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THE WORD CONTRACT IS DERIVED FROM LATIN WORD ‘CONTRACTUM’ WHICH MEANS DRAWN TOGETHER;

EVERY PROMISE OR EVERY SET OF PROMISES FORMIMG THE CONSIDERATION FOR EACH OTHERS IS AN AGREEMENT;

CONTRACT IS AN AGREEMENT BETWEEN TWO OR MORE PARTIES, WHICH IS ENFORCEABLE BY LAW;

TO FORM AN AGREEMENT THERE MUST BE A PROPOSAL OR OFFER BY ONE PARTY AND ITS ACCEPTANCE BY ANOTHER;

AGREEMENT= OFFER + ACCEPTANCE;2

CONTRACT MANAGEMENT

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A VALID CONTRACT IS ONE WHICH IS ENFORCEABLE AND BECOMES BINDING ON THE PARTIES;

THERE MUST BE A PROPOSAL AND ACCEPTANCE OR MEETING OF MINDS;

AGREEMENT MUST BE BETWEEN PARTIES COMPETENT TO CONTRACT;

PARTIES MUST GIVE THEIR FREE CONSENT;

AGREEMENT MUST BE SUPPORTED BY CONSIDERATIONS WHICH MUST BE LAWFUL;

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OBJECT OF AGREEMENT MUST BE LAWFUL;

AGREEMENT MUST NOT HAVE BEEN EXPRESSELY DECLARED VOID BY ANY LAW IN FORCE IN THE INDIA;

AGREEMENT MUST BE CERTAIN AND NOT VAGUE OR INDEFINITE;

LEGAL FORMALITIES (STATUTORY REQUIREMENTS OF MAKING IN WRITING, IN PRESENCE OF WITNESSES OR REGISTERED OR SIGNED BY AUTHORIZED PERSONS) MUSST BE COMPLIED WITH;

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MUST BE UNCONDITIONAL;

MUST BE MADE AT THE PROPER PLACE;

MUST CONFORM TO THE TERMS OF OBLIGATIONS;

MUST BE MADE AT THE PROPER TIME;

MUST BE MADE IN PROPER FORM;

PARTIES MUST BE ABLE AND WILLING TO PERFORM ITS OBLIGATION;

THERE MUST BE REASONABLE OPPORTUNITY FOR INSPECTION;

MUST BE MADE TO THE PROPER PERSON;

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LAW OF CONTRACTS MAY BE DESCRIBED AS THE ENDEAVOUR OF PUBLIC AUTHORITIES TO ESTABLISH A POSITIVE SANCTION FOR THE EXPECTATION OF GOOD FAITH WHICH HAS GROWN UP IN THE MUTUAL DEALINGS OF MEN;

IN CIVIL LAW OR THE LAW OF THE STATE OR THE LAND, LAW SIGNIFIES A COMMAND FROM A SUPERIOR AUTHORITY PRESCRIBING A COURSE OF ACTION, DISOBEDIENCE WHICH WOULD ENTITLE PUNISHMENT;

THE OBJECT OF THE LAW OF CONTRACTS IS TO REGULATE THE DEALINGS BETWEEN INDIVIDUALS/ PARTIES;

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LAW OF CONTRACTS IS NOT THE WHOLE LAW OF AGREEMENTS NOR IS IT THE WHOLE LAW OF OBLIGATIONS; IT IS THE LAW OF THOSE AGREEMENTS, WHICH CREATE OBLIGATION AND THOSE OBLIGATIONS WHICH HAVE THEIR SOURCE IN AGREEMENT;

BROAD CLASSIFICATION OF LAW- PUBLIC AND PRIVATE;

PUBLIC LAW DEALS WITH THE ADMINISTRATIVE POWERS OF STATE AND ALSO CERTAIN RELATIONS BETWEEN THE STATE AND THE INDIVIDUAL;

PRIVATE LAW DEALS WITH THE RIGHTS OF SUBJECTS INTERSE;

INDIAN CONTRACT ACT 1872;

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MOST OF THE MAJOR INFRASTRUCTURE PROJECTS IN OUR COUNTRY FOR THE PRESENT ARE BEING EXECUTED BY GOVERNMENT AND HENCE MOST OF THE CONTRACTS ARE PUBLIC CONTRACTS GOVERNED BY PUBLIC LAW;

MAJOR PART OF THE GOVERNMENT EXPENDITURE IS THROUGH THE PROCUREMENT OF GOODS, SERVICES AND CONSTRUCTION ACTIVITY;

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PUBLIC PROCUREMENT IS ACQUISITION OF GOODS, SERVICES AND PUBLIC WORKS IN A TIMELY MANNER THAT RESULTS IN BEST VALUE TO THE GOVERNMENT AND PEOPLE

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ARTICLES 298, 299, 14 AND 19

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Under this article, Executive power of the Union and States extends to carrying on of any trade, disposal of property and making of contracts for the same I.e. Public Procurement;

For such PP, the Government does not require any additional powers, it can have by entering to contracts;

The power to enter into contracts for PP is therefore expressly vested in the Government under this Article.

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ALL CONTRACTS MADE IN THE EXERCISE OF THE EXECUTIVE POWER OF THE UNION OR STATE BE EXPRESSED TO BE MADE BY THE PRESIDENT OR GOVERNOR OF STATE AND ALL SUCH CONTRACTS AND ALL ASSURANCES OF PROPERTY MADE IN THE EXERCISE OF THAT POWER SHALL BE EXECUTED ON BEHALF OF PRESIDENT OR GOVERNOR BY SUCH PERSONS AND IN SUCH MANNER AS HE MAY DIRECT OR AUTHORIZE;

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NEITHER PRESIDENT NOR GOVERNOR SHALL BE PERSONALLY LIABLE IN RESPECT OF ANY CONTRACT OR ASSURANCE MADE OR EXECUTED FOR PURPOSE OF CONSTITUTION OR ANY ENACTMENT RELATING TO GOI IN FORCE NOR SHALL ANY PERSON MAKING OR EXECUTING ANY SUCH CONTRACT OR ASSURANCE ON BEHALF OF ANY OF THEM BE PERSONALLY LIABLE IN RESPECT THEREOF;

IN ORDER THAT PUBLIC FUNDS MAY NOT BE DEPLETED BY CLANDESTINE CONTRACTS MADE BY ANY AND EVERY PUBLIC SERVANT THERE SHOULD BE DEFINITE PROCEDURE ACCORDING TO WHICH CONTRACTS MUST BE MADE.

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ARTICLE 19(1)(G) CONFERS ON ALL CITIZENS A FUNDAMENTAL RIGHT TO PRACTICE ANY PROFESSION (INCLUDES TAKING AND EXECUTING GOVT CONTRACTS) CARRY ON ANY OCCUPATION, TRADE OR BUSINESS;

FAIRPLAY IN ACTION MUST BE THE BASIS OF THE POLICY OF THE STATE- ART 14 APPLIES ALSO MATTERS OF GOVERNMENT POLICY AND IF THE POLICY OR ANY ACTION OF GOVERNMENT EVEN IN CONTRACTUAL MATTERS FAILS TO SATISFY THE TEST OF REASONABLENESS IT WOULD BE UNCONSTITUTIONAL; BASIC REQUIREMENTS OF ART 14 IS FAIRNESS IN ACTION BY STATE;

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PROFESSION OF DOING GOVT CONTRACTS IS A FUNDAMENTAL RIGHT UNDER CONSTITUTION;

PERSONS PRACTICING GOVT CONTRACTS CANNOT BE TREATED ARBITRARILY OR CAPRICIOUSLY;

GOVT CANNOT LIGHTLY BRUSH ASIDE A CONTRACTOR WHOSE TENDER IS THE LOWEST; REASONS FOR REJECTIONS SHOULD BE REASONABLE, COGENT AND ACCEPTABLE WITHOUT ARBITRARINESS OR DISCRIMINATION;

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PUBLIC PROCUREMENT SYSTEM CAN BE SAID TO BE WELL FUNCTIONING IF IT ACHIEVES THE OBJECTIVES OF TRANSPARENCY, COMPETITION, ECONOMY AND EFFICIENCY FAIRNESS AND ACCOUNTABILITY;

PP INCLUDES PROCUREMENT BY GOVERNMENT AND BY STATUTORY BOARDS AND NON-MINISTERIAL BODIES;

PP MUST FOLLOW PRESCRIBED COMPETITIVE PROCEDURES AND THE RULES GIVE A MAJOR WEIGHT TO FAIRNESS AND EQUITY;

PP IS ALSO SUBJECT TO OVERSIGHT BY LEGISLATURE AND AUDIT (IN ADDITION TO INTERNAL ACCOUNTABILITY MECHANISMS);

MISTAKES IN PP CAN HAVE VAST POLITICAL REPERCUSSIONS OWING TO THE FOCUS THAT THE MEDIA AND THE PUBLIC PLACE ON THE SUBJECT;

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A KEY PRINCIPLE OF GOOD GOVERNANCE PRESUPPOSES CONSISTENT PRINCIPLES AND REGULATIONS FOR PROCUREMENT;

INFORMATION AND DOCUMENTATION ON THESE RULES SHOULD BE WIDELY AVAILABLE AND THE RULES SHOULD BE ENFORCED FAIRLY AND CONSISTENTLY;

THERE SHOULD BE A WELL UNDERSTOOD SYSTEM FOR REGISTERING AND RESOLVING COMPLAINTS SPEEDILY;

THERE SHOULD BE A WELL FUNCTIONING SYSTEM FOR DISPUTE RESOLUTION AND CHECKS ON THE ARBITRARY BEHAVIOUR OF PROCUREMENT ENTITIES AND ON THE INCONSISTENT EXERCISE OF DISCRETIONARY POWERS IN CONTRACT AWARD, ENFORCEMENT AND MANAGEMENT

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ACCOUNTABILITY AND TRANSPARENCY ARE VITAL TO PROCUREMENT MANAGEMENT;

LACK OF OVERSIGHT MECHANISM TO ENSURE ACCOUNTABILITY UNDERMINES THE CAPACITY OF GOVERNMENTS TO SECURE THE CONFIDENCE OF CONTRACTORS AND SUPPLIERS IN THE PUBLIC PROCUREMENT PROCESS AND THE TRUST OF CITIZENS IN THE PROPER USE OF PUBLIC FUNDS;

TRUST AND CONFIDENCE CAN BE ESPECIALLY ERODED BY SECRECY IN PROCUREMENT TRANSACTIONS AT THE LOCAL LEVELS (ALTHOUGH A DEGREE OF CONFIDENTIALITY IS ESSENTIAL TO PROTECT BUSINESS PRIVACY AND THE LEGITIMATE INTERESTS OF INDIVIDUAL BIDDERS)

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TRANSPARENCY REDUCES UNCERTAINTY AND INHIBITS CORRUPTION IN PROCUREMENT BY ASSURING EQUALITY OF ACCESS TO INFORMATION FOR ALL BIDDERS BEFORE, DURING AND AFTER THE BIDDING PROCESS;

THE SYSTEM SHOULD ALSO PROTECT THE INTERESTS OF THE CITIZENS;

SOUND PP POLICIES AND PRACTICES ARE THUS AMONG THE ESSENTIAL ELEMENTS OF GOOD GOVERNANCE;

GOOD PRACTICES REDUCE COSTS AND PRODUCE TIMELY RESULTS;

POOR PRACTICES LEAD TO WASTE AND DELAYS AND ARE OFTEN THE CAUSE FOR ALLEGATIONS OF CORRUPTION AND GOVERNMENT INEFFCIENCY;

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CLEAR, COMPREHENSIVE AND TRANSPARENT LEGAL FRAMEWORK;

CLEAR CUT FUNCTIONAL RESPONSIBILITIES AND ACCOUNTABILITIES FOR PROCUREMENT FUNCTION;

EFFICIENT INSTITUTIONAL FRAMEWORK;

ROBUST MECHANISM FOR ENFORCEMENT OF POLICY, RULES AND REGULATIONS;

WELL TRAINED PROCUREMENT STAFF

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ECONOMY: BY OPEN COMPETITION;

EFFICIENCY: BY EFFECTIVE PROCESSES;

FAIRNESS: BY NON-DISCRIMINATION;

TRANSPARENCY: BY OPENNESS;

ACCOUNTABILITY: BY ADHERENCE TO PROCUREMENT LAW OR ACT;

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MERE COMPLIANCE TO THE INDIAN CONTRACT ACT IS NOT ENOUGH IN CASE OF GOVERNMENT CONTRACTS, BUT THEY MUST ALSO SATISFY ARTICLE 14 AND 19

ARTICLE 14: EQUALITY BEFORE LAW- THE STATE SHALL NOT DENY TO ANY PERSON EQUALITY BEFORE THE LAW OR THE EQUAL PROTECTION OF THE LAWS WITHIN THE TERRITORY OF INDIA;

HENCE TO SATISFY ARTICLES 14 &19 IN GOVERNMENT CONTRACTS THE PROCESS OF PROCUREMENT SHOULD BE FAIR &REASONABLE, FAIRNESS IN ACTION BEING THE BASIC REQUIREMENT;

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TAKING GOVT CONTRACTS IS A PROFESSIONAL OCCUPATION TO WHICH EVERY ONE HAS A FUNDAMENTAL RIGHT;

PP HAS TO BE OPEN FOR ALL WHO ARE ELIGIBLE;

SC HAS HELD “TODAY THE GOVERNMENT IN A WELFARE STATE IS THE REGULATOR AND DISPENSOR OF SPECIAL SERVICES AND PROVIDER OF A LARGE NUMBER OF BENEFITS,JOBS,CONTRACTS,LICENSES,QUOTAS, MINERAL RIGHTS ETC. THE GOVT POURS FORTH WEALTH, MONEY,BENEFITS, SERVICES, CONTRACTS, QUOTAS AND LICENSES…..”

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TO REGULATE PUBLIC PROCUREMENT OF GOODS, CONSTRUCTION AND SERVICES SO AS TO PROMOTE THE OBJECTIVES OF:

MAXIMIZING ECONOMY AND EFFICIENCY IN PROCUREMENT;

FOSTERING AND ENCOURAGING PARTICIPATION IN PROCUREMENT PROCEEDINGS BY SUPPLIERS AND CONTRACTORS, ESPECIALLY WHERE APPROPRIATE, PARTICIPATION BY SUPPLIERS AND CONTRACTORS REGARDLESS OF NATIONALITY AND THEREBY PROMOTING INTERNATIONAL TRADE;

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PROMOTING COMPETITION AMONG SUPPLIERS AND CONTRACTORS FOR THE SUPPLY OF THE GOODS,CONSTRUCTION OR SERVICES TO BE PROCURED;

PROVIDING FOR THE FAIR AND EQUITABLE TREATMENT OF ALL SUPPLIERS AND CONTRACTORS;

PROMOTING THE INTEGRITY OF, AND FAIRNESS AND PUBLIC CONFIDENCE IN THE PROCUREMENT PROCESS; AND ACHIEVING TRANSPARENCY IN THE PROCEDURES RELATING TO PROCUREMENT;

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VOLUME OF PROCUREMENT IS VERY HIGH; SO ARE THE STAKES;

GOK ANNUAL PROCUREMENT WAS ASSESSED AS ABOUT RS.13,000/- CRORES IN 2001;

IRREGULARITIES IN PROCUREMENT, MALPRACTICES/ CORRUPTIVE PRACTICES IN PROCUREMENT ARE A COMMON AUDIT OBJECTION; VIGILANCE CASES; SOME EVEN LEAD TO FALL OF GOVERNMENT;

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THE UNCITRAL MODEL LAW ON PROCUREMENT OF GOODS, CONSTRUCTION AND SERVICES WAS ADOPTED BY THE UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAW (UNCITRAL) AT ITS TWENTY-SEVENTH SESSION; THE COMMISSION HAS ALSO ISSUED A GUIDE TO ENACTMENT OF THE UNCITRAL MODEL LAW ON PROCUREMENT OF GOODS. CONSTRUCTION AND SERVICES (A/CN.9/403)

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MANY COUNTRIES HAVE A PROCUREMENT LAW; SOME COUNTRIES INCLUDING INDIA HAVE CODES AND

MANUALS; HOWEVER THESE ARE ISSUED BY ADMINISTATIVE

MINISTRIES /DEPARTMENTS AND COULD BE CHANGED/REVISED RATHER EASILY; MAY LEAAD TO INCONSISTENCIES;

THE REVISION/MODIFICATION OF THE LAW/ACT REQUIRES THE APPROVAL OF PARLIAMENT/ASSEMBLY WHICH IS RATHER TOUGH/DIFFICULT; IT WILL ENSURE CONSISTENCY;

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IN INDIA PROCUREMENT PROCEDURES ARE CONTAINED IN THE GENERAL FINANCIAL RULES (GFR) WHICH HAS BEEN REVISED IN 2005;

TAMIL NADU IS THE FIRST STATE IN INDIA WHICH HAS ENACTED A PROCUREMENT LAW; IT IS NAMED THE TAMIL NADU TRANSPARENCY IN TENDERS ACT, 1998 AND RULES 2000;

KARNATAKA IS THE SECOND STATE IN INDIA WHICH HAS ENACTED A PROCUREMENT LAW; IT IS NAMED THE KARNATAKA TRANSPARENCY IN PUBLIC PROCURMEENT ACT 1999 AND RULES 2000; KARNATKA HAS ALSO MANDATED STANDARD TENDER DOCUMENTS;

OTHER STATES SUCH AS ANDHRA PRADESH, ORISSA, PUNJAB ARE PROPOSING TO ENACT SIMILAR PROCUREMENT LAWS;

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THE INDIAN CONTRACT ACT, 1872; WORKMEN COMPENSATION ACT,1923; THE INDUSTRIAL DISPUTES ACT,1947; EPF AND MISCELLANEOUS PROVISIONS ACT, 1932; THE INDIAN PARTNERSHIP ACT, 1923; THE SALE OF GOODS ACT,1930; PAYMENT OF WAGES ACT, 1936; MINIMUM WAGES ACT,1936; EMPLOYEES’S STATE INSURANCE ACT, 1948; FACTORIES ACT, 1948;

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KARNATAKA SALES ACT, 1957; CONTRACT LABOUR (REGULATION AND ABOLITION) ACT,

1976; MATERNITY BENEEFIT ACT, 1961; CHILD LABOUR (PROHIBITION AND REGULATION ACT,

1986; PAYMENT OF GRATUITY ACT,1972; THE PUBLIC LIABILITY INSURANCE ACT, 1991; ENVIRONMENTAL (PROTECTION) ACT, 1986; THE ARBITRATION AND CONCILLIATION ACT, 1996; ETC.

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DEFINITIONS Summary 1. Arbitrator 2. Architect3. Bills of quantities4. Builder5. Building materials6. Building scheme 7. Building society

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8. Contractor9.Engineer10. Estimate11.Executory contract12. Land surveyor13.Lump sum contract14. Plan15.Quantity surveyor16. Resident engineer17.Schedule of prices18.Specification 19. sub-contract 20. Tender

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arbitrator is the person to whose attention the matters in dispute are submitted – a judge of the parties ‘ own choosing, whose functions are juditial and whose duties are not those of a mere partisan agent, but of an impartial judge,to dispense equal justice to all the parties, and to decide the law and facts involved in the matters submitted, with a view to determining and finally ending the controversy.

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building contracts defines architect as a person

who is skilled in the art of building and who is competent to design buildings and supervise their erection. He must not only be well versed in building techniques and be able to prepare plans, sections, elevations and specifications, but he must also have the ability to supervise the carrying out of the work and administration of the contract between the employer and the contractor.

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Builder is one who builds, or whose

occupation is that of building specifically, one who controls,and directs the work of building construction in any capacity. It means and includes a person whose business is to construct buildings, vessels, bridges, canals or rail roads by contract.

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Contractor: contractor is a person who makes a contracts, especially a builder who works by contract. A “contractor” is a person who in the pursuit of an independent business, undertakes to do specific jobs of work for other person, without submitting himself to their control in respect to the detail of the work.

Engineer: the engineers function in relation to design and supervision is similar to that of the architect. Unlike an architect, however, he may design not only the works in their final form but also the temporary works ancillary to their construction.

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bilding contract defines land surveyor as a

person who has, professes to have skill in surveying and valuing land, and landed property generally, and in the management of the estates. In India there are no separate land surveyors to do the work of surveying and valuing the land, which is generally done by qualified engineers and sometimes professional surveyors and valuers.

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Sub- contractor: A sub-contractor is a person who enters into a contract with the general or main contractor in relation to the work taken up by the latter. A sub-contract is binding only on the parties to the contract, and the terms of it may or may not be made to include, or comply with, the terms of the general or the main contract.

Tender : Tender is an offer. It is something which invites and is intended to invite acceptance. Sometimes in the case of large

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contracts a list is prepared, tabulated and shows the names of all contractors who have tended. And opposite each name the total price tended and also any observations made by the contractor or any peculiar conditions on which the contractor wishes to govern his execution of the work, are stated.

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1. Duties in detail 2. Examination of site 3. Estimates4. Plans, drawings, specifications and quantities5. As agent of the employer 6. Authority of architect and engineer7. As to wavier of contractual requirements of building

contract8. As to contracts or variations9. As to taking out bills of quantities.10. 4. As to measurement and valuation of variations 11. 5. Whether building owner liable to builder for measuring

up deviations.12. 6. As to employment of engineering or other consultants.

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The duration of the architect’s duties

under a building contract must depend on the special terms of the contract. Contracts often provide that the power of the architect to decide

various questions shall continue after the completion, breach or determination of the contract.

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An architect’s employment and his agency may usually be determined by his employer at any moment without notice and with or without good cause and the architect cannot compel specific performance of the contract to employ him, his service being of too personal a nature, or restrain the employer by injuction from retaining another architect. The architects sole remedy, if any, is by action for damage for breach of contract to employ and pay him.

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1. Waranty of authority: while an architects implied authority to bind the employer in a contract is as has been seen, extremely limited, he may neverthless be himself liable to the contractor for breach of warranty of authority if he exceeds his actual authority, and the contractor suffers damage as a result.

2. Measure of damages for breach of warranty: The damages recoverable for breach of warranty

of authority, are the loss which the contractor has sustained as the natural and probable consequence of the absence of authority

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Generally Degree of care owed by architect or

engineer Design Examination of the site Delivery of drawings and instructions in time Special duties in regard to nomination Knowledge of legislation, building

regulations, by-laws, and rights of adjoining owners

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Excess of cost estimates Preparation of quantities Recommending builders Recommending form of contract Supervision Comprehensive design Surveys Administration of contract Architects liabilities to building owner and

to builder for inaccuracies in quantities

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When an engineer, architect or surveyor is employed to perform a specific work, such as to prepare plans or make a survey, is entitled to be paid for his plans or survy as soon as he has done the work and given the employer a reasonable opportunity of inspecting and ascertaining its correctness, and he has a lien upon and may retain the plans until he is so paid.

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an architect or surveyor, by demanding more than a reasonable price and refusing to deliver his plans except upon payment of the excessive price, doen not preclude himself from subsequently suing for and recovering reasonable price. He may maintain an action and retain his lien not withstanding.

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Continual access by the contractor to documents which form part of the contract and provisions for the settlement for the discrepancies therein.

The contractor to provide all workmen ship required, labour, tools, tackle , water, plant, and materials.

The acceptance by the contractor by the architect or engineer as a recognized agent of the employer and provision for his supervision of the works.

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Conditions under which unmixed materials deposited on the site of the works are to become the property of the employer.

Provision for the condamination of improper materials and workmenship.

Removal of such condemned materials or workmenship to be carried out at once.

Responsibilities of contractor for setting out the works. Responsibility of contractor for the safety and good condition

of the works The giving of notice and payment of fees to lacal authorities

etc., by the contractor The indemnity of the employer from liability as to claims

resulting from accident to persons, property or things in relation to the work, insurance etc.,

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