Contract Management & Contract Law 1

Contract management
• Contract
• Types of contracts
• Contract Law
• Contract management
• Disputes & Resolution





Contract
• A Promise enforceable by Law

• Offer +Acceptance (Legally binding)

• To be legally binding as a contract, a promise
must be exchanged for adequate
consideration. i.e., benefit a party receives

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 lawful
consideration.
– Subject matter must be definite and lawful
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.
CONTRACTING IN GOVERNMENT
• Government is, by far, the largest contractor in any
Country, so too in India . Supply products
(purchases ) and services (Consultancy, labour etc.,)
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.

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 Article 299
of Constitution of India.

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 authorise”
• Neither the President nor the Governor shall be personally
liable_______”

Types of Contracts
• Lumpsum
• Item Rate
• Cost Plus Percentage
• Cost + Fixed Fee
• Maximum Price
• Turnkey

Form of Contracts
• Formal & Informal
• Express & Informed
• Unilateral & Bilateral
LAW OF CONTRACT
• Freedom of contract
• Contract adhesion
• Exclusions & Exemptions
• Sanctity of Contract
CONTRACTS ARE GOVERNED BY
• Indian contract Act 1872
( as amended by Act 4 of 2003)
• Deals mainly with general and limiting principles
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 & Conciliation Act
1996, the sale of Goods Act 1930 are not covered
by the Contract Act

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 is
considered to be a Contract – Section 2 (h) of the
Indian Contract Act.

All Agreements are Contracts if they are
made by

• Free Consent
• Party's Competent to Contract
• Lawful Consideration
• Lawful Objective



Contract Management
• Contract Organisation
– Owner
– Contractor
– Architects & Designing / Engineer
– Suppliers / Sub – Contractors
– Statutes and Mandates
Contract Management ..contd
• Management of Contracts
– Pre – Contract Requirements
– Contract Operation
– Issues and Problems arising
• Disputes & Resolutions
• Closure of Contract
Contract Management
• Pre – Award Stage (Tenders)
• Award of Contract (Agreement)
• Performance of the Contract (Execution
Process)
• Post Completion of Stage
Pre – Award Stage (Tenders)
Tenders
• Negotiated Tenders
• Limited Tenders
• Open Competition
• Mode of Publication
• Notice inviting tenders
• Submission of Tenders
• Irregularities in submission
– How to Treat?
• Conditions by contractors in tender
• With drawl of Tender
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 CLIENT WHETHER
FREE OR AT FIXED COST
 ESCALATION
 LIMITATIONS OF LIABILITIES