Does making the highest bid automatically create a binding contract?

A. As per Section 3 of the Contract Act 1872, making the highest bid does not automatically create a binding contract because an offer, such as a bid, must be explicitly accepted and communicated by the party inviting the bids. The mere submission of the highest bid does not constitute a contract unless the bid is formally accepted and this acceptance is communicated to the bidder. The party inviting the bids reserves the right to accept or reject any bid without providing a reason, as often stated in the terms of the invitation for bids.

This FAQ is prepared by Sadia Saman Advocate