Explanation and definition of Tender
The term Tender in a legal context refers to a formal invitation to submit an offer in the context of a call for tenders or the awarding of contracts for supplies, services, or construction works. The tender is often part of procurement procedures, particularly with public contracting authorities, but is also used in the private sector. The term originates from the English language and is commonly used in German law, especially in connection with procurement and purchasing processes. In some legal systems, such as Common Law, ‘Tender’ is also used to mean an offer to settle debts.
Legal basis of the Tender
Public procurement procedures
In public procurement, tender refers to the announcement intended to enable the participation of potential bidders in the procurement procedure. The legal basis under German law includes the Act against Restraints of Competition (GWB), the Public Procurement Regulation (VgV), and specific rules such as the Construction Contract Procedures (VOB/A), Contract Regulations for Services (VOL/A), as well as the Sector Regulation (SektVO).
Invitation to tender and announcement
A tender within the framework of public procurement is a formalized announcement with which a contracting authority initiates a procedure for the procurement of public contracts. The requirements for the drafting of tender documents or invitation to tender documents arise in particular from the principles of transparency, equal treatment, and non-discrimination in accordance with Art. 97 GWB as well as EU procurement directives.
Structure and content of the Tender
A tender must contain all necessary information for the preparation of an offer. This includes:
- Specification of services,
- Requirements for bidders,
- Deadlines,
- Award criteria,
- documents to be submitted,
- contract conditions.
Legal effects of the Tender
A published tender does not constitute a binding declaration of intent but serves to solicit offers. Only the acceptance of a bid (award) leads to the conclusion of a contract. The procedural principles require equal treatment of all bidders. Violations of tender provisions can lead to challenges or review procedures.
Private tenders and tender procedures
Tenders also play a role in the private sector. Companies use tender procedures to obtain competitive offers for major contracts. The process is governed autonomously by private law and is subject to the principles of civil law, particularly §§ 145 et seq. of the German Civil Code (binding nature of the offer, acceptance periods, contract conclusion).
Special features in international commercial law
In international commercial law, and especially when awarding large international contracts (e.g., in plant construction, shipbuilding, or aircraft manufacturing), tender procedures are common. Here, usually the agreed international contract terms (e.g., FIDIC contract conditions, Incoterms) apply, supplemented by country-specific laws, such as export control regulations.
The tender in the law of obligations
In Common Law, the term ‘Tender of Payment’ exists. It refers to the offer to fulfill a due obligation (e.g., a monetary debt). The legally effective presentation of performance in accordance with the relevant contractual and statutory provisions can have a liability-releasing or delay-preventing effect. In German law, a similar concept is regulated in § 294 BGB (tender of performance).
Legal aspects and disputes
Binding effect and possibility of withdrawal
A submitted tender in the sense of an offer is generally binding under German law pursuant to § 145 BGB. The withdrawal of an offer is only possible until receipt by the recipient or after the expiration of a binding period.
Review procedures and legal protection
Public tender procedures are subject to comprehensive legal protection systems. Unsuccessful bidders can file review applications according to § 160 GWB, for example due to violations of procurement regulations or discriminatory treatment. The competent review bodies (procurement chambers, higher regional courts) examine the procedure with regard to compliance with formal and substantive requirements.
Liability and damages
Violations of essential tender provisions can trigger claims for damages by affected bidders. This may be the case in instances of unlawful contract awards, inadequate information duties, or arbitrary deviation from tender conditions.
Distinction from related terms
The term tender is to be distinguished from the term submission, which in construction and procurement law refers specifically to the opening of bids. While submission describes a specific procedural step, the tender encompasses the entire tender document with all award criteria.
Summary
The term tender refers in the legal context to a formalized invitation to tender or an offer, which is important in procurement law but also in contract law. The legal requirements for the form and execution of tenders are complex and determined by both national and international legal provisions. Compliance with legal requirements in the tender procedure is essential for safeguarding the rights of all parties involved as well as for legal certainty and transparency in the procurement of supplies, services, and works.
Sources:
- Act against Restraints of Competition (GWB)
- Public Procurement Regulation (VgV)
- German Civil Code (BGB)
- FIDIC Contract Conditions
- Directive 2014/24/EU on public procurement
Frequently asked questions
What legal requirements apply to the publication of a tender?
The publication of a tender (invitation to tender) in a legal context is governed in particular by the relevant procurement regulations, such as the Act against Restraints of Competition (GWB), the Public Procurement Regulation (VgV), and sector-specific regulations such as the Sector Regulation (SektVO) and the Procurement Regulation for Freelance Services (VOF) in Germany. Contracting authorities—usually public bodies or companies with public influence—are required to announce tenders openly and transparently once certain thresholds are exceeded. They must observe minimum periods for publication and submission of offers, which vary according to the type of tender (open, restricted, negotiated procedure). In addition, EU-wide tenders with certain contract values must be published in the supplement to the Official Journal of the European Union (TED). Errors in publication, such as inadequate publication or disregard of transparency requirements, can lead to review proceedings or to the invalidity of the awarded contract.
What rights and obligations do bidders have during the tender procedure?
Bidders are entitled under the legal framework to equal treatment, transparency, and non-discrimination by the contracting authority. They are obliged to comply with the formal requirements set, such as deadlines, language requirements, and submission of the required evidence. In return, they have rights to information, for example, the right to inspect procurement documents and receive information on the status of the procedure. In the event of irregularities, they are entitled to initiate review procedures before the competent procurement chambers. Confidentiality obligations regarding business and trade secrets must be observed by both the contracting authority and the bidders to avoid legal claims for damages or injunctions.
What are the legal consequences of a breach of procurement rules in the context of a tender?
Violations of procurement rules can have a wide range of legal consequences. A serious procurement error—such as unjustified preferential treatment of a bidder, unlawful manipulation of the procurement procedure, or disregard of deadlines—can result in the nullity of the contract award and claims for damages. Competitors may, through a review procedure, obtain sanctions such as the annulment of the tender or a prohibition on negotiating already made decisions. In the case of serious legal violations, procurement and civil law consequences may also arise, such as exclusion from the procurement procedure, contractual penalties, or claims for recourse.
Are there statutory rules for the review of tender decisions?
A two-stage legal protection system is established in German and European law for the review of procurement decisions: Firstly, a so-called review procedure must be initiated before the procurement chamber. Here, unsuccessful bidders can challenge the procurement practice and assert their rights within certain deadlines. The chambers are obliged to conduct the proceedings expeditiously. An appeal against their decision can be filed with the Higher Regional Courts. Internationally, similar legal provisions exist, especially in the EU Directive 2014/24/EU. The review ensures that legal requirements such as the principles of transparency and equal treatment are upheld.
To what extent is the contract legally binding after the award?
With the award of a contract based on an offer in the context of a tender, a public or civil law contract is generally concluded, binding both parties—client and contractor. The binding effect arises immediately upon receipt of the award notification by the successful bidder. The content of the contract is mainly determined by the tender documents and the offer; subsequent changes, especially to the detriment of other bidders, are legally permissible only in limited exceptional cases (for example, in cases of obvious calculation errors or legislative changes). Withdrawal or subsequent dissolution of the contract is, unless stipulated in the contract, only possible in exceptional cases according to the general statutory provisions (such as due to breaches of duty or frustration of contract).
What legal provisions safeguard confidentiality and data protection in the tender procedure?
Confidentiality and data protection in the context of tenders are protected by various legal frameworks. Procurement law requires the contracting authority and all participants to maintain the confidentiality of bidders’ business and trade secrets. The General Data Protection Regulation (GDPR) ensures that personal data of the parties involved may only be collected, processed, and stored for the intended purposes of the procurement procedure. Violation of confidentiality obligations or data protection may result in cease-and-desist orders, claims for damages, and fines. Participants must also take appropriate technical and organizational measures to protect data and documents.
