in order to make an offer or to participate in the bidding process. Any other claims for damages remain unaffected.

This may be regarded as a case of culpa in contrahendo regulated by statutory provision.

In both alternatives of situation (i), A is liable for reliance damages on the ground of §126 GWB. A did not comply with the bidding rules set up by §97 GWB in order to protect bidders and thus impaired B’s ‘real chance’ as the lowest bidder to win the award. In situation (ii), the requirements of §126 GWB are not met: even if A had acted within the law, B would not have had a ‘real chance’ to win the contract. §126 GWB expressly states that other claims for damages remain unaffected. Therefore, in addition, A is liable according to the same principles set out above.

If, however, A intends to make a binding conditional offer to contract with the lowest bidder, a contract is concluded by B’s acceptance provided it is the lowest bidder.56 In that case, A’s liability is for B’s expectation interest, regardless of its status as a private company or public authority.

Greece

Parties to a public tender are bound by the obligation to conduct negotiations in good faith according to article 197 GCC.57 The negoti-

ation phase begins with the submission of offers to the public tender initiated by A.58

According to the facts of the case, A had published statements setting out the terms of the tendering process, which also included a statement that A will award the contract to the lowest bidder. These statements become binding upon the parties because with each tender submitted, an agreement is formed between the parties that these rules will govern the tendering process, and they will therefore govern the negotiation stage.59 Moreover, it is accepted that the parties to the negotiations may determine and complement the notions of good faith and business usage, in essence building their own framework of what amounts to conducting negotiations in good faith. Indeed, the statements made

56BGH, decision of 7 Nov. 2001, NJW 2002, 363 (concerning the inverse case of a sale to the highest bidder via Internet).

57The Greek Civil Code provides specific rules regarding the conclusion of a contract for public tender in article 199 1st sentence GCC: ‘Unless otherwise indicated, in an auction the contract is formed with the allocation of the successful bidder.’

58See Court of Appeals of Thessaloniki 3/1994 Arm 1994, 1132.

59Gazis, Legal Consultations 1956–1999, pp. 313, 318.

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by A and accepted by B specify the content of the good faith and business usage obligation that binds both parties to the negotiations. If A contravenes one of its statements (venire contra factum proprium), then it behaves in a manner which is inconsistent with good faith, and will therefore be liable towards the other party.

Concerning A’s liability in the three situations described:

first, B’s offer had been the lowest but A failed to take it into account because of an administrative error. A must take all bids into account and a failure to do so results in responsibility for negotiating in bad faith. A is responsible for the error of its administrative personnel according to article 334 GCC as if it was its own.60 Thus, A negotiates in bad faith and against business usage and will have to compensate B on the basis of article 198 GCC for the expenses which it has incurred in preparing its bid.

Secondly, A did not consider B’s offer because it always intended to give the contract to C. It is the essence of public tendering that the party organising it must consider all the bids which are submitted. A never intended to do this and thereby submitted all the bidders (apart from C) to unnecessary expense and effort. In addition, A contradicts its statement that it will give the contract to the lowest bidder, namely B. There is no doubt that A’s conduct is contrary to precontractual good faith and that it should compensate B for its expenses. In the case of precontractual liability compensation is, in principle, limited to the reliance interest and does not extend to the expectation interest.61 However, there has been some support in the legal literature for the view that in such cases (as also in situation (i)), where the lowest bidder who would otherwise be awarded the contract is disregarded in bad faith, the expectation interest must be compensated.62 Further, in terms of the remedies available, we note that B cannot have the contract concluded with A. A reasonable alternative to the precontractual basis would be for B to pursue a claim on the basis of delict,63 particularly article 919 GCC for damage caused contra bonos mores, in which case compensation for immaterial damage may also be awarded.64

60This is the prevalent view in case law and legal literature: see Pouliadis, Culpa in contrahendo und Schutz Dritter, p. 203; contrary D.B. Bosdas, ‘Precontractual Liability’

Arxeion Nomologias 1968, 337, 343.

61A. Georgiadis and P. Paulopoulos, ‘Precontractual Liability in Administrative Contracts’ NoV 1987, 701, 705.

62Gazis, Legal Consultations 1956–1999, p. 318. 63 Article 914ff. GCC.

64Article 932 GCC. For concurrence between precontractual and delictual liability, see AP 10/1991 NoV 1991, 1203; Court of Appeals of Athens 5382/1988; Court of Appeals

Thirdly, B’s bid was not the lowest but A still failed to consider it due to an administrative error. In all probability the solution here will be no precontractual liability for A, because of a lack of causal link between A’s oversight and B’s damage. Even if A had not been negligent in properly considering B’s bid, the latter would have incurred the expenses related to the bid but it would not have been successful. One last thing needs to be added: even if a court found a causal link and held A precontractually liable towards B for not complying with the rules of the tendering process, damages in that case would never amount to the expectation interest (B’s bid was not the lowest, unlike in the first and second scenarios) but would be limited to the reliance interest.

In principle, public authorities concluding private contracts are also bound by the provisions of the Civil Code regarding precontractual liability.65 Nonetheless, special legislation applies to public tendering initiated by a public authority specifying the rights and obligations of the parties. In addition, administrative law dictates that public bodies abide by the principle of equal treatment, which is not necessarily so in the private sector. If A were a public authority, in practice the main difference would probably be in the remedies. In short, the most striking difference is that the court may annul public tendering that has not been properly conducted and also that a party with the lowest bid may request the court to find that the contract has been concluded with that party.66

Ireland

(a) Where B’s bid was the lowest, A may be liable to B for failure to abide by its statement that it will award the contract to the lowest bidder. Remedies in the form of damages may be sought, or an order for specific performance.

Where it is stated that a contract will be awarded to the party who submits the lowest bid, then if the contract is awarded it must be awarded to the lowest bidder. The rules regarding tenders are identical to those which apply to auctions.67 Thus, in an ordinary auction, or tender, there is no obligation to accept the lowest, or indeed any bid. However,

of Thessaloniki 550/1983. For immaterial damage see Court of Appeals of Peiraius 856/1993 EllD1994, 1694; Court of Appeals of Athens 12101/1989 EllD 1994, 448.

65Georgiadis and Paulopoulos, above n. 61. See AP 1126/1986 EEN 1987, 410.

66AP 566/1993 EllD 1994, 1097; AP 1126/1986 EEN 1987, 410; Georgiadis and Paulopoulos, above n. 61, pp. 703–4; Gazis, Legal Consultations 1956–1999, p. 317.

67Friel, The Law of Contract, p. 30ff.

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if the auction is advertised as being ‘without reserve’, or the invitation to tender states that the contract will be awarded to the lowest bid, then, if the auction or tender proceeds, the lowest bid must be accepted. This rule was clearly laid out in Tulley v. Irish Land Commission.68 It does not matter whether the contract was not awarded to the lowest bidder either deliberately or through the negligence of the defendant.

Where the contract is not awarded to the lowest bidder, then the lowest bidder is entitled to either an order for specific performance or an award of damages. An order for specific performance is an equitable remedy and therefore discretionary. A court will only make the award under limited circumstances and where it is just to do so. A plaintiff is entitled to an award of damages as of right where the substantive claim is upheld. Where damages are sought, they may consist of either reliance damages with respect to the cost of preparation of the bid or expectation damages with respect to the loss of profit, but not both.

(b) Where the invitation to tender states that the contract will be awarded to the lowest bidder, it is not open to the defendant to award the contract to any other bidder. There is authority in Blackpool and Fylde Aero Club Ltd v. Blackpool Borough Council69 that a collateral contract may permit a bidder to claim reliance losses incurred in preparing for the bid. In that case, due to the negligence of the defendant, the plaintiff’s tender had not been considered by the defendant. The contract was awarded to a third party. The court awarded damages for expenses incurred by the plaintiff in preparation for the bid. However, in that case the plaintiff may have been awarded the contract if the defendant had considered it. In the present case, where its bid was not the lowest, B could not have been awarded the contract in any event. The situation is not therefore governed by the precedent in Blackpool and accordingly there is no liability between A and B. In effect, A’s carelessness has caused no harm.

Italy

A public bid between private parties (or where the public administration is acting as a private party)70 is generally71 considered to be governed by article 1336 of the Civil Code (offerta al pubblico): ‘if it contains the essential elements of a contract, it can be considered as a

68 (1961) 97 ILTR 174. See also 1, Corbin on Contracts, s. 46. 69 [1990] 1 WLR 1195.

70Cass, sez. I, 6 May 1995, n. 4989; Cass, sez. I, 25 Aug. 1993, n. 8975.

71M. Martini, ‘Offerta al pubblico’, Dig. Priv., XIII, 9.

proposal to contract, unless usage or the circumstances otherwise provide’.72 A distinction has been drawn between offerta al pubblico and the simple invitation to an offer (invito a offrire). The simple invitation differs from the offerta in the absence of the fundamental elements for a contract. As a consequence, a simple invitation is related only to the precontractual phase. It does not bind the inviting party (invitante) except for the duty of good faith generally required in negotiations.

This case requires first a consideration of whether the statements about the bidding rules could be deemed as an offerta al pubblico or as a simple invitation. If the former, A will be liable in contract according to Italian case law on the point,73 because B’s conduct constituted an acceptance of A’s offer. A’s liability would then be to compensate all B’s loss consisting in the actual damage (expenses of the bid) plus the loss of profit from the bid.74 On the other hand, if it was only a simple invitation, A would be liable under article 1337 of the Civil Code, and damages will be awarded only within the limit of the interesse negativo.

Italian case law usually considers a public bid as a case of offerta ‘if it contains all the elements of the contract specified in the scope of the bid’.75 Moreover, in the decisions concerning public bids for public76 or private77 employment, case law recognises a case of offerta

72Despite discussion on the point (Sbisa`, La promessa al pubblico) most of Italian academic writing distinguishes the case of offerta al pubblico from the similar feature of promise (promessa al pubblico) provided by art. 1989 c.c.: Bianca, Diritto civile, vol. III, Il contratto; A. Di Majo, ‘Offerta al pubblico (diritto privato)’ Enc. Giur. XXIX (Milano, 1979); Forchelli, ‘Offerta al pubblico’, NN.D.I. XI (Torino, 1968), 763; Messineo, Il contratto in genere, Tratt. Cicu e Messineo; Mirabelli, Delle obbligazioni. Dei contratti in generale; Sconamiglio, Dei contratti in generale, Comm. Scialoja Branca; Sacco, Il contratto. Their main difference is the time a party could be deemed bound by its offer.

73Cass, sez. lav., 5 Nov. 1998, n. 11142; Cass, sez. lav., 11 June 1991, n. 6590; Cass, sez. lav., 13 June 1987, n. 5225.

74In general judges recognise an expectation measure damages remedy more than specific performance of the contract.

75PRET-P. Roma, 5 Oct. 1998. See also for public employment contrary to the next note Cass, sez. lav., 19 Feb. 1992, n. 2067.

76Usually for the employment into public administration subject to the rules of labour law. See Cass, sez. lav., 5 Nov. 1998, n. 11142; Cass, sez. lav., 26 Sep. 1998, n. 9670; Cass, sez. un., 29 Aug. 1998, n. 8595; Cass, sez. lav., 21 Feb. 1991, n. 1836; Cass, sez. lav., 11 June 1991, n. 6590; Cass, sez. lav., 14 Mar. 1990, n. 2057; Cass, sez. lav., 19 Feb. 1987, n. 1804.

77Cass, sez. lav., 6 Oct. 1995, n. 10500; Cass, sez. lav., 1 Dec. 1994, n. 10278; Cass, sez. lav. 12 Nov. 1993, n. 11158; Cass, sez. lav., 26 Feb. 1988, n. 2064; Cass, sez. lav., 7 Apr. 1987, n. 3397.

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without requiring any particular contractual element. Italian academic writing78 generally considers as a simple invitation any offer that, although it contains the required contractual elements, gives particular importance to the other party’s qualities.79 Moreover, it is not an offerta al pubblico if the party reserves the right to choose its preferred acceptance.80

The facts do not provide enough information to decide on this point. It would be for the parties to give evidence about the real meaning of the offer. In questions of interpretation of private statements Italian case law provides criteria only for public bids concerning public employment.81 Once the judge has decided whether the case involves an offerta al pubblico, it has then to be decided whether A acted in breach of bidding rules.

Where B’s bid was the lowest, A would be liable. Situation (i)(a) could lead to culpa in eligendo or culpa in vigilando by the executive officers for the wrongdoing by the employees.82 In situation (i)(b), A would be contractually liable for having acted contrary to the duty of good faith provided in article 1375 of the Civil Code.83 The contractual liability depends on the fact that A’s behaviour is considered as an offer followed by B’s tacit acceptance.

In the case where B’s bid was not the lowest, case law is silent. The judge would probably not consider B as damaged in its contractual expectations.

Italian law provides special rules for public bids involving public authorities. In particular, the formation of a contract is generally subject to the so-called scheme of ‘contract subject to transparency rules’ (contratto ad evidenza pubblica).84 A three-phase administrative procedure85 is

78See Forchielli, ‘Offerta al pubblico’, NN.D.I. XI, 765; Sconamiglio, Dei contratti in generale, Comm. Scialoja Branca, p. 192; A. Di Majo, ‘Offerta al pubblico (diritto privato)’, Enc. Giur. XXIX; Di Staso, I contratti in generale, Giur. Sist.Bigiavi, vol. I; Mirabelli, Delle obbligazioni, Dei contratti in generale.

79As, e.g., agency, partnership, directorship or management or activities that require specific specialisation or professional qualities.

80See Di Staso, I contratti in generale, Giur. Sist.Bigiavi, vol. I, 403.

81TAR-T.a.r. Basilicata, 6 Feb. 1995, 5/1995.

82See Cass, sez. lav., 19 Feb. 1987, n. 1804.

83See Cass, sez. lav., 8 Feb. 1982, n. 755; TRIB-T. Roma, 17 July 1982.

84See C. Cattaneo and E. Furno, ‘Appalto di opere pubbliche’, Enc. Giur. II; Giannini,

Corso di diritto amministrativo, vol. III.

85The procedure is divided into: (1) a decisional phase (fase deliberativa), related to the public authority’s decision to contract contained in a project of contract; (2) the choice of the other private party of the contract (aggiudicazione); (3) an approval phase (approvazione) by a controlling authority about the legitimacy of the procedure and the legality of the contract.

necessary for the validity of contract. In general, public bidding rules are contained in documents (capitolati d’oneri) concerning the procedure for the award of the contract.86 If general (capitolati generali), Italian case law considers such documents as having the force of law.87 If specific documents (capitolati speciali) are concerned, they are deemed to have contractual force.88

There are four kind of public administration bids89 which differ in their procedural rules and in the degree of discretion granted to the public administration in choosing the other party to the contract. In the present case, the public bid could consist in a case of asta pubblica or pubblico incanto because the bid seems to be open to every firm with the required qualities.90 Italian doctrine is divided on whether to identify such a bid as a public bid91 or as a simple invitation for an offer.92 If it is a public bid, B could invoke contractual liability on the basis of breach of good faith only if it can prove that the public authority had established discriminatory rules. However, if the public authority has acted as a private party, the ordinary judges93 can decide on the legitimacy of a participant’s exclusion, and will assess damages according to article 1223 of the Civil Code. In particular, the judge must assess whether the conduct of the public authority has been in breach of the principle of good faith in competition.94 On the other hand, Italian case law does not recognise that excluded participants have any specific right to become party to the contract.

86S. Cattaneo, ‘I capitolati generali per l’appalto di opere pubbliche’ in Sandulli, Atti del congresso del centenario delle leggi amministrative di unificazione, I lavori pubblici; V. Cianflone, ‘Il capitolato’ In Enc. Dir. VI; Terranova, Capitolato generale di appalto e norme pubbliche.

87In the case of a breach of such rules, case law recognises the possibility to appeal to the Supreme Court or to the competent public administration. See Cass 29 Sep. 1997, n. 9531; Cass 18 May 1994, n. 4869; Cass 18 June 1987, n. 5355; Cass 24 Feb. 1982, n. 1146.

88Cons. Stato a. gen., 24 Mar. 1994, n. 498; Corte Conti sez. contr., 15 July 1991, n. 78.

89Asta pubblica or pubblico incanto; licitazione privata; appalto-concorso; trattativa privata.

90Licitazione privata differs in the limited range of private participants to the public bid that have to be expressly invited by the public authority. Appalto-concorso and trattativa privata imply specific conditions not required by the present case.

91Giannini, Corso di diritto amministrativo, p. 700.

92As discussed above, offerta al pubblico. In this case, see Cianflone, ‘Il capitolato’ Enc. Dir. VI, 341.

93Cass, sez. un., 26 May 1997, n. 4673; Cass, sez. un., 29 July 1995, n. 8298; Cass, sez. un., 20 Sep. 1995, n. 10924.

94Articles 1175 and 1375 c.c. Cass, sez. lav., 5 Nov. 1998, n. 11142, Cass, sez. un., 29 Aug. 1998, n. 8595; TRIB-T. Cagliari, 7 Mar. 1996; Cass, sez. lav., 21 Feb. 1991, n. 1836.