Tender and contract are two terms that are often used interchangeably in the world of business. However, there is a distinct difference between the two that is important to understand.

What is Tender?

A tender is a formal invitation to bid on a project or service. It is typically issued by a company or organization that is seeking to acquire goods or services from external sources. The tender process is designed to ensure that the company receives the best possible value for its investment.

To participate in a tender process, a company must submit a proposal outlining their qualifications and experience in relation to the project or service being procured. The proposal must also include a detailed cost estimate of the work to be completed. The company with the best proposal is then awarded the contract.

What is Contract?

A contract is a legally binding agreement between two or more parties. It outlines the terms and conditions of the work to be completed, including the scope of the project, the timeline for completion, and the payment terms. Contracts are used to protect the interests of all parties involved in a business transaction.

In the context of tender and contract, the contract is awarded to the company that has been selected as the best bidder during the tender process. Once the contract has been awarded, it becomes the legal agreement that governs the project or service being procured.

Key Differences Between Tender and Contract

Tender and contract are two distinct processes with different objectives. The main differences between the two are as follows:

Objective: The objective of a tender is to invite companies to bid on a project or service. The objective of a contract is to establish a legally binding agreement between the company and the contractor.

Process: The tender process involves issuing an invitation to bid, receiving proposals, evaluating the proposals, and selecting the best bidder. The contract process involves negotiating the terms and conditions of the agreement and finalizing the contract.

Scope: The tender process focuses on selecting the best bidder for the project or service. The contract process focuses on outlining the details of the work to be completed and establishing a legal framework for the project.

Conclusion

In summary, tender and contract are two distinct processes that are used in business transactions. The tender process is used to select the best bidder for a project or service, while the contract process is used to establish the terms and conditions of the work to be completed. Understanding the difference between tender and contract is important for anyone involved in business transactions.