Description

Scenario

Mr Speculator, a local property developer, recently purchased a large freehold site and was subsequently granted planning permission to build an office block (‘Building’) on the site.

ABC Ltd had been looking for a new headquarters. They were very pleased with the architect’s impression of the finished Building and agreed to buy it off plan. Contracts were subsequently exchanged, with a completion date of 1 June.

Mr Speculator wrote to three builders inviting them to submit tenders for the construction of the Building. It was explained to each of the builders that the Building had to be ready for occupation by 31 May at the latest, as Mr Speculator had exchanged contracts to sell the finished Building and was contractually bound to complete the sale of the completed Building to ABC Ltd on 1 June.

The Instructions to Tenderers instructed the tenderers to complete, sign and return the Form of Tender and the completed Appendix. The Instructions to Tenderers also included the following clause:

‘Your attention is drawn to the instructions for the electronic submissions of tenders as outlined below. It should be noted that the Internet ‘firewall’ will not permit receipt of files with attachments exceeding 10 MB. Therefore, the tenderer should ensure that where its attachments exceed this size that the submission is divided into two of more elements to ensure they are permitted entry by the firewall. Tenders should be received electronically and uploaded to the secure portal by 12.00 noon on 31 October. Mr. Speculator is not bound to accept all or any part of any tender. No tender which is received after the date and time specified above shall be admitted for consideration.’

A power failure on the 31 October prevented one tenderer from submitting its tender by the due time, so Mr Speculator extended the deadline for all tenderers by three hours to 15.00 on the same day.

Two of the tenderers submitted their tenders by the deadline.

Build ‘M’ Quick was ready to submit its tender before the deadline. With the announcement of the extended deadline of 15.00, it took advantage of the additional time for a final check, submitting it at 12.05. At 14.45, the Managing Director of Build ‘M’ Quick realised that in error the Appendix had not been submitted. He immediately attempted to submit it to the secure portal but no addition to the tender already submitted was possible. Shortly before 15.00, he telephoned Mr Speculator and spoke to his secretary and explained that he would email the Appendix separately which he did later that day but after 15:00.

Mr Speculator rejected the tender from Build ‘M’ Quick on the basis that it had not submitted a complete tender by the deadline and accepted the tender from XYZ Builders.

XYZ Builders started work in the January but progress was hampered by bad weather.

In April, XYZ Builders announced that it could not finish the Building by the 31 May unless it took on extra staff which it could not afford to do unless Mr Speculator agreed to raise the contract price by £50,000 to cover this cost. Mr Speculator felt that he did not have a choice as he was contractually bound to complete the sale of the completed Building to ABC Ltd on the 1 June and reluctantly agreed.

The Building was ready for occupation by the 31 May. Mr Speculator is refusing to pay the additional £50,000. He has informed XYZ Builders that he is now in financial difficulties and could only afford to pay £25,000. Fearing that it would otherwise receive no payment at all XYZ Builders reluctantly agreed to accept £25,000 in full and final settlement.