Q&As

Is there a general, implied or common law obligation on a bidder in a tender exercise to act in good faith or with candour when submitting a bid?

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Published on LexisPSL on 04/12/2018

The following Public Law Q&A provides comprehensive and up to date legal information covering:

  • Is there a general, implied or common law obligation on a bidder in a tender exercise to act in good faith or with candour when submitting a bid?

Is there a general, implied or common law obligation on a bidder in a tender exercise to act in good faith or with candour when submitting a bid?

In the judgment of the Court of Appeal in Street v Derbyshire Unemployed Workers’ Centre, which was also referred to by Jackson LJ in Mid Essex Hospital NHS Trust v Compass Group UK and Ireland Ltd, it was held:

‘The words “in good faith” have a core meaning of honesty. Introduce context, and it calls for further elaboration…The term is to be found in many statutory and common-law contexts, and because they are necessarily conditioned by their context, it is dangerous to apply judicial attempts at definition in one context to that of another.’

With respect to commercial transactions, although English courts have traditionally shown hostility towards implying a duty of good faith in this context, the way to approach giving meaning to ‘good faith’ is now reasonably clear. In Mid Essex Hospital Services, Beatson LJ applied an objective test; ‘when given the wording of the contract and the general context, would the conduct of the parties be regarded as commercially unacceptable by reasonable and honest people?’. This approach was reiterated in Yam Seng Pte Ltd v International Trade Corporation and Bristol Groundschool Ltd v Data Capture Limited. Note that parties may also impose a duty of good faith

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