Blackpool and Fylde Aero Club Ltd. v Blackpool Borough Council [1990] EWCA Civ 13 (25 May 1990)

Facts

The defendant, Blackpool Borough Council, owned and managed Blackpool Airport. They invited the claimant, Blackpool and Fylde Aero Club, and six other parties to submit tenders for a concession to operate pleasure flights from the airport. The Aero Club had held the concession since 1975. The Council’s invitation to tender stated that tenders must be submitted in a provided envelope and that any tender received after the deadline of 12 noon on 17th March 1983 would not be considered. The invitation also included a clause stating, ‘The Council do not bind themselves to accept all or any part of any tender.’ The Aero Club submitted their tender by hand, placing it in the Town Hall letterbox at approximately 11 a.m. on the deadline day. Due to an oversight by Council employees, the letterbox was not cleared at 12 noon as scheduled. Consequently, the Club’s tender was marked as having been received late and was never opened or considered. The Council subsequently awarded the concession to another party. The Aero Club sued for breach of contract, alleging that the Council had a contractual obligation to consider all tenders that were submitted on time and in the correct form.

Issues

The primary legal issue before the Court of Appeal was whether the Council’s invitation to tender constituted a mere invitation to treat, or if it created a binding contractual obligation to consider all conforming tenders submitted before the deadline. A secondary issue was whether the clause allowing the Council not to accept any tender absolved them of any procedural obligations.

Judgment

The Court of Appeal unanimously dismissed the Council’s appeal, upholding the trial judge’s finding that a contract existed and had been breached.

Reasoning of the Court

Lord Justice Bingham, delivering the leading judgment, established what is now known as the ‘two-contract’ analysis in tender cases. While acknowledging the general rule that an invitation to tender is an invitation to treat, he found that the specific circumstances of this case gave rise to a unilateral, or ‘collateral’, contract. This contract obliged the Council to consider all conforming tenders. The Court’s reasoning was based on the clear intentions of the parties as inferred from the formal and prescriptive nature of the tender process. The Council had invited a small, select number of parties to participate in a highly structured process with rigid procedural rules. By submitting a conforming tender, the Aero Club accepted the Council’s implied offer to consider their bid alongside all other conforming bids.

Bingham LJ highlighted the commercial reality and expectations of the parties involved:

A tendering procedure of this kind is, in many respects, heavily weighted in favour of the invitor… The invitee is in reality bidding for a contract with the invitor, and the invitor’s promise to consider his bid is a valuable one.

He further concluded that the submission of the tender created a binding obligation:

I think it plain that the council’s invitation to tender was, to this limited extent, an offer, and the club’s submission of a tender was an acceptance of that offer.

The Court determined that the clause stating the Council was not bound to accept any tender did not negate the separate, implied obligation to *consider* them. This clause related to the Council’s discretion in awarding the main contract for the concession, not to the preliminary process of evaluating the bids. The Council’s failure to retrieve the tender from the letterbox, an error entirely of its own making, constituted a breach of this collateral contract to consider all timely and conforming tenders. The Court thus found the Council liable in damages for the breach, which would be assessed based on the Club’s loss of a chance to have its bid accepted.

Implications

This decision is a landmark case in English contract law, particularly concerning invitations to tender. It establishes that while an invitation to tender is typically an invitation to treat, a collateral contract may be implied where the invitor prescribes a clear, orderly, and formal procedure for submission. This ‘two-contract’ approach provides crucial protection for tenderers, ensuring that if they comply with the stipulated rules, their bid will be given due consideration. It prevents an invitor from arbitrarily or negligently disregarding a conforming tender. The case clarifies that the invitor’s discretion is not absolute; they are bound by the procedural rules they themselves set. This principle ensures fairness and integrity in competitive bidding processes, recognising the time and expense that tenderers invest in preparing their submissions.

Verdict: The appeal was dismissed. The court upheld the lower court’s judgment that the Council was in breach of an implied contractual obligation to consider the claimant’s tender.

Source: Blackpool and Fylde Aero Club Ltd. v Blackpool Borough Council [1990] EWCA Civ 13 (25 May 1990)