HARVELA INVESTMENTS LIMITED V. ROYAL TRUST CO OF CANADA (1985) 2
ALL ER 966
House of Lords (UK) – 11 July 1995
Harvela and Sir Leonard were invited by Royal Trust to make sealed competitive bids for shares on certain terms and Royal Trust stated that it bound itself to no one except the highest bid. Royal Trust also stated that it would only accept a sealed and confidential single offer for the shares.
Harvela lodged a bid of $2,175,000 for the shares while Sir Leonard bid $2,100,000 or $101,000 in excess of Harvela’s offer. The Royal Trust purported to accept the bid by the Sir Leonard of $2,276,000.
Harvela obtained an injunction to stop the sale of the shares and sought an order for specific performance of the alleged contract between it and Royal Trust to purchase the shares.
When a person invites tenders and expressly binds itself to accept the highest bid is that person liable for breach of contract if the highest bidder is not accepted.
Was Royal Trust allowed to accept the referential bid (that is the bid to pay $101,000 over the other bid) from Sir Leonard or bound to accept the highest fixed bid?