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Simple English definitions for legal terms
competitive bid
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A quick definition of competitive bid:
A competitive bid is an offer made by someone who wants to buy something or provide a service. It is usually made in response to a public notice of a sale or purchase. The person making the bid offers a specific price for the item or service, and it may be open to negotiation or remain firm. There are different types of bids, such as sealed bids that are not revealed until all bids are opened, and open bids that can be changed to compete with other bids. In the world of securities, bid and asked refer to the buying and selling prices of stocks.
A more thorough explanation:
A competitive bid is an offer made by a buyer to pay a specific price for something that may or may not be for sale. This type of bid is usually submitted in response to a public notice of an intended sale or purchase.
For example, when a government agency wants to purchase goods or services, they may issue a request for proposals (RFP) and invite vendors to submit competitive bids. The vendor with the most competitive bid, based on factors such as price, quality, and delivery time, is usually awarded the contract.
Another example of a competitive bid is when a company wants to acquire another company. The acquiring company may make a takeover bid, which is a competitive offer to purchase the target company's shares at a premium price.
Overall, a competitive bid is a way for buyers to get the best value for their money by encouraging sellers to offer their best price and terms.
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