Legal Updates

A flaw in a bank guarantee attached to a tender bid disqualifies the bid

August 11, 2016
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A bidder attached to its tender bid a bank guarantee with validity shorter than required in the tender documents.

The Court held that the rule regarding bank guarantees is that a flawed guarantee disqualifies the proposal. Only in rare situations the flaw can be cured and this is when the error was a clerical error or omission and under the following preconditions: a. The error can be learnt from the guarantee itself; b. One can construe the original intent by a significant objective evidence that were before the tender committee at the time of opening of the tender box; c. Prima facia, it appears to be an innocent mistake, caused out of inadvertence rather than any intention by the bidder or the guaranteeing bank; and d. Neither the error or its cure will impair the principal of equality of the bidders in the tender. Thus, the tender committee's decision to act strictly as to the guarantee, was a reasonable decision that does not justify intervention of the Court.