Court caseAIR 1973 Guj 34

The Housing Board invited tenders for the construction of houses and stated in the tender documents the estimated cost of the work. The contractor, relying on the Board's figures, quoted a percentage below the estimate and was awarded the contract. The estimate turned out to be seriously wrong: the quantities and rates in it bore no relation to the actual cost of the work, which was far higher. The contractor claimed that his consent had been obtained by misrepresentation and sought compensation.

The Gujarat High Court held that an estimate put forward by the owner in a tender notice is a positive assertion of fact on which tenderers are meant to rely. Though the Board believed it to be correct, the assertion was made in a manner not warranted by its information and was untrue; it was therefore misrepresentation within s. 18(1). The Court rejected the plea that the contractor should have checked the figures himself: a tenderer is not expected to prepare his own detailed cost analysis in the short time allowed, and the Exception to s. 19 did not apply. The contractor was entitled to relief.