Bidders are frequently told in bidding and tendering
instructions that bids or tenders are required to be submitted
"under seal" or that "sealed tenders are
required". Confusion arises because the term "seal"
is often used in three different contexts in the bidding and
tendering world.
1. The seal as creating a binding promise
We
previously discussed Ron Engineering and the Contract A -
Contract B scenario. In essence, the courts treat the submission of
a tender as a binding promise (Contract A) on the part of the
bidder that, if it is selected as the successful bidder, it will
enter into a contract (Contract B) with the owner.
Under contract law, however, promises made without receiving
consideration in return are not enforceable. Without some
consideration from the owner to the bidder, the agreement on the
part of the bidder to enter into Contract B is unenforceable by the
owner.
