BLACKPOOL AND FLYDE AEROCLUB LTD v BLACKPOOL BOROUGH COUNCIL

General Principle:

A collateral warranty arises if a bid is properly submitted within time and not considered.

Name:

Blackpool and Flyde Aeroclub Ltd v Blackpool Borough Council [1990] 1WLR 1195

Facts:

The Blackpool Aeroclub (claimants) and an additional six potential suitors were invited to submit tenders for the ability to fly leisure flights from Blackpool Airport. The claimant lodged a tender correctly. However, this tender was not considered because there was an admin processing error. The defendant (Blackpool Borough Council) argued that the claimant had simply submitted an offer that had just not been accepted.

Ratio:

The Court of Appeal in Blackpool and Flyde Aeroclub Ltd said there was an implied collateral warranty. Blackpool Council had chosen the parties that they wanted to invite to make tenders. What this implied is that anyone who was invited and who also followed the pre-determined procedure would be allowed to have his tender properly considered.

Application:

In Lord Bingham’s leading judgement, it was stated that:

“A tendering procedure of this kind is, in many respects, heavily weighted in favour of the person inviting. He can invite tenders from as many or as few parties as he chooses. He need not tell any of them who else, or how many others, he has invited.”

Parties that make invitations to tender are bound to consider a tender that is submitted before a pre-determined deadline.

Analysis:

As by the 9th July XYZ had received no reply to this e-mail, so they faxed a letter to CUPD stating that their tender was now withdrawn, because they had been awarded other contracts and that they now had a full workload. No contract has been formed between the parties yet because Communication of acceptance is not valid because an agreement can only exist when a clear offer is made that is then mirrored by a clear statement of acceptance. Therefore an early withdrawal of the tender by XYZ is no breach of contract as no contract was formed. However, what did exist was a collateral warranty which arose between the parties to keep the offer open for 45 days. Collateral warranties are used as a supporting agreement to a primary contract where an agreement needs to be put in place. The use of collateral warranty has been seen in cases such as Blackpool and Flyde Aeroclub Ltd v Blackpool Borough Council [1990] 1WLR 1195.