Contract Management & Contract Law

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    Overview of Contract Management &

    Contract Law

    Dr S N RaoDirector, ESCI

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    Contractmanagement

    Contract

    Types of contractsContract Law

    Contract management

    Disputes & Resolution

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    Contract

    A Promise enforceable by Law

    Offer +Acceptance (Legally binding)

    To be legally binding as a contract, a

    promise must be exchanged for adequateconsideration. i.e., benefit a partyreceives

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    Contracts

    Essentials of a Valid Contract

    There must be an agreement or meeting the

    minds The agreement must be between parties

    competent to enter into a contract

    The Parties must give free consent

    The agreement must be supported by lawfulconsideration.

    Subject matter must be definite and lawful

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    Contracts by Government

    Article 299

    Deed must be by authorised person

    Transparency in the deal

    Public Interest in accepting Tenders should

    prevail

    Negotiations should be done with a purpose

    and prudence.

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    CONTRACTING IN

    GOVERNMENTGovernment is, by far, the largest contractor in

    any Country, so too in India . Supply products

    (purchases ) and services (Consultancy, labouretc.,)

    WHAT IS THE SIGNIFICANCE OF GOVT.

    CONTRACTS ?

    Contract between private parties is absolutely

    binding and valid if section 10 of the Indian

    Contract Act 1872 is satisfied.

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    SECTION-10

    All agreements are contracts if they are made by

    the free consent of parties competent to contract,

    for a lawful consideration and with a lawful

    object, and are not hereby expressly declared to be

    void______

    Contracts entered into between private persons

    and the Government are governed by Article299 of Constitution of India.

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    ARTICLE 299

    All contracts made in exercise of the executive power of

    the Union or the State shall be expressed to be made by

    the President or by the Governor of the State as the case

    may be and all such contracts and all assurances of

    property made in the exercise of that power shall be

    executed on behalf of the President or the Governor by

    such person and in such manners as he may direct or

    authoriseNeither the President nor the Governor shall be

    personally liable_______

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    Types of Contracts

    Lumpsum

    Item Rate

    Cost Plus Percentage

    Cost + Fixed Fee

    Maximum PriceTurnkey

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    Form of Contracts

    Formal & Informal

    Express & Informed

    Unilateral & Bilateral

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    LAW OF CONTRACT

    Freedom of contract

    Contract adhesion

    Exclusions & Exemptions

    Sanctity of Contract

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    CONTRACTS ARE GOVERNED

    BYIndian contract Act 1872

    ( as amended by Act 4 of 2003)

    Deals mainly with general and limitingprinciples such as formation, Validity,performance or breach and remedies therefore.

    Not a complete code on contract since statutes

    dealing with negotiable instruments Act 1881,the Indian Arbitration & ConciliationAct 1996, the sale of Goods Act 1930 are notcovered by the Contract Act

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    WHAT IS AN AGREEMENT

    Every promise and every set of promises forming

    the consideration for each other is an agreement

    Section 2 (e) of the Indian Contract Act.

    AGREEMENT AND CONTRACT

    An agreement which is enforceable by Law isconsidered to be a Contract Section 2 (h) of

    the Indian Contract Act.

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    All Agreements are Contracts if

    they are made by

    Free Consent

    Party's Competent to Contract

    Lawful Consideration

    Lawful Objective

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    Contract Management

    Contract Organisation

    Owner

    Contractor

    Architects & Designing / Engineer

    Suppliers / Sub Contractors

    Statutes and Mandates

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    Contract Management ..contd

    Management of Contracts

    Pre Contract Requirements

    Contract Operation

    Issues and Problems arising

    Disputes & Resolutions

    Closure of Contract

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    Contract Management

    Pre Award Stage (Tenders)

    Award of Contract (Agreement)Performance of the Contract (Execution

    Process)

    Post Completion of Stage

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    Pre Award Stage(Tenders)

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    Tenders

    Negotiated Tenders

    Limited Tenders

    Open Competition

    Mode of PublicationNotice inviting tenders

    Submission of Tenders

    Irregularities in submissionHow to Treat?

    Conditions by contractors in tender

    With drawl of Tender

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    CONTRACT CONDITIONS THAT HAVE

    MONETARY IMPLICATIONS

    EXTENSION OF TIME

    LIQUIDATED DAMAGES

    PENALITIES

    PAYMENT TERMS LIKE MOBILISATION

    ADVANCE, SECURITY DEPOSIT, TIME LIMIT

    WITHIN WHICH BILLS ARE TO BE PAID, STAGES

    OF PAYMENT

    ARBITRATION CLAUSE

    MACHINERY AND MATERIALS ISSUED BY CLIENTWHETHER FREE OR AT FIXED COST

    ESCALATION

    LIMITATIONS OF LIABILITIES

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    MODES OF INVITING TENDERS

    NEGOTIATED TENDERS

    LIMITED COMPETITION

    OPEN COMPETITION

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    REQUIREMENTS TO BE FULFILLED

    BEFORE INVITING TENDERS

    SANCTION TO BE OBTAINED

    URGENT WORKS WITH NO TIME

    SPLITTING OF WORKS TO BEDISCOURAGED

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    TENDER DOCUMENTS TO BE READY

    BEFORE INVITING TENDERS

    NOTICE INVITING TENDERS

    STANDARD FORM OF TENDER

    SCHEDULE OF QUANTITIES OF WORK

    COMPLETE SET OF DRAWINGS

    COMPLETE SET OF SPECIFICATIONS

    ESSENTIAL ARCHITECTURAL

    DRAWINGS

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    INFORMATION TO BE PROVIDED IN

    NOTICE

    QUALIFICATIONS

    NAME

    EMD

    SECURITY DEPOSIT

    TIME LIMIT

    COST

    MODE OF SUBMISSION

    DATE, TIME AND PLACE OF OPENING

    TENDERS

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    PREPARATION AND SUBMISSION

    OF TENDER

    PURCHASE OF BLANK TENDER FORM

    STUDY OF TENDER DRAWINGS

    VISIT TO THE SITE OF WORK ROUGH VERIFICATION

    ANALYSIS OF RATES

    DECIDING THE PERCENTAGE WORKING OUT THE LUMPSUM

    CHECKING OUT THE RATES

    COPIES OF DOCUMENTS

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    IRREGULARITY IN SUBMISSION OF

    TENDER

    UNSIGNED TENDER MAY BE BINDING

    ESTIMATES AS OFFERS ARE BINDING

    PAYMENT OF EARNEST MONEY

    WITHDRAWAL OF TENDER PRIOR TO ITS

    ACCEPTANCE

    PRE QUALIFICATION OF TENDERS

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    Acceptance of Tender

    Letter of Intent

    Mode of Communication

    Date of Acceptance

    Revocation of Acceptance

    Rejection of Tender

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    Operation of Contracts

    Interpretation

    Duties / Obligations of Owner

    Duties / Obligations of Contractor

    Organising the Project Execution

    Monitoring the progress

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    Award of Contract(Agreement)

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    ESSENTIAL CHARACTERISTICS

    OF A CONTRACTThe terms of the contract must be clear andprecise.

    Time is the essence of contracts

    The terms of contract should be enforcedstrictly. This responsibility rests with both

    parties.

    Revision of rates in accepted agreementsduring the currency of such agreement is

    prohibited.

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    CONTRACT DOCUMENT

    CONTAINS NOTICE INVITING TENDERS

    INFORMATION & INSTRUCTION TO TENDERERS

    GENERAL CONDITIONS OF CONTRACT SPECIAL CONDITIONS OF CONTRACT

    SCHEDULE OF QUANTITIES & COST

    TENDER DRAWING

    SPECIFICATION OF WORKS

    FORMS FOR BANK GUARANTEE IN RESPECT OF EARNEST

    MONEY

    PERFORMANCE GUARANTEE

    MOBILISATION ADVANCE

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    GENERAL CONDITIONS OF

    CONTRACTFor