Legal Updates

A bid that does not comply with the provisions of a tender may be rejected even if was approved by the tender control company

June 2, 2021

An entrepreneur won a tender for the construction of apartments as part of the "Price per Occupant" project of the Israel Land Authority (reduced cost apartments). As part of its bid, the entrepreneur submitted a draft contract to be signed between it and the purchasers, in which it was set that the purchasers would bear the costs of connecting electricity and water infrastructures. The wording of the contract was approved by the tender control company, despite the tender provisions.

The Court held that the wording of the contract drafted by the entrepreneur did not meet the tender provisions and should not be accepted despite the approval of the control company. The starting point for the interpretation of a contract is its wording, but when the language is not clear and explicit, the contract will be interpreted according to the intent of the parties, as implied from the contract and the circumstances of the matter. When the contract was executed between an individual and an administrative authority, the public interest that the contract is intended to fulfill must be examined, and when the contract is drafted as part of a tender bid, the existence of the principle of equality shall also be reviewed, where deviating from the tender provisions damages the rights of other tender participants or entities that would have participated had they knew that the tender terms may be deviated from. Here, the tender explicitly stated that the entrepreneur is not authorized to charge for the connection of electricity and water infrastructures. Further, the objective of "Price per Occupant" project is to allow the purchase of a first apartment at a price lower than the market price. Thus, the wording of the contract is contrary to both the provisions of the tender and to its objective purpose and thus the tender offer is disqualified.