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CONTRACT

DEFINITION: It is an Agreement between

Two or more parties having

Consideration and is

enforceable by law is called a

CONTRACT

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AGREEMENT

Promise/s to do something or not to

do something by parties is called an

AGREEMENT

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CONSIDERATION

It is a reciprocal promise/s or

exchange of things is called a

consideration

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Hence all agreements are not a

contract but all contract are

agreements.

Enforceable by Law means that it

should be a legal agreement and

contract

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LEGALLY ENFORCEABLECONTRACT

As per Contract Act 1872 Contract entered

by the parties are major, agreement/

promises are legal and consideration islegal than the contract is said to be an

legally enforceable

Contract not enforceable by law is called

as a Void Contract

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VOID CONTRACT

Entered by the party who is

Minor

Lunatic

Illegal act to do

(Agreement)

Illegal ConsiderationFraud

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VOIDABLE CONTRACT

Contract which has ability to become voidis called as a Voidable contract which areentered upon by

Misrepresentation

Undue Influence

Corson

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Contract Law is to understand andinterpret the promises between the partiesto the contract.

Law are set by the Court with reference tothe Act passed by the Parliament

Act is a BARE Act and Sections of actinterpreted by court and Judgementpassed is called as Law

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We need to handle the situation from the

formation of the contract to administration

of contract to concluding the contract so

as to achieve successful completion of

contract and project with zero dispute

situations

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FORMATION OF CONTRACT

It is an invitation of proposal and receiving

offer and acceptance of offer is called as a

Contract

Hence invitation of proposal need be taken

care

Offer need be proper

And acceptance should be absolute

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TENDER WHEN ACCEPTED AFTERSCRUTINY IS BECOMING A CONTRACTDOCUMENT

EVERY WORD WRITTEN IN TENDERARE PROMISES AND CONTRACTUAL

OBLIGATIONS OF THE PARTIES TOTHE CONTRACT

HENCE DRAFTING OF TENDER

DOCUMENTS IS VERY IMPORTANT

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THE CLAUSE IN THE TENDER SHOULD BEDRAFTED KEEPING IN VIEW LAW RELATED

TO CONSTRUCTION CONTRACT

COURT HAVE STARTED CALLING CERTAIN

CLAUSES AS EXCULPATORY

AVOID AMBIGUITY IN THE DRAFTING

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PROJECT/CONTRACT ADMINISTRATOR

IT IS NECESSARY TO LET EVERY ONE KNOW EXACTLY HIS

SPHERE OF ACTIVITIES AND RELATED RESPONSIBILITY ANDAUTHORITY. EACH CADRE HAS TO BE TRAINED FOR THE EXACTJOB.

FOLLOWING ACTIVITIES ARE A MATTER OF CONTRACT

ADMINISTRATION

1. MEASUREMENTS, BILLS AND PAYMENTS.2. EXTRA-ITEMS AND CHANGE ORDER.3. EXTENSION OF TIME.4. MATERIALS ACCOUNTS.5. QUALITY.6. CLAIMS MANAGEMENT.7. LABOUR WELFARE.8. PUBLIC INTEREST AND ENVIRONMENTS.

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ADMINISTRATION AND HUMAN RELATIONS :

THE CONSTRUCTION PROCESS IS AN INTENSE INTERACTION

BETWEEN PEOPLE ON ALL SIDES. THERE MUST BE A DEGREE

OF CONFIDENCE BETWEEN THE TWO SIDES. OWNERS MUST

FEEL THEY WILL HAVE THEIR PROJECT DONE WITHIN

REASONABLE TIME AND MONEY. CONTRACTORS SHOULD

HAVE CONFIDENCE THAT THEIR LABOURS WILL NOT GO

WASTE. THIS REQUIRES A GOODS BALANCED CONTRACT

DRAFTED SO THAT ADMINISTRATION POSES LESS PROBLEMS.

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CONSTRUCTION PROJECT IS A PROCESS

WHICH HAS

A)SPECIFIC OBJECTIVE TO BE COMPLETED WITHINCERTAIN SPECIFICATIONS.

B) DEFINITE START AND COMPLETION DATES.

C) PRE SANCTIONED FUND WITH LIMITED CUSHION.

D) TO CONSUME RESOURCES SUCH AS MEN,MONEY, MACHINERIES

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SHORT COMING OF CONTRACT ADMINISTRATION:SHORT COMINGS OF CONTRACT ADMINISTRATION COULD BE TRACEDTO FOLLOWING AREAS.

1. CONFUSION ABOUT WHO IS WHO IN THE ORGANISATION FORDELEGATION OF DUTY AND EXERCISE OF POWERS.

2. UNTIMELY AND DEFECTIVE WORK ORDER.3. DELAY IN SITE HANDING OVER WITH PROPER ACCESS WITH

RESPONSIBILITY OF WATER/ POWER NOT CLEARLYUNDERSTOOD.

4. DRAWINGS MAY NOT BE READY.5. USERS HAVE NOT FROZEN THEIR REQUIREMENTS.6. TIME ESTIMATED FOR CONSTRUCTION IS WRONG.7. B.O.Q. IS NOT FAIRLY ACCURATE AND REQUIRES LOT OF

VARIATIONS.8. ALTERATIONS, EXTRAS, SUBSTITUTIONS ARE MORE OFTEN

REQUIRED.9. INADEQUATE SITE STAFF FOR SUPERVISION AND RECORD OF

BILLS.10.CLAIMS MANAGEMENT.11.PAUCITY OF FUNDS.

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CONTRACT ADMINISTRATION,

SHORTCOMINGS AND REMEDIES

CONTRACT IS A SET OF ENFORCEABLE PROMISES.

IN THIS CONTEXT, FOLLOWING DOCTRINES AREMOST IMPORTANT.

1. WAIVER2. ESTOPPELS

3. ELECTION4. ALTERATION

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WAIVER

ON BREACH OF ANY TERM OF CONTRACT, BY ONE PARTY THERE COMES

TO THE OTHER PARTY. THE OTHER PARTY NOT EXERCISING ITS RIGHT IS

CALLED A WAIVER

ESTOPPELSESTOPPELS IS A COROLLARY TO WAIVER IN THE SENSE THAT ONCE

YOU HAVE WAIVED A RIGHT, YOU ARE STOPPED FROM ENFORCING THE

RIGHT. YOUR ACTION CREATING RELIANCE FOR OTHER PARTY

CREATES AN ESTOPPELS FOR YOU. YOU CANNOT REVERSE THE

ACTION WITHOUT CREATING A LEGAL DETRIMENTS TO YOU.

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ALTERATION

WHEN ONE ALTERS A CONTRACT, THE OTHER PARTY HAS A RIGHT TO

REPUDIATE OR AFFIRM. IT IS THE AFFIRMATION THAT CREATES NEW

CONTRACTUAL RELATIONS AND REPUDIATION BECOMES

WAIVER.

ELECTION

FOR RELIEF OR OTHERWISE, YOU MAY HAVE A FEW OPTIONS. YOUR

OPTING FOR ONE, CREATES ESTOPPELS FOR OTHER. LIQUIDATED

DAMAGES LINKED TO EXTENSION OF TIME IS ONE SUCH SITUATION SO

YOU ARE ADVISED TO PUT THAT PHRASE WITHOUT PREJUDICE.

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BECAUSE WE CANNOT HANDLE THE

CONTRACT?

BECAUSE WE HAVE BECOME LITIGANT?

BECAUSE WE MEAN NO BUSINESS ANDARE NOT INTERESTED IN DEVELOPMENT?

IS IT TRUE?

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19TH CENTURY CONSTRUCTION SCENERIO

NAME DATE OF START DATE OF

COMPLETION

ESTIMATED

COST IN RS.

ACRUAL

COST IN RS

1. THE UNIVERSITY

LIBRARY &

RAJABAI CLOCK

TOWER

16TH JAN 1869

( 9 YEARS)

NOV.1878 6,32,451.00 6,32,120.00

2. P.W.D. BUILDING 21ST MAY 1869 1ST APRIL 1872 4,38,937.00 4,14,484.00

(3 YEARS)

3. THE GENERAL

POST OFFICE

21ST FEB.1869 11TH APRIL 1872 5,99,992.00 5,94,200.00

(3 YEARS)

4. PRESIDENCY

MAGISTRATES

COURT

3RD NOV 1871 31ST DEC. 1888 3,87,361.00 3,73,694

(4 YEARS)

5. THE LAW

COURTS

1ST APRIL 1871 NOV.1878 16,47,196.00 16,44,528.00

(7 YEARS)

6. MUNICIPAL

BUILDING

25TH APRIL

1889

31 ST JULY 1893 11,88,082.00 11,19,969.00

(4 YEARS)

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CAUSES:1. IRRATIONAL RISK-SHARING.

2. MULTIPLE AGENCIES AND CONFLICT OF

INTERESTS.

3. CONTINUOUS EROSION IN VALUE OF

MONEY.

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STRAINS NEED STRESS

MANAGEMENT:

STRESSES ARE CLAIMS IN

CONSTRUCTION:

CLAIMS BECOME DISPUTES AND

DISPUTES LEAD TO DISTRESS.

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SOURCE OF CLAIM

1.DOCUMENTS

2.EXECUTION

3.PAYMENTS

4.TIME

5.DEFAULT

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(A) EXECUTION OF CONTRACT: CHANGES/ EXTRA ITEMS/ VARIATIONS.

DIFFERING SITE CONDITIONS.

DELAYS AND ITS CONSEQUENCES .

(B) ADMINISTRATION OF CONTRACT:

PAYMENTS OF DUES.

CLOSURE OF CONTRACT /

TERMINATION LOSSES.

TYPES OF CLAIMS

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DEFECTS IN DOCUMENTS /DESIGN / DECISION.

INCOMPETENCE OF PARTIES

TO COPE UP WITH CHANGES.

DIFFERING SITE CONDITIONS.

ATTITUDE OF ANY ONE ORBOTH THE PARTIES.

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EXCUSABLE & NON EXCUSABLE DELAY

CRITICAL & NON CRITICAL DELAY

CONCURRENT & NON CONCURRENT DELAY

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General Rules of Interpretation:

In deciding the "Breach of Contract" the adjudicatingforum reads the terms and conditions within a

framework of certain rules. reading intentions of partiesfrom contract documents.

These rules are as follows :-

1. Words be given plain meaning - Plain Meaning Rule

Words which could have two meanings will be giventhat meanings which makes Contract valid rather thanvoid.

2. If certain things are expressly mentioned, it will excludeother things of similar nature - Expressio Unius Rule

3. General word like "etc." be narrowed down to meanonly things of same genre - Ejusdem generis Rule.

4. Words have to be construed forcibly against the drafter- Contra Profrentem Rule.

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An A.I based computer programme to go through Questions-Answers logic linked to data bank of relevant case laws to

appreciate likely outcome. This tool can be developed forcomputation of claims, documentations and decision-makingas well as for strategies to argue claims.

Early resolution of disputes in Construction is a must for allconcerned in view of fast erosion in value of money.

The constriction Disputes Resolution needs a rare combinationof legal and engineering talent. This being so rare that we

must develop tools of Artificial Intelligence for Computers toassist Arbitrators for expeditious disposal of the disputes.Construction industry in extensive interaction with Law-experts can help us to develop such tools. I placed before youmy modest effort at this.