Where tender enquiry documents state that an established selection procedure is promised but is then disregarded by the employer it, can an unsuccessful bidder claim damages?
An employer that promises a tendering procedure and then ignores it can be liable to a bidder who would otherwise have won, even though no construction contract was awarded. The route is a collateral contract that governs the tender process itself.
Yes in principle: an invitation to tender can carry an implied collateral contract that a timely, conforming tender will be considered and that any stated procedure will be followed, so departing from it is a breach for which a bidder who would have won can recover its tender costs and lost profit
Yes, in principle. Although no construction contract has been awarded, the invitation to tender can carry an implied collateral contract that governs the tender process. The Court of Appeal has held that a bidder who submits a timely, conforming tender is entitled as a matter of contractual right to have it opened and considered with the others. Where the enquiry states that a recognised tendering code will be followed, a collateral contract to apply that code arises, and departing from it, for example by inviting selected bidders to cut their prices, is a breach. A bidder who would have won had the procedure been followed can recover its wasted tender costs and its lost profit, the profit discounted for the chance of other work. The claim depends on a procedure that created the collateral contract, a breach, and a loss caused by it.
| The route | An implied collateral contract governing the tender process |
| Blackpool | A timely, conforming tender must be opened and considered |
| Stated procedure | Stating a code creates a collateral contract to apply it |
| Breach | Departing from the stated procedure is a breach of that contract |
| Damages | Wasted tender costs and lost profit, discounted for other work |
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