Legal Definitions - offer for sale by tender

An "offer for sale by tender" describes a specific method by which a seller invites potential buyers to submit confidential, written proposals or bids (known as "tenders") for an asset, property, or contract. Unlike a traditional auction where bids are openly declared and the highest bid usually wins, in a tender process, all bids are submitted by a specified deadline, typically in a sealed format, and are then evaluated by the seller.

The seller is generally not obligated to accept the highest bid, but rather has the discretion to choose the offer that best meets their overall criteria. These criteria might include the proposed price, payment terms, the buyer's reliability, their plans for the asset, or other strategic considerations. This process is often used for significant assets, large-scale projects, or when the seller wants to consider factors beyond just the monetary value.

• Example 1: Sale of a Commercial Property

  A university decides to sell a large, historic building on its campus that is no longer needed. Instead of simply listing it with a real estate agent, the university issues an "offer for sale by tender." They advertise the property and invite interested developers and organizations to submit detailed proposals by a specific date. These proposals must include not only their proposed purchase price but also their plans for the building's preservation and future use, their financial capacity, and their proposed timeline for development. The university's board reviews all submitted tenders, considering not just the highest price, but also the quality of the proposed use and its alignment with the university's legacy and community interests, ultimately selecting the tender that offers the best overall value and vision for the property.

  Explanation: This illustrates an offer for sale by tender because the university (seller) invited confidential, written proposals (tenders) from multiple parties by a deadline. They did not commit to accepting the highest price but evaluated offers based on broader criteria, demonstrating the seller's discretion inherent in a tender process.

• Example 2: Government Procurement of Services

  A municipal government needs to select a company to manage its city-wide waste collection and recycling services for the next five years. To ensure a fair and competitive process, they issue an "offer for sale by tender" to various waste management companies. The tender document specifies the exact service requirements, environmental standards, fleet specifications, reporting obligations, and pricing structures. Companies submit their detailed bids, including their operational plans, proposed costs, and experience, by the deadline. The city then evaluates all tenders, considering not only the total cost but also the company's track record, proposed environmental impact, customer service plan, and ability to meet the city's specific needs, ultimately awarding the contract to the tenderer who offers the best overall service package and value.

  Explanation: Here, the municipal government (as the procurer/buyer) invited detailed, confidential bids (tenders) for a complex service. They evaluated these bids against multiple criteria beyond just the lowest price, such as operational plans and environmental impact, which is characteristic of an offer for sale by tender.

• Example 3: Divestment of a Business Unit

  A large technology conglomerate decides to sell off a non-core software division that specializes in niche accounting solutions. To attract serious buyers and manage the sale discreetly, they issue an "offer for sale by tender." They prepare a comprehensive information memorandum detailing the division's assets, intellectual property, financial performance, and customer base. They then invite interested private equity firms and other technology companies to submit sealed bids by a set date. The conglomerate's executive board reviews the tenders, weighing not only the purchase price but also the proposed payment terms, the buyer's commitment to retaining key employees, and their strategic vision for the software division, ultimately choosing the offer that provides the best financial return while also ensuring a smooth transition for the employees and customers.

  Explanation: This example shows a conglomerate (seller) inviting confidential, written offers (tenders) for a business division. The decision-making process involved evaluating multiple factors beyond just the highest bid, such as employee retention and strategic vision, which is a hallmark of an offer for sale by tender.