When may a contractor recover tendering or preparatory costs if the proposed contract does not proceed?
Ordinary tender costs are incurred at the tenderer's risk. Recovery becomes possible where additional work was requested, where a request is properly implied, or where retention of a requested benefit without payment would be unjust.
Abortive tender costs are not ordinarily recoverable, but requested preparatory work may attract reasonable payment even though the expected contract is never concluded
Distinguish competitive tender expenditure from project work requested for the prospective employer's purposes. "Subject to contract" negotiations normally leave each party bearing its own preparatory costs. A payment claim is stronger where the employer expressly or impliedly requested design, procurement or other work, knew it was not being supplied gratuitously and received a benefit. Any express agreement that the work is speculative or payable only on a stated event must be respected.
| Issue | Position |
|---|---|
| Ordinary bid preparation | Tenderer normally bears the cost |
| Negotiations subject to contract | Each party ordinarily accepts withdrawal risk |
| Expressly requested project work | Potential reasonable-payment claim |
| Implied request | Depends on words, conduct and commercial context |
| Work expressly speculative | Payment follows the agreed contingency, if any |
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