rule that silence does not constitute an acceptance, is also likely to lead to disputes about whether in particular cases the conduct of a party has or has not amounted to acceptance by conduct of an offer which waived the need for acceptance to be communicated.

4.  Enforcement of auction/tender conditions

A common problem in many jurisdictions is how to hold a party to a statement in which is set out conditions concerning how bids in an auction for the sale of property or tenders for the award of a contract will be dealt with. The problem that usually arises is a claim by an unsuccessful bidder/ tenderer that its offer was improperly excluded from the process or that its offer ought to have been accepted rather than that of another party. The prima facie problem that such claims face is that, because the claimant has not been successful in its offer it has no contract and therefore no contractual means to complain about the alleged improper behaviour of the defendant. In stating this problem, it is important to note that the party inviting the bids or tenders is not usually itself seen as having made an offer; rather, it has invited the bidders to make offers from which it will choose one to accept.

A simple way to solve this problem would be to analyse the conditions stipulated by the party inviting the offers, and which are to govern the bidding process, as unilateral promises on its part. Such conditions, if promises, might for instance bind the promisor to consider all bids submitted by a certain date (or not to consider any bids submitted after that date), or not to collude with a specific bidder against the other bidders, or not to communicate with bidders after the closing date except in certain ways. Such conditions might go even further and bind the party inviting bids to sell to the highest bidder (in an auction), or to award the contract to the tenderer submitting the lowest price for the desired work. The attraction of a unilateral promise analysis is that such promises would be seen as independent from the anticipated contract to be concluded with the successful bidder, thus enabling any bidder to complain of a breach of the conditions even if it was not successful in its bid.

Of course, unilateral promises have an established place in only one of the systems under consideration, that being Scotland, though their place in the DCFR would also make a promissory analysis possible. In the other systems, if a solution is to be found to the perceived problem, then it must be by virtue of some other analytical route. In English law, two solutions have been adopted. One has been adopted in auctions where bidders have

to an erroneous belief on the defendant’s part that it had been submitted late, was held entitled as a matter of contract (that is, under the subsidiary contract) to complain about the breach of the defendant’s statement that it would not consider late bids (interpreted further to mean that it would consider timely bids). The final settlement of the claim is not reported, but it would not have been so easy for a court to determine as in the earlier Harvela case. As the defendant had not undertaken to award the contract to a specific party, the plaintiff was not arguing that it ought to have been awarded the contract; rather it was seeking damages for the lost opportunity of being awarded the contract, even though the quantum of that claim was somewhat difficult to compute. This case demonstrates a further imaginative use of contract law to solve a problem that seems more naturally classifiable as one of breach of a unilateral promise by the defendant.126

The Canadian Supreme Court in R v. Ron Engineering127 considered matters from the perspective of the other party, when it bound a tenderer to a tender condition not to withdraw the tender before a specified date. As with the English courts, this solution was achieved by reference to the idea of a preliminary, subsidiary, or unilateral contract, governing the tendering process. Ron Engineering was just the beginning of the development of Canadian law in this field, as in subsequent decisions it has been held that the preliminary contract can contain reciprocal obligations, either expressly or impliedly,128 and that such obligations include an implied obligation on the party inviting tenders to treat all tenderers fairly and equally.129 This implied obligation has been characterised as embodying a requirement of good faith.130 It has been held, for instance, that accepting a bid by a party ineligible to bid under the conditions laid down for the bidding process is in breach of this implied good faith ­obligation.131 In the same judgment it was also held that a clause purporting to exclude

126The case concerned facts that occurred prior to the UK implementation of the EU rules dealing with tendering for public works contracts. Those rules would now govern the circumstances of the Blackpool case. However, were a similar dispute to arise again between private parties, it would require to be solved using the Blackpool logic.

127R v. Ron Engineering & Construction (Eastern) Ltd [1981] SCR 111.

128Martel Building Ltd v. Canada [2000] 2 SCR 860, at para. 83.

129Ibid., para. 88.

130Tarmac Canada Inc. v. Hamilton-Wentworth (Regional Municipality) 1999 Carswell Ont 2761. There are many recent examples, see for instance Force Construction Ltd v. Nova Scotia (Attorney General) [2008] NSJ No. 490.

131Tercon Contractors Ltd v. British Columbia (Ministry of Transportation & Highways)

2010 SCC 4.

liability to bidders for losses which might arise from participation in the bidding process did not exclude a claim by an unsuccessful bidder, for the somewhat controversial causal reason that the appellant’s losses arose not from participation in the bidding process but rather from the respondent’s dealings with the ineligible bidder.132

Some Canadian developments have, however, surely gone too far in imposing allegedly fair outcomes. It has, for instance, been decided by the Ontario Court of Appeal that even if a party inviting tenders has expressly stated that it does not bind itself to accept the lowest tender, the courts may ignore such a statement and imply a term that the lowest tender will be accepted, if such an implication can be said to be necessary to ensure fairness in the tendering process. Such an approach is tantamount to rewriting a contract for the parties, and shows no regard for the promises made by them or the contract they intended.133

The German courts have also to some extent considered tendering problems. In a case concerning the auction of a car on a third party website, the seller refused to sell the car to the highest bidder, even though under the terms of the auction he had stated that he would do so.134 The Bundesgerichtshof (BGH) considered whether a contract of sale had been concluded by the parties. Unlike the court below, the BGH was not prepared definitively to state that the seller had made an offer, and the buyer an acceptance.135 Nonetheless, applying the German rule that a contractual obligation requires the declaration of will of two parties, it held that each party had issued such a declaration, although expressing the view that in the case of the seller his declaration might in fact have been a (legally permissible) prior acceptance of whichever bid made was the highest. The BGH decisively rejected the view that the seller’s statements on the website amounted only to a non-binding invitation to treat: on the contrary, the information he had had to submit to the website in order to advertise the sale of his car was a precise and unequivocal commitment

132The Supreme Court’s judgment was a 5–4 majority.

133See Chinook Aggregates Ltd v. Abbotsford (1989) 35 CLR 241 (Ontario Court of Appeal). In that case, despite the party inviting tenders stating clearly that ‘the lowest or any tender will not necessarily be accepted’, the Appeal Court implied a term that the lowest qualifying bid would be accepted. It did so in order, it said, to negate the effect of an undisclosed, and thus unfair, policy of the party inviting tenders that local contractors bids would be favoured if they were within 10% of the lowest bid.

134NJW 2002, 363.

135However, in a similar case from 2005, the BGH expressed the view that it was the seller who had made the offer, and the buyer the acceptance when it submitted the highest bid: BGH JZ 2005, 464; NJW 2005, 53.