Baco and Ayub Trading Company Limited versus Permanent Secretary, Ministry of Defence and National Service; Commercial Case No 40 of 2015: High Court of Tanzania (Commercial Division) at Dar es Salaam. (Unreported).
- Contract.
- Invitation to treat – letter of intent to invite plaintiff’s bid for a tender – he was given an award letter but no contract was signed-Plaintiff delivered some goods to the Defendant but she refused to accept the goods– the tender award was cancelled before the goods were delivered – whether there was a binding contract.
Held:-
(i) It is now well settled that a letter of intent or award letter merely indicates a party’s intention to enter into a contract with the other party in future. A letter of intent is not intended to bind either party ultimately to enter into any contract. The letter of intent merely expresses an intention to enter into a contract. There is no binding contract at this stage. However, a letter of award may be construed as a letter of acceptance if such intention is evident from its terms.
(ii) Where parties to a transaction exchanged letters of intent, the terms of such letters may, of course, negative contractual intention; but, on the other hand, where the language does not negative contractual intention, it is open to the courts to hold that the parties are bound by the document; and the courts will, in particular, be inclined to do so where the parties have acted on the document for a long period of time or have expended considerable sums of money in reliance on it. Be that as it may. (Quoted Chitty on Contracts (Para 2. 2115 in Vol 1, 28th Edn).