Contract Law Problem Question

Firstly, we have to distinguish whether Jack makes an invitation to tender or an invitation to treat. According to Harvela Investments Ltd v. Royal Trust Co of Canada (CI) Ltd (1986), the usual analysis is that 'an invitation to tender for a particular project is simply an invitation to treat.' However, in the case of Harvela Investments Ltd, the invitation to tender is treated as an offer implicating legal obligations. I believe that Jack was making an invitation to treat rather than an invitation to tender, constituting an offer, for several reasons; firstly, the terms of the invitation are vague, with no specification of time for which acceptance of the 'most competitive tender' will remain open till; secondly, I infer that the lack of formality in Jack's proposal indicates Jack's lack of intention to create legal relations; thirdly, invitations to tender only creates obligations where justice demands it, since it costs a relatively large amount to produce the tender, whereas in this case, I infer that that there is little cost in producing the tender, hence, justice wouldn't demand legal obligations. Moreover, Jack states that 'he will accept the 'most competitive' tender' which is a subjective judgement since 'most competitive' can mean various things; thus it is a value judgement which the court cannot enforce or decide. Using the objective test of intention, I believe that a reasonable person would know that Jack did not intend to form contractual obligations with either parties. Thus, I conclude that Jack makes an invitation to treat to three parties: Bob, Ken and Andy. 'An invitation to treat is an expression of willingness to embark on negotiations with the other party to see whether the agreement can be reached further down the path.' Thus, Jack is not making an offer; the offer is made by he person who submits the tender and the acceptance is made when the person inviting the tenders accepts one of them. Therefore, Jack's invitation to treat is not legally binding.

Since Andy does not ever receive Jack's invitation to treat, his subsequent offer is not in response to Jack. Andy's offer of Ј8,000 cannot possibly claim to be considered by Jack's invitation to treat solely because there is no nexus between the two parties, i.e. Andy did not previously know of Jack's proposal when he made his own offer. However, it is possible for Jack to accept Andy's offer if he so desires, for it is an entirely separate and new contract to which he would be submitting himself to. This is only possible since Jack is not under any legal obligation to only accept offers in response to his invitation to treat. But since Jack does not respond to Andy's offer, there is no contract between the two parties.

When Bob 'writes back saying that he will do the work for Ј10,000,' he is making an offer to Jack. Bob's statement of willingness in response to Jack's invitation to treat implies that he has an intention for contract to be legally binding. However, in order for this contract to be undertaken, Jack must accept Bob's offer. In this case, Jack does not respond to Bob's offer, thus, there is no contract existing between Bob and Jack. Due to the fact that Jack proposes an invitation to treat, rather than an invitation to tender, as an offer, he is under no legal obligation to accept Bob's offer, even though in terms of price, it is the 'most competitive' tender (excluding Andy since he is no longer qualified as a competitor). Only if Jack had set out to make an invitation to tender would Bob be able to make a claim against him, on the basis that he may have regarded the words 'most competitive' to mean 'the lowest price.' Even then, the claim would be weak since in Blackpool , Bingham LJ commented that the invitor to the invitation to tender 'need not accept any tender; he need not give reasons to justify his acceptance or rejection of any tender received.' I conclude that Bob has no particular basis to claim anything in this scenario.

When Ken 'replies saying that he will charge Ј12,000 for the work,' he is making an offer in regards to Jack's invitation to treat. There is consideration present here since according to the 'Doctrine of Consideration,' promises will legally enforceable if you 'ask for something in return for' something else. Here, Ken asks for Ј12,000 in return for his work to build Jack's conservatory. Therefore, when Jack 'accordingly contacts Ken to say that he will be employing him to do the building work,' Jack has accepted Ken's offer, and both parties have entered into a legally binding contract. Jack's statement qualifies as an acceptance since there is correspondence between the two parties, whereby both the offer and acceptance are on the same terms; there is nexus, where the acceptance is in response to the offer; and finally, there is communication on both parts. Moreover, when Jack states that he will accept the 'most competitive' tender, he could argue that the recommendation from 'Barnie,' his 'neighbour' who expresses that 'Ken is an excellent builder' constitutes Jack's meaning of the 'most competitive.' However, this is not relevant unless Bob wishes to argue in court that Jack's proposal was indeed an invitation to tender, which constitutes an offer, as according to Harvela.

When Jack proposes to Ken to 'part payment of debt,' he is asking to pay Ј2,000 less to Ken, for the same job. Ken gains no legal benefit if he promises but he does gain practical benefit since he would not have to take Jack to court, and 'run the risk of a costly legal action against Jack which may result in him recovering even less than the Ј10,000 offered' since Jack is 'having cash flow problems.' However, even though in other circumstances, where there is practical benefit gained, the second promise would be legally binding, there is an exception when the situation is 'part payment of debt.' The law says that practical benefit is not enough

...