Australia: Unfair tender processes – will tenderers have a remedy if theres no process contract?

We expect Australian courts will start using the doctrine of estoppel to provide a legal remedy to tenderers that can prove the tender process was not conducted fairly, or in accordance with the RFT.

It is common for government agencies to competitively tender contracts that government enters into with the private sector. When private sector entities respond to a Request for Tenders (RFT) issued by a government agency, they expect the government agency will:

  • evaluate the tenders received in accordance with the process described in the RFT;
  • otherwise do what the government agency has said it will do; and
  • treat all tenderers fairly.

Unfortunately, this expectation is not always met. When it isn't, disgruntled tenderers sometimes look to the courts for a legal remedy.

Courts in Australia and other countries have struggled to provide effective legal remedies. The usual approach taken by Australian courts is to try to impose these obligations on the government agency pursuant to a contract. They do this by saying:

  • the RFT issued by the government agency is an offer by the agency to conduct the tender process in accordance with the terms of the RFT; and
  • the offer is accepted by each tenderer, so as to create a contract between the government agency and the tenderer, when the tenderer submits its tender.

This contract is referred to as a "process contract". It is separate to the contract that the government ultimately enters into with the successful tenderer. By finding a process contract, the court is then able to imply a term into the process contract requiring the government agency to treat all tenderers fairly, and award a disgruntled tenderer damages for breach of contract if the government agency fails to conduct the tender process fairly or in accordance with the terms of the RFT.

The problem with this approach is that it is easy for government agencies to avoid a process contract being created, by stating in the RFT that no process contract will arise.

For a contract to arise, each party must intend to create it. If the government agency expressly states that it doesn't intend for the RFT to create contractual obligations in relation to the tender process, it becomes very difficult for a court to find that the government agency actually did intend create a process contract. Consequently, it has become routine practice for government RFTs to expressly exclude the creation of a process contract.

Accordingly, courts wishing to give legal effect to expectations that government agencies will conduct tenderer processes fairly and in accordance with the RFT, need to find an alternative legal basis for doing so. We think the legal doctrine of estoppel will allow the courts to do so.

What is estoppel?

The legal doctrine of estoppel enables a court to protect a person against a loss suffered as a result of reliance on a promise or representation. To obtain relief under the doctrine, a claimant must demonstrate that:

  • he or she has acted to his or her detriment on the basis of an assumption or expectation that has been induced by the wrongdoer;
  • in circumstances where the wrongdoer's role in inducing or encouraging the assumption or expectation is such that it would be unjust or unfair for the wrongdoer to depart from the assumption or expectation.

The court grants relief by preventing the wrongdoer from departing from the assumption or expectation, or by requiring the wrongdoer to pay compensation.

When a government agency issues an RFT that explains how a tender process will be conducted and implies that the process will be conducted fairly, this causes tenderers to assume or expect that the government agency will conduct the tender process fairly and in accordance with the RFT. A tenderer acts to his or her detriment, by investing time and resources to prepare a tender, in reliance on this assumption or expectation, and the government agency intends for the tenderer to do so.

Estoppel and a tender process

So, will a court prevent a government agency from departing from the evaluation process set out in the RFP, or require it to compensate tenderers that suffer loss as a result of the departure?

As a general rule, Australian courts will not allow estoppel to operate to prevent or hinder the performance of a positive statutory duty, or the exercise of a statutory discretion which is intended to be performed or exercised for the benefit of the public or a section of the public. This is because it would be contrary to public policy to allow an estoppel to frustrate the performance of a duty, or the exercise of a discretion, that the legislature has imposed or given in the public interest. It is for similar reasons that contractual undertakings by government agency that fetter the future exercise of statutory discretions are unenforceable.

But just as public authorities that enter into contracts are bound by ordinary private law rules dealing with contracts, the legal doctrine of estoppel can also apply to public authorities when engaging in certain activities. Courts in the United States distinguish between the "proprietary" and "governmental" capacities of public authorities, with the result that if a public body is acting within its proprietary capacity, and if its representative has been acting within the scope of his or her authority, then an estoppel can arise. Australian courts have used different terminology by distinguishing between the "planning or policy" level of government decision-making (where statutory discretions are exercised), and "operational" decisions that implement policy decisions.

If a government agency is making an operational decision, as opposed to a policy decision, then an estoppel can arise to prevent the government agency from making a decision that departs from an assumption or expectation that the government agency has induced, and on which the claimant has relied to its detriment.

We consider a decision by a government agency to depart from representations made by it in an RFT to be an operational decision as it does not require the exercise of any statutory discretion at a policy or planning level.

Accordingly, given the exclusion of process contracts has become commonplace in government RFTs, we expect Australian courts will start using the doctrine of estoppel to provide a legal remedy to tenderers that can prove the tender process was not conducted fairly, or in accordance with in the RFT.

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Sparke Helmore Lawyers
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Sparke Helmore Lawyers
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions