Contract Law Assignment: Case Analysis of The Call for Tenders
Contract Law Assignment Instructions:
The call for tenders
On 1 December 2019, the Council placed the following advertisement in local and national newspapers:
Tenders are invited from all interested individuals, local, and national businesses for the provision of the following services from 1 November 2020 to 15 March 2021 as part of the McQuarrie Local Council’s Fun for All: Sun, Surf or Turf tourism promotional program.
1. Provision of beach and park-side food and beverage vans for daytime services.
2. Provision of water sports activities, including paddle-boarding, windsurfing, surfing, and fishing.
3. Provision of local tourist activities such as bushwalks, sea kayaking tours, and cycling, horse-riding, and artists and gourmet food “trails”.
4. Provision of arts and crafts activities for school-aged children. The deadline for submissions is 24 December 2019. (Contact details below.) Submissions must comply with the Council’s tender template. The template may be obtained from the Council. (Contact details below.) An administration fee of $50 must be paid for a tender to be considered.
All properly submitted and received tender submissions will be considered. An announcement of the successful parties will be made at an event to be held at the Council’s offices on 20 January 2020. Attendance at this event is expected for the ceremonial signing of the contract.
TENDER SUBMISSION DETAILS
Mr Ted Wood
Manager - Tenders and Private Works Department
Tel: 04000 123 456
McQuarrie Local Council Offices
1 Harbour Boulevard
COVE D’ÉTÉ NSW 2123
Tel: 02 1234 5678
Question 1: Several parties properly submitted tenders to provide water sport activities. One was a local business operated by one of the local outdoor fitness instructors, Rock Davies, called McQuarrie Water Activities. Rock said that he could provide the service for $20,000. His was the lowest price quoted to provide the service.
The Council examined all tenders and decided that Rock’s tender satisfied its requirements and was the cheapest option. The Council chose to accept Rock’s tender.
On 15 January 2020, the Council emailed Rock, which Rock read. It said ‘Congratulations! We have accepted your tender. Please attend the Council offices on 20 January for the ceremonial signing of the contract.’ Rock did not respond because he decided that, on reflection, it would not be profitable enough for him to proceed. He did not attend the ceremony and thought that was the end of the matter.
The Council wishes to force Rock to provide his service. It asserts that there is a binding contract between it and Rock concerning the provision of water sports.
Your task: Provide advice on whether the elements of agreement (offer, acceptance) and intention have been satisfied. Do not discuss consideration or electronic transactions in your response to this question. Explain your answer with reference to relevant cases discussed in Lectures and required readings.
Question 2: Assume that an agreement was formed between the Council and Rock.
Your task: What consideration has been provided by each party to support it? Explain your answer with reference to relevant cases discussed in Lectures and required readings.
On 16 December 2019, Kylie saw the call for tenders and decided that she would submit a tender to provide tourist activities. She had worked for 12 years for Club Med in the United Kingdom, France, and Switzerland as an outdoor education instructor, managing the activities for all the guests – adults and children – and so had a lot of experience.
Kylie spent a week completing her application. She used the Council’s mandated template. She posted it in the mail to the Council on 23 December 2019. The same day, she paid electronically the administration fee to the account specified in the tender template document. Unfortunately, the letter with the tender did not arrive until 3 January 2020. By 18 January 2020, Kylie had not heard anything from the Council. She telephoned Ted Wood to ask if her tender was successful. Ted replied that the Council did not receive her tender on time and, therefore, had not been considered.
If the Council had considered Kylie’s application, it would have seen that it was the cheapest quote for the tourist activities.
Question 1: Kylie asserts that the Council was contractually obliged to consider her tender. Your task
Advise Kylie whether this is correct. Your response should consider the postal acceptance rule and explain your answer with reference to relevant cases and legislation discussed in Lectures and required readings.
Question 2: Alternatively, assume that she emailed her tender to TWood@mcquarrie.gov.nsw.au on the morning of 24 December 2019 and deposited the administration fee electronically the same morning. But Ted Wood did not see that email until he returned from annual leave on 2 January 2020.
Would these facts change your response to the previous question? Explain your answer with reference to relevant cases and legislation discussed in Lectures and required readings.
Issue identified in the contract law assignment
Whether the elements of agreement and intention are satisfied or not between McQuarrie Water Activities and Tenders and Private Works Department?
All agreements are contracts, if they are made by free consent of the parties, competent to contract for a lawful consideration and with a lawful object and not hereby expressly declared to be void . For an agreement both offer and its acceptance is compulsory. Offer means proposal made to a person for doing something or not doing something with a view to obtain assent if that other person either to such act or abstinence .
When a person to whom the offer or proposal is made signifies his assent there to, then the proposal is said to be accepted. Acceptance must be absolute and unqualified and it must be communicated to offeror. Consideration can be anything stipulated by the promisor, subject to it is not illegal and it must come into existence at the time of promise or after it. Where the consideration predates the dates of promise then it would not be considered as good consideration . For a contract to exist the parties to the contract must intend to create legal relation . Generally the presence of consideration provides the evidence of intention to create legal relationship . In determining whether there is contractual intent or not, objective approach is adopted. It doesn’t matter whether one person is secretly is not intending to be legally binding if it would appear to a reasonable observer that they did.
In the present case Rock Davies, called McQuarrie Water Activities applied to one of the tenders for providing water sport activities for $20000. Council after reasonable checks awarded the tender in the favour of Mr Rock Davies because he quoted the cheapest price and was satisfying all the requirements of the same. The Acceptance of the offer was made by Council on 15th January 2020 and communicating the same via email and also seeking his presence to attend the ceremony on 20th January 2020 for signing of contract. Rock Davies didn’t respond to the mail with a view that it would not be enough profitable for him to proceed and also not attended the ceremonial ceremony.
Tender is not an offer but an invitation to offer but Rock Davies after applying for the tender makes an offer to the council for providing the service for $20000 and the Council accepted the offer and was communicated to him via email. Here both the parties intended to create legal relation and both the parties are competent to create legal contract. In the present case all the requisite elements are present for legally binding contract i.e. Agreement, Consideration, intention to create legal relationship and competent parties to the contract.
It can be concluded that since all the necessary elements are present and hence it is a legal binding contract. Rock Davies will have to provide service at earlier decided price. He cannot refuse to provide service with a view that proceeds won’t be enough to make profits out of the same.
To determine consideration by both the parties for validation of contract:
Consideration refers to the price for which the proposal of the other is bought and the promise thus given for value is enforceable. Consideration must move at the desire of the promisor and it may from the promisee or any other person who is not party to the contract. It should be real, not illusionary and should not opposed to public policy. Inadequacy of consideration doesn’t make a contract void i.e. if a party to a contract wants to do something for other at inadequate price would not hamper the validity of the contract.
In the present case Rock Davies decided to apply for tender for providing water sport activities for the Council. The Council after comparing it with the other believed that he is satisfying all the conditions along with cheapest price so they decided to award him the tender. The acceptance was communicated over email with seeking presence of him at ceremony for signing contract of the same. Here Consideration for Rock Davies is $20000 and for the Council is water sport service provided by Rock Davies.
In the present case Consideration for Rock Davies is $ 20000 and in return he would provide water sport activity service to the council which is consideration for the council. Consideration for both the parties to the contract is legal and not opposed to public policy.
Whether the contract between Kylie and Council is legally binding or not?
For the purpose of effectiveness of contract acceptance must be communicated. Mere a mental decision to accept the offer is not sufficient. Agreement is completed when and where communication of acceptance is received .The communication of a proposal or offer is completed when it comes to the knowledge of the person to whom it is made . In case of proposer communication of offer is said to be completed when it is put in a course of transmission to him so at to be out of the power of acceptor . As against the acceptor it is complete when it comes to the knowledge of acceptor. In Common parlance it can be said that offer can be revoked before transmission of offer by the party to the agreement but once offer is send by offeror he cannot revoke the same if the counter party agrees to the offer. But communication ends for acceptor when it comes to the knowledge of him before it he can revoke the same.
In the present case Kyle applied for a tender for providing tourist activities. She used the same process for applying for the tender as it was asked by the Council and administration fees were also duly paid. Unfortunately the letter which was required to be submitted along with the tender did not reach the council on the last date on which tender was required to be submitted. In this case communication completed for Kyle on the date of transmission of email i.e. if the tender would have been awarded to Kyle for providing service of tourist activities then date of acceptance would have been the date when email was transmitted to the Council i.e. 23/12/2019. Against council communication of offer will be said to be completed when it will come to the knowledge of Council. The council came to know about the offer of Kyle on 3rd of January 2020 which is beyond the last date when tender was required to be submitted. Therefore it can be said that if letter along with the tender would have reached council before the last date then they would have to consider the tender of Kyle for providing tourist activities but in this case it is not so hence Kyle cannot legally enforce the council to consider the tender.
Kyle cannot assert that the council was contractually obliged to consider her tender since it came to knowledge of council after 24th December 2020. If it would have reached to the council before the last date to submit the tender then council would have to consider the same.
If the letter along with the tender would have been submitted on the morning of 24th December 2019 with the administration fee but Ted Wood would not have seen the same due to annual leave, whether with this fact could Kyle make his tender consider?
It is clearly stated in the law that communication is said to be completed when it comes to the knowledge of the person to whom it is sent but for the person who is sending the message or offer the communication is said to be completed when the offer was transmitted i.e. the date of which letter was posted or email was sent .
In the present case if Kyle would have sent the letter along with the tender before the last date but it would have come to the knowledge of the Ted Wood after the due date, this also would not affect the situation. Kyle in this case also cannot assert that the council was legally obliged to consider the tender because communication will said to be completed against the person to whom it is sent on the date on which it comes to the knowledge of the person to whom it is sent.
In this case also Kyle cannot assert council to consider the tender.
1. Nancy S Kim. Relative Consent and Contract Law. Nev. LJ 18 (2017): 165.
2 .Hugh Beale, et al. Cases, materials and text on contract law. (Bloomsbury Publishing, 2019)
3.Alexander Savelyev, Contract law 2.0:‘Smart’contracts as the beginning of the end of classic contract law. Information & Communications Technology Law 26.2 (2017): 116-134.
4 Balfour v Balfour  2 KB 571
5Charles L Knapp, Crystal M. Nathan, and PrinceG. Harry. Problems in Contract Law: cases and materials. (Aspen Publishers, 2019).
6Australian Contract Law
7Harvela Investments v Royal Trust Company of Canada  AC 207 8Derek Hawkins,. Validity of Contract and Statue of Limitations. (Wisconsin Law Journal 2017).
Australian Contract Law
AGC (Advances) Ltd v McWhirter (1977) 1 BPR 9454, 9457 (Holland J) Balfour v Balfour  2 KB 571
Harvela Investments v Royal Trust Company of Canada  AC 207
Books and Journals
Beale, Hugh, et al. Cases, materials and text on contract law. (Bloomsbury Publishing, 2019).
Hawkins, Derek. Validity of Contract and Statue of Limitations. (Wisconsin Law Journal 2017).
Kim, Nancy S. Relative Consent and Contract Law. Nev. LJ 18 (2017).
Knapp, Charles L., Nathan M. Crystal, and Harry G. Prince. Problems in Contract Law: cases and materials. (Aspen Publishers, 2019).
Savelyev, Alexander. Contract law 2.0:‘Smart’contracts as the beginning of the end of classic contract law. Information & Communications Technology Law 26.2 (2017).
Yonjan, Yam Kumar. An Analysis on Major Elements of a Valid Contract Under Muluki Civil Code, 2074.( Available at SSRN 3437233 2019).