5 Auctions and Tenders

Subject(s):

Construction of contract — Formation of contract — Interpretation of contract — Performance of contract — Validity of contract

This chapter discusses the process of making contracts by auction and by tender. Although these processes are different they have important features in common both in fact and in law. Reasoning from one transaction has been carried over to the other. Both auctions and tenders are an attempt to achieve the best price by competition without entering into negotiations. Auctions are typically used to sell valuable chattels such as paintings or houses or other buildings. Competitive tendering is commonly used for the procurement of services, particularly in the construction industry. Here the assumption is that those who desire the work will bid the lowest price they can afford, thus ensuring a low price for the person procuring the service.