Tender Bids: When Price Can Change After Closing Date
Author:
Rockliffs Solicitors and IP Lawyers
Publish Date: September 13, 2010
Price is an essential element of a tender, and courts have found that an offer which is uncertain on price cannot form the basis of a binding contractual relationship. An issue often faced is the extent to which corrections can be made to price schedules following close of tenders.
In Australia, subject to the tender conditions, a very limited amount of amendment in the case of a clerical transcription or arithmetical error may be permitted.
An interesting recent Canadian case over a project for the town of Newmarket involved a tender in which one bidder's stipulated price plus GST amount did not equal the total cost of work.
The town's evaluation committee took the view that the firm had made an arithmetical or clerical error in its bid form and recalculated the GST and total cost of work on the basis that the stipulated price was correct. As a result of these amendments the committee recommended the firm be considered the lowest priced tenderer.
When the matter was challenged, however, the court decided that the pricing mistake was not one capable of rectification, but was so fundamental that the tender was too uncertain to be accepted.
Tender conditions and bidding rules in invitation to tender documents need to be drafted to ensure that they give owners the widest discretion possible to accept compliant, non-compliant or substantially compliant bids in order to ensure achieving a value-for-money outcome.
For those tendering, the case is an important reminder to ensure that pricing information is correct at the time of submission, as it is likely that correction following the closing date will only be permitted in limited circumstances, if at all.
Reproduced with the permission of the Law Society of New South Wales.
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