The purpose of
tendering is to select a contractor to do the project for a reasonable
competitive price. According to the institution of civil engineers(1976,p.100),
main purpose of tendering procedure is to secure economies in project costs
by establishing competition between firms willing to enter in to a contract for
the performance of specific work. After selected the tenderer, employer and
the selected tenderer will enter in to a contract.
Contract is an “agreement
between two or more parties which is intended to
have legal consequences”-(Brook 2004, p.35)
Basically there
should be three requirements for make a contract. Those are;
· Offer
· Acceptance
· Consideration
The common
understanding is that a Contract will come into existence if and when the
contractor’s offer accepted by the client. Until the offer is accepted there is
no contract. Generally contractor’s offer valid for a limited time period, and
the time period may stated in the tender document and/or invitation to tender
and sometimes its states in the governing law.
For an example
Qatar Central Tender committee law article 16 has states ”Period of validity
of tender after opening provided that this period shall not exceed ninety days.
The tender shall remain effective and irrevocable during this period.”
However, offer
should accept before it terminate. There are few circumstances which may terminate
the offer. Those are;
1)
On death of either party
2)
Withdraw the offer
3)
After a specified
time/reasonable time (According to the Qatar Central Tender committee law 90
days)
4)
When the client makes a counter
offer.
Hence the
tenderer can withdraw the offer before it is accepted. However the tenderer can submit a new offer
before tender closing time.
In the case of National
Highway Authority of India v M/s Ganga Enterprises, The High court held “To
have an enforceable contract there must be an offer and unconditional
acceptance. A person who makes an offer has the right of withdrawing it before
acceptance”
However this
situation may differ if the tenderer agrees to keep his offer open for a
specific period for a consideration. For an example employer pays payment to
the contractor to keep the tender open such as an employer pays QR 40,000 to tenderer
for keep the tender open for 120 days. In such case there is a subsidiary contract
between the tenderer and client to keep open offer for a 120 days. If the
tenderer withdraw the offer before 120 days, he may sue by the client for
breach of contract. In such case, probably he may have to pay, additional cost
incurred by the employer to select another contractor for the project.
Further the tenderer can submit a revised offer
to supersede the original offer before stipulated tender closing date & time.
Further it’s
important to study position of tender bond with regarding withdraw of an offer.
If a tenderer withdraws an offer, can he ask to return tender bond?
The tender bond
could be considered as the consideration for a subsidiary contract between
tenderer and employer, had been formed when submitting the offer by tenderer.
This situation is similar to the aforesaid example, where the employer pays
money to keep tender open for 120 days.
First look the
purpose of tender bond. Main purposes of tender bond are to ensure that a
successful tenderer will enter in to a contract and compensate for the cost
associate with the tendering in case of withdrawal. Further it makes sure that
only genuine bids are received.
If tenderer able
to get back the tender bond without forfeiture, the purposes of the tender bond
would be lost. Moreover there is a breach of contract. Hence even the tenderers
able to withdraw their offer, they haven't right to withdraw the tender bond.
In the case of National
Highway Authority of India v M/s Ganga Enterprises, the supreme court held "A person may have a right to withdraw his
offer but if he has made his offer on a condition that some security money will
be forfeited for not entering into contract or some act is not performed, then
even though he may have a right to withdraw his offer, he has no right to claim
that security be returned to him"
Tender bond may
forfeiture in case of withdraw the offer within tender bond validity period,
further it may forfeiture if the successful tenderer fails to sign the contract
or provide performance bond within given time period.
In Qatar Central
Tender Committee (QCTC) law article nr 42 has states "If the successful
tender does not deposit the performance bond .......Central tender committee
may recommend cancelling his tender and confiscating the tender bond...”. Moreover,
the article 44 has states “If the tenderer fails to sign the contract on the
fixed date or if he withdraws ......he shall be liable for .....Confiscation of
the final security (tender bond)”
Since the
tenderer haven't right to withdraw the tender bond, when it would expire?
Generally in tender document and/or invitation to tender has provided validity
period for the tender bond. Further there may be legislations which states the
tender validity period. For an instant Instruction to tender on QCTC, clause 7
has states "Tender bond... It must be unconditional and valid for 120
days as from the date of opening of the tender".
Generally tender
bond validity period is greater than tender validity period. It is as a
safeguard for the extended tender validity period. Article 25th of
QCTC law has states “the period of its validity shall not be less than
thirty days after the termination of the period fixed for the validity of the tender
However general
practice is to return the all tender bonds after the successful tenderer deposited
the performance bond. According to the QCTC law article 26, “The tender bond
shall be returned to their owners after the tenderer whose has been accepted,
has deposited the performance bond”.
By considering
above facts I believe, it's good practise to add a clause to instruction to
tenderers, which clearly states the position of tender bond with regarding
withdraw the offer.
Sample clause;
1) The Tender bond may be forfeiture;
a)
If the tenderer withdraws his
offer before tender bond expires.
b)
If the successful tenderer
fails to enter in to the Contract within the specified time.
c)
If the successful tenderer
fails to provides the Performance bond within the specified time.
I conclude,
tenderer can withdraw his offer before accept without reasoning, However the
tenderer’s tender bond may forfeiture.
References;
·
Brook, M., (2004). Estimating
and Tendering for Construction Work. 3rd ed. Oxford: Elsevier
Butterworth-Heinemann.
·
Chappell, D., (2006). Construction
Contracts-Questions and Answers. Abingdon: Taylor & Francis.
·
Jone, M. and Will. H., (2000). Construction
Contracts Law and Management.3rd ed. London: Spon Press.
·
Law No.8 of 1976, Qatar. Qatar
Central tender Committee.
·
Pathak, A., (2007). Legal
Aspects of Business.2nd ed. Abingdon: Tata McGraw-Hill.
·
The Institution of Civil
Engineers. (1976).An Introduction to engineering economics.2nd
ed. London: William Clowes & Sons Ltd.
