Spencer v Harding (1870) LR 5 CP 561

Facts

• The defendant, Harding, circulated a document inviting tenders for the purchase of goods, specifying the type and quantity available.
• The circular did not state that Harding would sell to the highest bidder, nor to any bidder.
• The claimant, Spencer, submitted the highest tender.
• Despite being the highest bidder, Spencer’s tender was declined by Harding.
• Spencer claimed that Harding’s circular was an offer to sell to the highest bidder, forming a contract upon submission of the tender.
• The dispute focused on whether Harding’s invitation constituted a unilateral offer or was merely a solicitation of offers.

Issues

1. Whether the circular inviting tenders constituted a legally binding offer to sell to the highest bidder.
2. Whether a contract was formed by Spencer’s submission of the highest tender in response to the circular.
3. Whether the absence of express commitment in the invitation rendered it an invitation to treat rather than an offer.

Decision

• The Court of Common Pleas held that Harding was not contractually obliged to sell the goods to Spencer.
• The circular was classified as an invitation to treat, not an offer.
• Binding contractual obligations would only arise if the circular expressly indicated an intent to be bound by accepting the highest bid.
• No contract was formed as Harding had not accepted any offer.

Legal Principles

• An invitation to tender is generally regarded as an invitation to treat, not as an offer.
• Only the acceptance of an offer (not a preliminary invitation) creates a binding contract.
• Explicit language is required in an invitation to indicate willingness to be bound by the highest or any tender.
• The principle protects parties issuing tenders from unintended contractual obligations.
• There are exceptions to the general rule, as in cases where circumstances—such as a specified process or obligation to consider timely bids—may create an implied contract (e.g., Blackpool & Fylde Aero Club Ltd v Blackpool BC).

Conclusion

Spencer v Harding established that a general invitation to tender, without clear language of intent to be bound, is an invitation to treat and not an offer, so no contract arises unless the party issuing the invitation explicitly undertakes to accept the highest or any tender received.