On 24 April 2002 the Court of Appeal held in Nelson Group Services (Maintenance) Ltd v BG Plc that there was an implied representation that detailed forecasts of projected sales figures provided by BG were based on accurate facts and assumptions.
In 1994 BG invited tenders for the work of installing certain types of appliances sold through its showrooms. As part of the tender process, bidders were provided with detailed forecasts of projected sales figures for each showroom. Nelson based its tender price on these projections and in due course was awarded a number of the regional contracts.
It soon became clear that the volume of business being received by Nelson was substantially less than that predicted in BG's forecasts. In 1998 Nelson brought an action against BG contending that the forecasts provided amounted to an implied representation that BG "knew of facts which justified the (forecasts) and/or that there were substantial and reasonable grounds upon which the same is based". The Court of Appeal held that, although there may be occasions where the expression of an opinion might carry with it no implication other than that it was genuinely held, in these circumstances there was an implied representation that BG had justifiable grounds for the forecasts.
Parties that provide bidders with what could be taken as meaningful projections during a tender process should therefore ensure that the basis of the projections is defensible and the facts and assumptions that such projections were based on are accurate. Otherwise, they should make it very clear where projections are more speculative.
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. The law may have changed since first publication and the reader is cautioned accordingly.