2022-03-21（188）Engineering law and the ICE Contracts

1. RESTRICTIVE PRACTICE AND TENDER PROCEDURES. Until the passing of the Restrictive Trade Practices Act of 1956 the law developed by the courts on restrictive practices was unsatisfactory and there was no administrative machinery to prevent enforcement of tendering agreements contrary to the public interest. The Restrictive Trade Practices Acts 1956 & 1968 have now largely been replaced and consolidated by the Restrictive Trade Practices Act 1976. The Act defines restrictive agreements widely, requires them to be registered and provides for their judicial examination. There is a statutory presumption that any agreement falling within the definition is against the public interest and void, and the Restrictive Trade Practices Court can prevent enforcement of the agreement.

Recommendations by a building trade association that members should refuse to tender for contracts over a specified amount unless the employer supplies a bill of quantities, that they should always charge rates for day work in the building federation schedule and that they should press for use of the R.I.B.A. contract forms wherever appropriate, have been held to infringe the legislation. An agreement not to offer to supply goods in response to an invitation to tender save after discussions with any other person or persons invited to tender for the supply of such goods has also been held to be a restrictive agreement, on the principle that a broad construction of the Acts is to be favoured. 

Agreements between contractors fixing tender prices or agreeing not to compete do not affect the validity of the actual contract if a tender is accepted—unless before the contract is made the tenderer is asked for and gives the employer an assurance that there has been no such agreement, in which case the employer has remedies for misinformation. Most important, if an agreement which is registrable under the Restrictive Trade Practices Acts is not registered, any person whose interests are affected by the carrying out of its terms may sue the parties to the agreement for damages for breach of statutory duty. 

Article 85(1) of the Rome Treaty establishing the Common Market prohibits and imposes severe sanctions against a wide category of restrictive agreements. The Article will, however, only apply where trade between member states of the Common Market is or is likely to be affected and therefore only to construction contracts of international significance.

The procedures to be followed by the employer in inviting tenders for public works are subject to regulation, under local authority standing orders, directives of the Council of the European Communities, etc. Such regulation is outside the scope of this book. 

2. TENDERS AND ESTIMATES. In an old case it was held that a contractor who submitted a quotation headed “estimate” in reply to an invitation to tender had not made it sufficiently clear that he was not giving a firm tender, so that he was bound by the figure. And, in fact, what are called “estimates” for small jobs are generally worded as binding lump sum offers (p. 27).