Agreement to tender: Overview, definition, and example
What is an agreement to tender?
An agreement to tender refers to a commitment made by one party to offer or submit a tender for a specific project or contract. In this context, "tender" refers to a formal offer or bid made by a company or individual to undertake a particular project, provide goods, or deliver services, usually in response to a request for proposals (RFP) or invitation to tender (ITT) issued by another party. The agreement to tender can outline the conditions under which the tender will be submitted, including the scope, pricing, timeline, and other relevant details.
For example, a construction company may enter into an agreement to tender for a large building project, indicating its intention to submit a formal bid in response to a request from the project owner.
Why is an agreement to tender important?
An agreement to tender is important because it formalizes a party’s intention to participate in a competitive bidding process. It provides clarity to all parties involved about the expectations, timelines, and conditions for submitting a tender. This can be critical in industries such as construction, government contracting, or supply chain management, where formal tender processes are common. The agreement helps ensure that both parties are aligned on the requirements and expectations for the submission of the tender.
For businesses, having an agreement to tender in place helps manage the bidding process and ensures that they meet the specific requirements of the tendering entity.
Understanding agreement to tender through an example
Imagine a city government issues an invitation to tender for the construction of a new public park. A landscaping company, GreenScapes, enters into an agreement to tender, committing to submit a bid that outlines their plan for the park, including design, cost, and timeline. The agreement to tender may also outline the necessary documents and certifications required to submit the bid and the timeline for doing so.
In another example, a company that manufactures electronic components might agree to tender for a large contract to supply parts for an automobile manufacturer. The agreement ensures that the supplier will submit a formal offer with pricing, delivery schedules, and product specifications, competing with other vendors for the contract.
An example of an agreement to tender clause
Here’s how a clause like this might appear in a contract:
“The Supplier agrees to submit a formal tender for the Project in response to the Request for Tender issued by the Client, in accordance with the terms outlined in this Agreement, no later than [insert date].”
Conclusion
An agreement to tender is a formal commitment to submit a bid or offer in response to a tender request. It ensures that both parties understand the requirements and conditions for the tender process, helping businesses participate effectively in competitive bidding. For businesses, entering into an agreement to tender is an essential step in securing contracts and providing clear, detailed proposals to potential clients or project owners.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.