Exam 8: The Requirement of Consideration

Correct Answer:

Verified

The issues of equitable-estoppel and adequacy of consideration are raised in this case. The grocery chain will raise an argument that the wholesaler is estopped from now charging the terms of the contract negotiated between the parties. The wholesaler had openly negotiated these terms with Save-A-Lot upon which the latter relied in entering into the agreement in calculating the timing and quantity of its purchases. The grocery chain will argue that it relied on the wholesaler's promise of discount to its detriment and would have acted otherwise had it been aware from the outset that the policy gave discounts only for greater quantities.
The wholesaler in turn may argue that Save-A-Lot was merely attempting to "snap up" its offer. In a business such as food wholesaling the quantity stated in the contract as eligible for the discount should have been readily apparent as being too low. The grocery chain was attempting to take advantage of the error and, thus, there is inadequate consideration for the contract.

Correct Answer:

Verified

a. The call for tenders is an invitation to do business or to make an offer. The response to a call for tenders is therefore an offer
b. Since the call for tenders is not an offer, the municipality cannot be bound by any response, but can pick which, if any, of the offers it wishes to accept
c.
i. You should ensure that the wording of the call makes it clear that Minuscule is not bound to accept the lowest bid or any bid at all. You should also demand that the bids be made under seal so that they cannot be revoked before Minuscule has had the opportunity to consider it.
ii. When bids are submitted, they should be required to provide a substantial deposit, which would then be forfeited if they are chosen as the winning bidder but refuse to exercise the contract.