70211 Contracts

70211 Contracts

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70211 Contracts

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70211 Contracts

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Course Code: 70211
University: University Of Technology Sydney

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Country: Australia

Discuss about the Contract Law for Trident Systems Pty Ltd.

Tender is an invitation to offer in which a corporation calls for bids from the prospective bidders. The company selects the best option as per its requirement and accepts the offer made by the bidder. In the present case, the NSW Department of Administrative Affairs invited tender from independent contractors to increase the safety of its main office. The department made an advertisement of tender and directed the parties for the online registration. The Alcatraz Security Systems Pty Ltd submitted their tender by complying with the guidelines provided by the department, although, the guidelines provided by the department to Alcatraz did not disclose all the necessary information as per section 5. The department accepted the tender of Trident Systems Pty Ltd, which quoted its price at 50 percent more than Alcatraz. Frank discovered that head of the department leaked the details of his tender to Trident before they submitted their tender.
The issues of this case include, whether the NSW Department of Administrative Affairs is under an obligation to admit the tender of Alcatraz. Another issue is that if the department is not obligated then whether Alcatraz has any contractual right.
The common law of Australia guides the contractual behavior between the parties to a contract. According to the common law of the contract, offer and acceptance are the essential elements for establishing a valid contract between two parties. One person is required to give an offer which another party must accept without any change in requirements[1]. Further, the common law distinguishes between an offer for contract and an offer which is merely a request to the party, in order to create offers to do negotiations related to the contract. In Spencer v Harding Law case[2], the court held that the advertisement was an invitation to contract and the tender was a proposal, the defendant has right to admit such tender or not. In the case of Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd[3], the court provided that the price tag displaying on a dress in a shop is considered an invitation to offer, not an offer for a contract[4]. If a customer approaches the shopkeeper to buy such item, then it cannot be considered as an acceptance rather it is an offer which may or may not be accepted by the shopkeeper. Further, in the case of Carlill v Carbolic Smoke Ball Co[5], the court held that a general offer is a valid offer if any person accepts such offer then the person automatically enters into the legally binding contract with another person. In AGC (Advances) Ltd v. McWhirter case[6] the court held that in case of an auction, it is only an invitation to treat not an offer and bidder at auction make an offer for the acceptance of the auctioneers which can be and cannot be accepted. Further, in the case of Blackpool & Fylde Aero Club v Blackpool Borough Council,[7] the court held that if an invitation to offer is made only to selective parties, along with clear guidelines for submitting the bids, then such invitation to offer is considered as an offer. After that, any bid or tender submitted by any of such selective parties will be considered to be an acceptance and not an offer, and therefore such parties will be bound by the contractual obligation[8].
The Government Act [9] provides an imperial, organized, open procedure of tender in which government officers are required to disclose all the necessary guidelines and information regarding the tender. In this instant case, the department did not provide all the information which is mentioned in another provision of this Act, neither the information was fully provided at the time of acceptance of tender by the officer. Further, provision of above Act provides the disciplinary power to the minister, in which such minister can penalize a government officer who breaches any rule of this Act. As per the guidelines, the details of the tender will not be revealed to anyone. In this case, the Managing director of Alcatraz Company alleged that the Department disclosed tender’s important information to Trident before the admission of tender, therefore, Alcatraz can complain to the relevant minister.
One of the guidelines of the contract provided that the department is not obligated to accept the offer with lowers quote price, the department has right to select whichever tender they prefer to choose. As per the case of Blackpool & Fylde Aero Club v Blackpool Borough Council[10], the court provided that the council is bound to accept the tender and provide the license to Red Rose Helicopters. In this case, the department provides wrong guidelines to Alcatraz, and the tender of Alcatraz was not considered by the department. The department is in a primarily contract with Alcatraz because they did not provide correct information regarding the guidelines of the contract. The primarily guidelines force the department to provide a fair tender procedure to the Alcatraz[11].
The department can provide an argument that on they mistakenly provide the wrong guidelines and they did not have a fraudulent intention of not providing proper tender opportunities to Alcatraz. The department can also argue that one of the conditions in the guidelines of the tender provided that the department is not bound by any tender and they can select any tender they decided. Therefore, even if the wrong guidelines were provided to Alcatraz, the department has right to select any other tender of their choice.
As per the judgment of Blackpool & Fylde Aero Club v Blackpool Borough Council[12], the argument of the department is not valid. As per the provision of Government Tenders Act 1999, the department is obligated to provide a reasonable, open and systematic tender process to all the participants. By selecting the tender offer of Trident, the department did not provide a fair opportunity to Alcatraz; therefore, the acceptance of Trident’s offer is illegal under statutory illegality. The acceptance of Trident’s tender shall be considered invalid because the department did not have right to provide such tender to another party[13].
According to the law of contract, Alcatraz has the right of legal contract, and they can sue the department for not providing them the opportunity of a fair tender procedure. As per section 30 of the Government Tenders Act 1999, the relevant minister has the power to discipline the officer which contrivance he provisions of this act, as per the Government Sector Employment (General) Rules 2014. Alcatraz can file a suit and held the officer of the department liable for not sending him correct guidelines and allowing the tender to another party when they have a primarily legal contract between them[14]. Although, the guidelines of the contract provided that the department can select any tender they want but according to the Government Tenders Act 1999 the department is liable to provide the tender to Alcatraz.
From the above observations, it can be concluded that department did not provide a fair tender opportunity to Alcatraz. The department has right to select the tender of their choice, but the officer failed to provide correct guidelines to Alcatraz. The Alcatraz and the department have primarily legally bounding contract which provides various rights of the contract to Alcatraz. The department did not have right to provide tender to another party because they have a legal contract with Alcatraz. Therefore, the tender provided by department to Trident shall be considered as void. Alcatraz has right to file a suit against the department for not providing a fair opportunity for tender offer and leaking the tender information to another party. The department is liable not providing reasonable opportunity and transferring the contract to another party.
Adams, John N., and Roger Brownsword. “More in Expectation than Hope: The Blackpool Airport Case.” The Modern Law Review54.2 (1991): 281-287.
Gooley, John V., Peter Radan, and Ilija Vickovich. Principles of Australian Contract Law: Cases and Materials. LexisNexis Butterworths, 2007.
Peden, Elisabeth. “Incorporating terms of good faith in contract law in Australia.” Sydney L. Rev. 23 (2001): 222.
Sidwell, A. C., D. Budiawan, and T. Ma. “The significance of the tendering contract on the opportunities for clients to encourage contractorled innovation.” Construction Innovation 1.2 (2001): 107-116.
Treitel, Guenter Heinz. The law of contract. Sweet & maxwell, 2003.
AGC (Advances) Ltd v. McWhirter (1977) 1 BPR 9454
Blackpool& Fylde Aero Club v Blackpool Borough Council (1990) EWCA Civ 13
Carlill v Carbolic Smoke Ball Co Court of Appeal (1893) 1 QB 256; [1892] EWCA Civ 1
Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd (1953) EWCA Civ 6 
Spencer v Harding Law (1870) Rep. 5 C. P. 561
The Government Act 1999 (NSW)
The Government Sector Employment (General) Rules 2014

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