Contract and Agency Law

Topics: Contract, Contract law, Breach of contract Pages: 9 (3129 words) Published: October 8, 2010
Contract and Agency Law
Group Based Case Study

Bai KailinQ0806156
Question 1

A tender is also considered as an offer. Tenders refers to a process by which one can seek prices and terms for a particular project (such as a construction job in this case) to be carried out under a contract. The sealed offers themselves, including company information, a project outline, and a price quote, are known as tenders or bids. Since Beng Huay Construction Pte Ltd submitted the most competitive tender and was awarded the contract, there is acceptance on Beng Huay Construction Pte Ltd. Whether or not BH can revoke their bid and withdraw from the project entirely depend on what was the terms and conditions stated in the contract. For a contract to be valid, there must be an offer initially by one of the parties. In this case here BH could argue that CPL had under-priced part of the job.

It is not possible under these circumstances because the general rule is that an offer can be withdrawn at any time prior to acceptance. However in this case, the offer has already been accepted. Firstly, CPL placed an advertisement for a tender to construct a warehouse cum factory complex somewhere in Boon Lay which is regarded to as an Invitation To Treat. Next, BH submitted the most competitive tender which in this case is considered as the offer. Following which, BH was awarded the contract which in this case is regarded as the acceptance by CPL of the offer by BH, and as a result, a legally binding contract has been formed. As such, it is not possible for BH to revoke their bid and withdraw from the project entirely in this case since the offer had already been accepted. However since BH will be unable to revoke the bid and withdraw from the project entirely the parties can engage an independent third party mediator to hear their respective views. The mediator can then try to mediate the dispute and lead the parties into an acceptable settlement.

Question 2 – Part A
The guarantee is perhaps the most common form of security used in the commercial world today. It is not of recent origin though, and has been in use, in some form or other, since ancient times. This is not surprising, because the idea of getting one person to answer for another is a logical and almost instinctive one. Since the use of guarantees is so common and widespread, one might assume that the parties to a guarantee arrangement, and perhaps even the public at large, are generally quite aware of the more important legal aspects of suretyship. The reality is that very often, the parties, or at least one of them, know very little about either suretyship law generally or the particular guarantee which they have signed. The aim of a performance guarantee is to guarantee compensation for the recipient of the guarantee if the counterparty does not perform its contractual obligations (for example, delivery of goods, performance of work, provision of services, etc.). The amount of a performance guarantee is agreed between the parties. Usually, a performance guarantee is 5-20% of the value of the agreement. The date of expiry of a guarantee is the due date of performance of contractual duties set forth in the agreement. Primary liability: liability imposed directly on a person because of his or her own negligence, default, or legal undertaking Secondary liability: liability (as of a guarantor) that arises from a legal obligation owed to an injured party to pay damages for another's failure to perform or negligent act

The difference between primary liability and secondary liability: Primary liability is an obligation for which a person is directly responsible; it is distinguished from secondary liability which is the responsibility of another if the party directly responsible fails or refuses to satisfy his or her obligation.

A performance guarantee in this case is a bank guarantee agreement for the performance of the parties contractual obligations – so that...
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