2022-03-28（195）Engineering law and the ICE Contracts

9. “TENDER…WITH…WRITTEN ACCEPTANCE…A BINDING CONTRACT”—so that it is generally too late after acceptance for the contractor, e.g., to make enquiries about the employer’s financial position or to raise queries on the contract documents, and too late for the employer to incorporate new terms relating to co-ordination of the main contract and nominated sub-contract programmes, or attendances on nominated subcontractors.

The tender generally may be withdrawn at any time before acceptance even if the contractor has agreed to keep it open (p. 3 (b)). An acceptance sent by post normally binds both parties immediately it is posted, not merely when it is received. For enquiries by the engineer before acceptance see p. 377, N. 12. q

Outright acceptance by the employer should say in writing simply that the tender is accepted (as envisaged by the words from the form of tender quoted at the head of this note).

There are several alternatives to an outright tender and acceptance making a full and complete binding contract. The traditional form of words to show that although negotiations have reached an advanced stage neither party is actually to be bound at all by a legal agreement, is to say that the tender or acceptance is “subject to contract”. The parties then have a breathing space for second thoughts and advice; they are not normally committed in law unless they eventually sign a formal contract, which neither is bound to do. r

A tender or acceptance may be subject to some other condition, which will take effect if accepted by the other party. The nature of the condition should be defined carefully, rather than leaving it to a court to determine. Is the agreement to be binding subject only to termination if the condition, such as receipt of financing or planning permission, is not fulfilled (within a stated time if appropriate) and possibly saying that only one party has the option to terminate? Alternatively, is the agreement intended not to bind either party at all unless and until the condition is fulfilled, so that either may withdraw in the meantime? Is either party under a duty to use his best endeavours or reasonable efforts to ensure that the condition is met or at least not to prevent the condition being fulfilled? s

Too often in practice one of the parties wishes to have it both ways—to write a letter which will bind the other party but leaves himself free to decide whether or not to contract. That is not possible except by openly and with the agreement of the other party making a contract with a one-sided right of termination (above) or entering into a separate option agreement under seal or for consideration (p. 3 (b)).