Contract Law

Topics: Contract, Auction, Contract law Pages: 7 (2431 words) Published: May 21, 2013
Contract Law
In the following case note I will examine the High Court case; Smart Telecom Plc. V Radio Teilefis Eireann & Glanbia Plc. [2006] IEHC 176. The essence of this case is one involving a request for tenders put forward by RTE for sponsorship and the subsequent refusal of Smart Telecom’s referential bid thereto. The questions raised were (1) whether referential bidding was a permissible term of RTE’s offer and (2) if not, were they were obliged to re-tender the contract for failure to inform Smart as such and equally liable for break of contract. Mr. Justice Kelly ruled against Smart Telecom, upholding the judgment made in The Harvela Case (1986) – one with very similar facts. Both Kelly J. and Lord Templeman shared the view that where there is an expressed contractual promise to accept the highest bid – that excludes referential bidding. And that RTE had no obligation to reiterate terms of contract to Smart - as there were no alterations to those existing terms. I expressly agree with these judgments.

There has been a large amount of consistency in the prior case law in this area with which I will make reference to prominent cases from Wales (1898) and New York (1982). Logical methods of deduction were employed by Kelly J. in Smart v RTE with due concern for the true intention for the vendor. This type of consideration I believe to be apt and of paramount importance in the interest fairness and transparency regard to all parties involved; the vendors, the tenders and the nature of competition itself – a style which has rendered this an area of the law unchallenged for almost a century.

1. RTE invited bids for sponsorship to four interested parties (two of whom were Smart and Glanbia) summoning their best offers as sealed bids and expressly promising to sell to the highest bidder. The bids were to be confidential and opened at a specific time in tandem. 2. It was specifically stated that there was a competitive nature about the request for tenders in the interest of fairness and transparency. 3. The bids were to be stated as gross figures, for a two-year period, inclusive of agency commission. 4. As a pre-emption, it was stated that in the event of identical offers, there would be a 2nd round. 5. A subsidiary of Smart called Smart Telecom Holdings Limited (Holdings) responded despite not being one of the original four parties offering 1,5100,000e (sic). 6. Smart responded with the offer of a sum equal to 5% above the highest priced bid received. 7. OMD Ireland on behalf of Glanbia offered 1,595,500e per annum this is 3,191,000e for two years. 8. On the morning of the deadline one of the other parties emailed enquiring, in essence, about the acceptability of referential bids. 9. RTE responded by clarifying their original email – and thus denouncing the acceptability of referential bids. 10. RTE did not inform the other bidders of this enquiry or the response thereto. 11. The Smart bid was considered invalid – consistent with their response made to enquiry made the unnamed company about referential bids earlier that day. 12. Smart was informed of this and asked for clarification on their Holdings bid, which was that of 15 million euro. 13. They claimed this had been a typographical error and that the intended offer was 1,510,000e. RTE requested an email clarification of that. 14. An email was then received by RTE on behalf of Smart Telecom (not Holdings) rather for the sum of 1,500,100e (differs from figure mentioned). 15. RTE regarded this big from Holdings as the only valid one to emanate. 16. Notwithstanding the question of whether Holdings was even entitled to submit a bid at all, they were considered, but it was in fact Glanbia who submitted the highest fixed bid. 17. RTE accepted Glanbia’s offer.

18. Smart emailed RTE claiming they were the highest bidders and that if they did not accept they...
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