By Gavin Tosh
The process of establishing a contractual relationship begins with an offer being made, notwithstanding that there may have been much ‘cultivation’ of the customer and preparing of the ground beforehand. An Offer will take the form of a quotation, which could be simple and could even be verbal, or it could be a lot more complex and be properly described as a proposal or tender. Simple quotations may well be real offers which could simply be accepted without further ado and a contract thereby created. It is therefore important to remember to include a limitation on the validity of the quotation, lest the customer tries to hold you to it 6 months later when your costs have risen or you no longer have the capacity.
Most tenders are submitted in response to an ‘Invitation to tender’, or ITT. Significant amounts of information will usually need to be submitted in response to an ITT and this alone differentiates a tender from what would be called a quotation. But also – significantly – a request for proposal or ITT is usually not an offer which anticipates an acceptance and thereby the creation of a contract. Instead it will be what is called an Invitation to Treat, which is actually inviting an offer in response, which would then be capable of acceptance by the original issuer of the tender. The distinction between an offer and an invitation to treat is often hard to draw as it depends on the question of the parties’ intention. An offer is made when a person shows a willingness to enter into a legally binding contract. An invitation to treat is merely a supply of information to tempt a person into making an offer. However the distinction between the two can often be misleading and can easily be misinterpreted. It is important to be aware of the difference so that you are not led into an unwanted binding contract when you think you are merely supplying information in response to which an offer is to be made.
Finally, an invitation to tender as an invitation to treat is still a contractual document albeit not capable of an outright acceptance to form a contract – but a contractual document nonetheless, as is the response which you make to it. These documents are likely to develop into the contract with minor changes being negotiated between the parties in the intervening period. Needless to say, great care is warranted.
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