Thursday, 29 August 2013


The purpose of tendering is to select a contractor to do the project for a reasonable competitive price. According to the institution of civil engineers(1976,p.100), main purpose of tendering procedure is to secure economies in project costs by establishing competition between firms willing to enter in to a contract for the performance of specific work. After selected the tenderer, employer and the selected tenderer will enter in to a contract.
Contract is an “agreement between two or more parties which is intended            to have legal consequences”-(Brook 2004, p.35)
Basically there should be three requirements for make a contract. Those are;

·         Offer
·          Acceptance
·          Consideration

The common understanding is that a Contract will come into existence if and when the contractor’s offer accepted by the client. Until the offer is accepted there is no contract. Generally contractor’s offer valid for a limited time period, and the time period may stated in the tender document and/or invitation to tender and sometimes its states in the governing law.

For an example Qatar Central Tender committee law article 16 has states ”Period of validity of tender after opening provided that this period shall not exceed ninety days. The tender shall remain effective and irrevocable during this period.”

However, offer should accept before it terminate. There are few circumstances which may terminate the offer. Those are;

1)      On death of either party
2)      Withdraw the offer
3)      After a specified time/reasonable time (According to the Qatar Central Tender committee law 90 days)
4)      When the client makes a counter offer.

Hence the tenderer can withdraw the offer before it is accepted.  However the tenderer can submit a new offer before tender closing time.

In the case of National Highway Authority of India v M/s Ganga Enterprises, The High court held “To have an enforceable contract there must be an offer and unconditional acceptance. A person who makes an offer has the right of withdrawing it before acceptance”

However this situation may differ if the tenderer agrees to keep his offer open for a specific period for a consideration. For an example employer pays payment to the contractor to keep the tender open such as an employer pays QR 40,000 to tenderer for keep the tender open for 120 days. In such case there is a subsidiary contract between the tenderer and client to keep open offer for a 120 days. If the tenderer withdraw the offer before 120 days, he may sue by the client for breach of contract. In such case, probably he may have to pay, additional cost incurred by the employer to select another contractor for the project.
Further the tenderer can submit a revised offer to supersede the original offer before stipulated tender closing date & time.

Further it’s important to study position of tender bond with regarding withdraw of an offer.
 If a tenderer withdraws an offer, can he ask to return tender bond?

The tender bond could be considered as the consideration for a subsidiary contract between tenderer and employer, had been formed when submitting the offer by tenderer. This situation is similar to the aforesaid example, where the employer pays money to keep tender open for 120 days.
First look the purpose of tender bond. Main purposes of tender bond are to ensure that a successful tenderer will enter in to a contract and compensate for the cost associate with the tendering in case of withdrawal. Further it makes sure that only genuine bids are received.
If tenderer able to get back the tender bond without forfeiture, the purposes of the tender bond would be lost. Moreover there is a breach of contract. Hence even the tenderers able to withdraw their offer, they haven't right to withdraw the tender bond.

In the case of National Highway Authority of India v M/s Ganga Enterprises, the supreme court held "A person may have a right to withdraw his offer but if he has made his offer on a condition that some security money will be forfeited for not entering into contract or some act is not performed, then even though he may have a right to withdraw his offer, he has no right to claim that security be returned to him"
Tender bond may forfeiture in case of withdraw the offer within tender bond validity period, further it may forfeiture if the successful tenderer fails to sign the contract or provide performance bond within given time period.

In Qatar Central Tender Committee (QCTC) law article nr 42 has states "If the successful tender does not deposit the performance bond .......Central tender committee may recommend cancelling his tender and confiscating the tender bond...”. Moreover, the article 44 has states “If the tenderer fails to sign the contract on the fixed date or if he withdraws ......he shall be liable for .....Confiscation of the final security (tender bond)”

Since the tenderer haven't right to withdraw the tender bond, when it would expire?

 Generally in tender document and/or invitation to tender has provided validity period for the tender bond. Further there may be legislations which states the tender validity period. For an instant Instruction to tender on QCTC, clause 7 has states "Tender bond... It must be unconditional and valid for 120 days as from the date of opening of the tender".

Generally tender bond validity period is greater than tender validity period. It is as a safeguard for the extended tender validity period. Article 25th of QCTC law has states “the period of its validity shall not be less than thirty days after the termination of the period fixed for the validity of the tender
However general practice is to return the all tender bonds after the successful tenderer deposited the performance bond. According to the QCTC law article 26, “The tender bond shall be returned to their owners after the tenderer whose has been accepted, has deposited the performance bond”.
By considering above facts I believe, it's good practise to add a clause to instruction to tenderers, which clearly states the position of tender bond with regarding withdraw the offer.

Sample clause;

1) The Tender bond may be forfeiture;
a)      If the tenderer withdraws his offer before tender bond expires.
b)      If the successful tenderer fails to enter in to the Contract within the specified time.
c)       If the successful tenderer fails to provides the Performance bond within the specified time.

 I conclude, tenderer can withdraw his offer before accept without reasoning, However the tenderer’s tender bond may forfeiture.


·         Brook, M., (2004). Estimating and Tendering for Construction Work. 3rd ed. Oxford: Elsevier Butterworth-Heinemann.
·         Chappell, D., (2006). Construction Contracts-Questions and Answers. Abingdon: Taylor & Francis.
·         Jone, M. and Will. H., (2000). Construction Contracts Law and Management.3rd ed. London: Spon Press.
·         Law No.8 of 1976, Qatar. Qatar Central tender Committee.
·         Pathak, A., (2007). Legal Aspects of Business.2nd ed. Abingdon: Tata McGraw-Hill.
·         The Institution of Civil Engineers. (1976).An Introduction to engineering economics.2nd ed. London: William Clowes & Sons Ltd. 


  1. dear mrs dilshan,
    I have s subject matter. it's about procurement. Is Construction Manager at Risk and Guaranteed Maximum price (GMP) is same?if you have enough time please put articles for procurement and ADR ( based on FIDIC ) .

  2. My understanding is you want to know whether Construction Management and GMP are refereed to the same?

    No, there are two different things. GMP is a contract type(Payment method) and Cont. mgt. is a procurement type.

    Construction mgt. is a procurement method.(Separated and Alternative are main two types of procurement methods.
    Design and Build, Management type are few types of procurement methods under alternative method.Construction management
    and Management Contracting are the two types under Management type.)
    In this Construction management type project, Client will employee a Construction managemr to under take the

    There are Contract types(payment types) such as Measure and Pay, Lump Sum or Cost reimbursement(Cost+/Target cost). GMP is a variant to the target cost.

    In GMP contracts, contractor will be pay actual cost(like in cost plus contracts) subjected to a ceiling price(maximum price).For an example if the GMP is 10M which comprise 8M cost and 2M profit, even the actual cost is 9M, contractor will be pay 8M and profit 2 M. However if the cots is 7M, he will be paid 7M+2M profit. In this case contractor is guaranteed the cost and employer is guaranteed the profit.


මෙම ලිපියට අදාලව ගැන ඔබ දන්නා වෙනත් කරුණු ඇත්ද?එවාද, විෂයට අදාල ඔනැම කරුණක් මෙහි සටහන් කරන්න.
යුනිකොඩ් එසැණින් පරිවර්ථකය.

Related Posts with Thumbnails