No matter how big or small, local governments enter into
hundreds of contracts throughout the course of the year. Whether
you contract using strategic contracting procedures or the default
contracting procedures [Chapter 6 of the Local Government
Regulation], basic contract principles will apply.
In this series, Kaden Boriss will re-acquaint you with these
basic contract principles.
Today's topic: Agreement
There are four key elements needed to establish any
(1) Agreement; (2) Consideration; (3) Intention to be legally
bound; (4) Certainty of terms.
Classically, agreement is reached by one person making an offer
and another party accepting that offer. For an agreement (necessary
to create a binding contract), the acceptance needs to be in the
same terms as the offer.
If an "acceptance" differs in any material way from
the offer, no contract is created. The "acceptance"
becomes a counter offer.
The most obvious form of offer for local government is a tender.
If Council's "acceptance" differs in any way from the
tender, it becomes a counter-offer.
Council should maintain control of the tender process. If a
preferred tender has an unacceptable term, Council should invite
the tenderer to withdraw the qualification (ie. change its offer).
If Council counter-offers, Council has ceded control of the process
of acceptance to the tenderer. Council may wish to accept another
tender (eg. due to a delayed response from the preferred
If another tender is accepted (without Council effectively
withdrawing its counter-offer) Council is exposed to the preferred
tenderer accepting Council's offer. Council would then have two
contractors for the one contract. Risk profile: Catastrophic!
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The revised Commonwealth Procurement Rules (CPRs) will impact on how Commonwealth agencies manage procurement processes.
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