Perclval Ltd, Plaintiff
London County Council Asylums, Defendant
The present case deals with Tenders and standing offers. A tender is a type of offer, the offer made is an offer to satisfy conditions or obligations with the existing capability of immediate execution, such that if the person to whom the offer is made has cooperated, the condition or obligation should be met immediately.
Because the condition or obligation in question may necessitate conformity, whether through payment or transfer of ownership, the offer may be commercial or monetary in nature.
There can be no offer, service, or other performance that needs time in the strictest meaning of the word. The promise of an incomplete sum of money is likewise, strictly speaking, impossible to carry through.
The elements of a valid tender, are as follows-
- 1. It must be ambiguous.
- 2. It must be done at the proper location.
- 3. They must follow the conditions of the agreement.
- 4. It must be completed at the appropriate time.
- 5. It must be carried out correctly.
- 6. The bidder must be able and willing to fulfil their duty.
- 7. A fair opportunity for examination must be provided.
- 8. The tender must be sent to the appropriate person.
A standing offer is one that is intended to stay available for a set period of time and can be accepted at any moment before the deadline.
When a firm requires a significant number of items on a regular basis, it generally advertises for tenders to provide the products. This type of tender or offer is known as an open, ongoing, or standing tender or offer.
When a standing offer is approved, it implies that anytime the items are needed, an order will be placed with the party that filed the tender, and a separate contract will be established for each order. Standing Offer Agreements hope to enhance cost-effectiveness and quality to users through quantity consolidation and standardisation; reducing the time required to purchase ordinary products or services; lowering the total administrative costs of purchasing low-cost goods and services that are frequently required; and ensuring efficient, high-quality spending.
In terms of goods contracting, Standing Offers offer the option to form pricing agreements through the tender process, resulting in reduced costs for frequently-required products by concentrating demand.
A standing or continuous offer may be cancelled prior to acceptance or before an order is made; but, once an order is placed, the contract is formed; thus, after placing an order, the offer cannot be revoked.
In this case, the plaintiffs published an advertisement for tenders for the supply of goods to their stores.
The defendant affirming with the advertisement made by Perclval Ltd made a tender in which they agreed to supply the firm with large volumes of the required special products as the company would require them from time to time for twelve months.
The Company accepted the tender given by the defendant in writing and then issued numerous directives that had to be followed, which were carried out by the defendant efficiently.
Finally, the Company issued an order for products within the time frame, which the defendant refused to fulfil. Perclval Ltd, filed a lawsuit against London County Council Asylums, for breach of contract.
Will Perclval Ltd be able to succeed in filing a suit for a breach of contract?
Rule of Law
A standing offer is the one that remains open for acceptance for an extended length of time. Tenders for the provision of commodities are a type of Standing Offer.
The case for breach of contract was won by the company as the tender was a standing offer, that was to be transitioned into a sequence of contracts by the company’s eventual acts, and the order given precluded the probability of revocation, and the defendant, even though they would reclaim their individual rights of action in the future, were obligated to supply the goods that were actually ordered until then.
The court came to this judgement as a standing Offer refers to an offer that is made to deliver certain items or any amount as and when necessary. In such a case, a contract does not arise just because the tender is approved; rather, a contract exists because the order is made.
In such a situation, each order is accepted, and when the offer is accepted, the contract is formed.
In the case of Bangal Coal Co. Ltd. Vs. Homee Wadia & Co. (1899) which is the leading case in issues related to standing offers and tenders.
The defendants promised to deliver coal on an as-needed basis for twelve months at an agreed-upon amount. The plaintiff placed specific orders, and the defendants provided the coal, but the defendants withdrew their offer before the 12-month period had expired.
The plaintiff then filed a breach of contract lawsuit against the defendants. In dismissing the claim, the Court determined that there was no contract and hence no breach of contract. The Court emphasizes that it was simply a standing offer and that a contract is formed when acceptance is made by placing an order; before this step, any party may withdraw, but once an order is placed, they cannot revoke it.
In the present case, the defendants accepted the offer, indicating that an agreement had been made and a contract was formed, hence London County Council Asylums and Mental deficiency Committee had to comply with the instructions given regarding the order that was placed and were liable for not fulfilling the obligations that were upon them.