Costs of Tendering - Building Contract - page 10

There is no implication that the costs incurred by the contractor in preparing his tender will
be reimbursed by the employer, but the contractor may be entitled to reasonable payment if,
at the employer's request, he does substantial preparatory work over and above normal tender
preparation and no contract is ever placed.
Marston Ltd v. Kigass Ltd
QUEEN'S BENCH DIVISION
(1989) 15 Con LR 116
The plaintiffs claimed £25,946.23 for preparatory works over and above the costs and
work of preparing their tender for a design and build contract to provide a factory at
Warwick to replace one which had burnt to the ground. The contract for the work was
never placed because the proceeds of the insurance money from the old factory were
insufficient to cover the cost of rebuilding to the local authority's standards.
The plaintiffs' tender was the best value for money but because there was a tight time
scale it needed to be supplemented with further details. The tender was followed by a
vital meeting on 18 December 1986, when the plaintiffs were the only tenderers invited
to discuss their tender. The defendants' chairman made it clear that no contract to
rebuild the factory would be entered into unless and until he had obtained the insur-
ance money to pay for the rebuilding. Nothing was said which indicated that in the
event of the insurance money not being forthcoming all preparatory work done by the
plaintiffs up to that point would be at the contractors' risk. The defendants were well
aware that the plaintiffs would have to start preparatory work before the contract was
signed, and it was understood if not spelt out that there should be a four-week lead-in
period. It was expressly agreed that the contract would be signed (if the insurance
money had been received) on 16 January 1987 and that work would start on site on 2
February 1987. It was also found that it was made plain to the plaintiffs at the meeting
that subject to payment of the insurance money and the employer's surveyor being
satisfied on points of detail normal to a tender appraisal the contract would be given
to the plaintiffs.
Held: There was an express request made by the defendants to the plaintiffs to carry out a
small quantity of design work and there was an implied request to carry out preparatory
works in general. Both the express and implied requests gave rise to a right to payment
of a reasonable sum.
JUDGE PETER BOWSHER QC: I ind that the facts of the present case, although different in
important respects are similar in kind to the facts in William Lacey v. Davis (1957). There was
a request to do the work, though the request in respect of the bulk of the work was implied
rather than express. It was contemplated that the work would be paid for out of the contem-
plated contract. Both parties believed that the contract was about to be made despite the fact
that there was a very clear condition which had to be met by a third party if the contract was
to be made. The defendants obtained the benefit of the work in my judgment, though [counsel
for the defendants] submitted that they did not. That submission led into an interesting con-