This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
The November 1873 England Court of Queen’s Bench case of Richardson v. Silvester offers an early example of the potential legal perils of issuing a tender call where there is no real intention to contract. In this case, the defendant posted an advertisement for a tender in the Cambrian News. The tender call was for the lease of a 400-acre farm in Merioneth County that included a mansion house, mill, and mountain pasture with 1,000 sheep. After the plaintiff had incurred expense by hiring inspectors to value the property, he discovered that the defendant did not have the authority to lease the property. The plaintiff sued to recover his expenses.
The trial court dismissed the case, finding that the plaintiff had no cause of action against the defendant. On appeal, the Court of Queen’s Bench disagreed, recognizing that the plaintiff had a claim for legal fraud and deceit owing to the alleged false representation:
It must be taken upon the statement of the plaintiff that the advertisement was issued with some indirect motive, and that the farm was not to be let. This amounts to a false representation. It was a false statement knowingly made and published in order to be read by persons who would be likely to be tenants of farms, and the natural consequences would be that a person who was desirous of becoming a tenant would, upon reading the advertisement, incur expense in looking at the farm. That, it is alleged, is what the plaintiff did.… [T]he advertisement must be read as if it is a representation made to the plaintiff. Then, if there is a false representation knowingly made to the plaintiff, and he acts on it and is injured, he has a cause of action.
After recognizing that a cause of action can attach in situations where a party issues a tender call with no intention to contract, the Court of Queen’s Bench directed the matter back to trial to hear evidence regarding the plaintiff’s claim.
As this case illustrates, making a misrepresentation with respect to the intention to contract can give rise to legal claims and compensation awards for costs incurred. Purchasing institutions should therefore be sure of their intention to contract before going to market with a tender call.
