is the person eligible to enter into a contract with the party inviting tenders. So in the present case Alice had entered into a contract with the person whose tender is accepted.
  4. If Alice has contracted with anyone- That according to the present situation Alice, the lady who invites tenders has contracted with the person whose tender is accepted as the tender which complies with all the requirements. In the give case, Alice accepted the tender of Cassy. So we can say that there is existence of contract Alice and Cassy. The Australian law well describes that the request for tenders is the process precedes the contractual relationship. The request for tender is only for the purpose of formation of contract. We agree that mere invitation is not an offer to contract, but when one party invites a tender and the other party in compliance with the requirements of the tender submits it and the party who invites tenders accepts any one of them then the relationship of offeror and acceptor came into existence. So in the present situation we can say that Alice has contracted with Cassy whose tender she accepted. The reason for the accepting the tender of the Cassy is that he quoted the lowest amount. It is not settled law under Australian law that the person only accepts the lowest bid, but in this situation she accepts the bid by seeing the lowest quotation because she had as plans for the development of the child care facility and not any profitable institute. If see the bids of all the four bidders then Edna had the lowest bidder, but she fails to submit the tender on time, so for that reason her bid was refused and after that the lowest bidder was Bazza. But also in the case of Bazza he refused to do the work as one of his bricklayer refused to do work because by mistake he quoted lowest amount which is not profitable to them. So after that Cassy is the only bidder who bid at the lowest amount with the amount of $400,000. So in the end we can say that Alice had contracted with Cassy whose bid she accepted.[6]

Suggestions:-

By considering all the facts and circumstances of the case, it is suggested that though there is no written contract between the bricklayer and Bazza. It is the settled law in Australia that the contract can be written or oral. Once the person promises to do act for other party then under the law he is not allowed to go behind the promise. Bazza can claim damages from the bricklayer even though his tender is not accepted. It is further suggested that if Alice had entered into a contract with anyone, she had to inform to others bidders as the ethics of tenders. She haad to inform to all the bidders i.e. the winning bidders and the rest of the bidders about the reason of acceptenace of bid to the winning bidder and the reason for not accepting the bids of rest of the bidders.

References

Ashley, Clarence D., 'Conditions In Contract' (1905) 14The Yale Law Journal C., J. W., 'Contracts: Offer And Acceptance: Acceptance Conditioned By Letter Following Telegram: Acceptance By Unauthorized Means' (1929) 18California Law Review 'Contract. Offer. Invitation To Treat' (1925) 25Columbia Law Review 'Contract. Offer. Invitation To Treat' (1925) 25Columbia Law Review Dowrick, F. E., 'Invitees--Notice Of Unusual Dangers' (1955) 18The Modern Law Review 'Estoppel. Estoppel In Pais. Future Conduct As Basis Of Estoppel' (1909) 22Harvard Law Review 'Inviting Bids To Become A Preferred Supplier Does Not Violate Patents In Europe' (2012) 31Biotechnology Law Report 'Rights And Liabilities Under Option Contracts' (1905) 18Harvard Law Review 'TENDERING' (1949) 25Australian Veterinary Journal WILLETT, CHRIS, 'THE FUNCTIONS OF TRANSPARENCY IN REGULATING CONTRACT TERMS: UK AND AUSTRALIAN APPROACHES' (2011) 60International and Comparative Law Quarterly
[1] Clarence D. Ashley, 'Conditions In Contract' (1905) 14The Yale Law Journal. [2] 'Estoppel. Estoppel In Pais. Future Conduct As Basis Of Estoppel' (1909) 22Harvard Law Review. [3] J. W. C., 'Contracts: Offer And Acceptance: Acceptance Conditioned By Letter Following Telegram: Acceptance By Unauthorized Means' (1929) 18California Law Review. [4] 'Contract. Offer. Invitation To Treat' (1925) 25Columbia Law Review. [5] 'Inviting Bids To Become A Preferred Supplier Does Not Violate Patents In Europe' (2012) 31Biotechnology Law Report. [6] CHRIS WILLETT, 'THE FUNCTIONS OF TRANSPARENCY IN REGULATING CONTRACT TERMS: UK AND AUSTRALIAN APPROACHES' (2011) 60International and Comparative Law Quarterly.
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