This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its April 2014 decision in Printhouse Ltd. v. Land Transport Authority, the High Court of Fiji found the government liable for breach of contract and awarded the plaintiff contractor $157,300 in damages. The case dealt with a tender call for 150,000 wheel tax stickers. The plaintiff contractor was awarded the contract after bidding $1.21 per unit for a total of $181,000. However, the government failed to follow through with the full order. It ultimately only purchased 20,000 stickers for a total of $24,200. The contractor sued for the difference. The Court ruled as follows:
In commercial world it is accepted practice and norm that when large quantity is ordered price is low and lesser quantity attracts higher price. In the present case when the Plaintiff quoted for the tender for 150,000 stickers Plaintiff’s supplier gave the price for the said quantity in terms of the tender. There was no reason for the Plaintiff to believe that its order is only for 20,000 stickers and when its tender was for 150,000 stickers.
The Court found the government in breach of contract for failing to order the volume it had represented in its tender call. It awarded the contractor the difference between the amount bid and the amount ordered.
As this case illustrates, since overall contract volumes can have a significant impact on unit pricing, purchasing institutions should be careful to accurately quote their required volumes in order to ensure responsive pricing and avoid post-award contract disputes with winning bidders.
