Introduction

Normally, once the design phase has been completed, the employer must search for qualified contractor to
construct the project. In public works projects, this procedure is often strictly outlined, while in the private
sector the process is often varied. In searching for the suitable contractor, the employer will then advertise
an invitation. In many newspapers we can find various advertisements for bids. In construction industry, we
called it as invitation to tender or invitation to bid. There is no strict format for invitation to tender. Below is
an example of invitation to tender.
Invitation to Tender
Seng Hansen
Master Student of Construction Contract Management UTM
Email: hansen_zinck@yahoo.co.id
1
Invitation to tender or invitation to bid actually is a kind of invitation to treat, which is an invitation by one
party (the employer) to another party (the prospect contractor) to make an offer which if accepted,
becomes the basis of a binding contract. The architect or the quantity surveyor is normally responsible for
inviting tenders from interested contractors on behalf of the employer. An invitation to tender does not
amount to an offer in contractual terms. It is merely an invitation to the contractor to make an offer.
Procedures of Valid Invitation
Although there is no strict format in the act to invite contractors to submit their tenders, there are some
specific procedures that must be followed and understood by the employer or his representative. Here is a
brief description of the procedure.
1. The invitation to tender must be placed in newspapers, magazines, trade publications and the like. The
jurisdiction of the employer and the type of the project will dictate the frequency with which
advertisements must appear in publications and the length of time notices must be posted
2. The invitation to tender must be posted in public places (especially for government projects) and
distributed to the local construction community. This publicity may include the employers tender list of
possible interested contractors
3. Advertisement must be carefully written
4. All tenderers must be treated alike and be afforded an opportunity to tender under the same terms and
conditions.
What Information that should be in the Invitation to Tender?
Although there is no strict format template of the invitation to tender, the invitation must at least include Although there is no strict format template of the invitation to tender, the invitation must at least include
some basic information so that the tenderers can get a brief description about the tender and the project
itself and whether they are eligible enough to participate in the tender. Below is a typical template which is
usually used in an invitation to tender.
2
The tender is called for the following works: -
NOTICE OF INVITATION TO TENDER
(1)
(2)
(3)
(4)
3
(5)
(6)
(7)
(8)
After the employer or his representatives receive the tenders from various contractors, they will then make
an evaluation and prioritization towards the most suitable contractor and the best price offered by the
contractor. This evaluation will be in a format such as below.
NOTE
(1) The Company Logo (if any)
(2) The Name of the Project
(3) Brief description about the employer's company
and the project (nature, location)
(4) Name of the works (if the project consists of
different works)
(5) The type of contract used
(6) Contractor requirements (if any)
(7) Location to obtain the tender documents
Time, manner and place to submit the tenders
(8) Contact person for further enquiries
4
Some Legal Issues Regarding Invitation to Tender
There are some legal issues regarding the employers act in inviting contractors to tender. Below are some
brief explanations and respective cases.
A. Invitation to Tender becomes an Offer
An announcement inviting tenders is not normally an offer; unless accompanied by words indicating that
the highest or the lowest tender will be accepted.
Harvela Investments Ltd v Royal Trust Co of Canada (1984) 2 All ER 65
In certain circumstances an invitation for tenders may be an offer. In this case the defendants had made it
clear that they were going to accept the highest tender. They did not do so. The Court held that this was an
offer which was then accepted by the person who made the highest tender and that the defendants were in
breach of contract by not accepting it.
Harvela and Outerbridge (2 companies) were requested to submit tenders for the purchase of shares. The
defendants explicitly specified that it binds itself to accept the highest bid from the two. Harvela bid $2.175.
Outerbridge bid $2.1m, or $101k of any other offer (this is called a referential bid). Defendants accepted
Outerbridge, Harvela sued.
The issue was whether the the tenders were offers or invitation to treat. It was argued that by submitting
the highest bid, the plaintiff accepted the defendants offer and thus was entitled to purchase the shares.
Held: the defendants specification that it binds itself to accept the highest bid meant that the invitation to
submit tenders amounted to an offer. By submitting the highest bid, the Plaintiff accepted the offer and a
unilateral contract was formed. Outerbridges referential bid was deemed invalid, because the specification
of the invitation to submit tenders implied no referential bids.
B. Invitation to Tender may create Contractual Obligation
Normally there will be no contract before the tender is accepted but in some circumstances the invitation
to tender may create contractual obligations. In a case where there is no offer to contract with the highest
or lowest bidder, if the invitation to tender prescribes a clear, orderly and familiar procedure, it may be an
offer to consider all conforming tenders. Thus, where, a local authoritys staff failed to clear a letterbox and
the authority did not consider a tender submitted before the deadline, it was held liable for breach of
contract.
Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council [1990] 3 All ER 25
The Council owned an airport. It raised money by granting a concession to operate pleasure flights from the The Council owned an airport. It raised money by granting a concession to operate pleasure flights from the
airport. In 1983 it invited the plaintiff and six other parties to tender for the next three year concession. The
invitation stated that the tender was to be in the envelope provided, was to bear no mark which would
identify the sender and that tenders received after 12 noon on 17 March 1983 would not be considered.
The plaintiff placed its tender in the Town Hall letter box at 11am on 17 March 1983 but the letter box was
not cleared at 12 noon by Council staff. As a result, the plaintiffs tender was classified as late and excluded
from consideration.
Held: In the circumstances the Council had promised that any tender properly submitted by the deadline
would be considered and the plaintiffs submission of a tender created a binding contract to that effect.
C. Implicit Obligation to conduct the process fairly
At least in the public sector, the letting of contracts by competitive tender gives rise to an implicit contract
to conduct the tendering process fairly.
Harmon CFEM Facades (UK) Ltd v. Corporate Officer of the House of Commons (1999) 67 Con LR 1
This dispute arose out of the letting of the fenestration contract for the new House of Commons (H of C)
building in Bridge Street, Westminster. In the original tendering process, the claimant was the lowest
tenderer at 40,479,469. All the tenders were higher than had been expected and the specification was
altered, with the claimant again the lowest tenderer. There was a further round of tendering in which the
tenderers were in effect tendering for different options. Those managing the tendering process were
anxious for the contract to go to a British firm. The contract was awarded to a consortium with a British
element.
Held: The defendant was in breach of its obligation to conduct the tendering process fairly and openly. The
claimant was entitled to recover the wasted costs of tendering. Further, since the defendant could not
lawfully let the contract to the successful tenderer and since in practice restarting the tendering process
was not a practical option, the claimant was entitled to recover damages for its failure to be awarded the
contract.
5
Conclusion
Invitation to tender is one type of invitation to treat. It is normally not considered as an offer in construction
industry. Invitation to tender basically is a method in which the employer tries to find the most suitable
contractor for the project. There is no strict format template of invitation to tender.
Although there is no format template, a typical invitation to tender usually includes some basic information
of the employer and the project so that the contractors get some description about the project itself. It
must at least describe the name of the project; brief description of the employer and the project; the works
to be done; the type of the contract to be used; contractor requirements (if any); location to obtain the
tender documents; time, manner and place to submit the tenders; and contact person for further enquiries.
To be valid, it must be placed in newspapers and the like, must be posted in public places, must be in
writing, and all tenderers must be treated alike and be afforded an opportunity to tender under the same
terms and conditions.
Although it seems to be a simple action, invitation to tender may raise some legal issues. It can be an offer
under some condition, it may create contractual obligation, and the architect/QS/employer has an implicit
obligation to conduct the process fairly. These issues must be considered whenever the employer or his
representatives want to advertise an invitation to tender for their particular projects.
References References
Furmston, M. 2006. Powell-Smith & Furmstons Building Contract Casebook. Fourth Edition. Oxford:
Blackwell Publishing.
Beatson, J. 2002. Ansons Law of Contract. 28
th
Edition. Oxford: Oxford University Press.
6