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Name Kulsoom Alam

ID: 10819
Subject: Business law
PRE CONTRACT STAGES

Acceptance of necessity

Determining the mode of tendering

Vetting of draft tender enquiry

Maintenance of Register of approved vendors

Issue of GTE/OTE/LTE/PAC

Tender Opening

Scrutiny and preparation of CST

Technical Evaluation Committee/ Tender Purchase Committee

Price Negotiation Committee

MANAGEMENT OF CONTRACTS

Implementation of the contract should be strictly monitored and notices issued promptly whenever a
breach of provisions occur.

Proper procedure for safe custody and monitoring of Bank Guarantees or other Instruments should be
laid down.

Monthly review of all Bank Guarantees or other instruments expiring after three months.

Monitoring the progress of supply or work. Extensions of bank guarantees or other instruments, where
warranted, should be sought immediately.

Wherever disputes arise during implementation of a contract, legal advice should be sought before
initiating action

Documents to be filed in the matter of resolution of dispute, if any, should be carefully scrutinized
before filing to safeguard government interest.

POST CONRACT MANAGEMENT

Any relaxation in the contract terms / conditions should be severely discouraged. In exceptional cases
where the modification / amendments are absolutely essential, the same should be allowed only after
taking into account the financial implications for the same.

Contracts to be closely monitored and all follow up actions should be taken promptly

Delivery Period extension should be granted only on bonafide request.

In case of delay in supply of item, the LD, to the extent possible, should be recovered.

Post Contract Management Common Flaws

While granting delivery period extensions the Performance Bank guarantee was not extended properly.
Non stipulation of proper delivery period in the contract for supply as per the terms of delivery.

Non incorporation of proper guarantee/warranty terms.

Modifications of contract terms/specifications after award of the contract giving undue benefit to the
supplier.

Non imposition of Liquidated damages for delay in supplies and recovery of the same from the suppliers.

Non recovery of LC extension charges from the suppliers for extending the letter of credit.

Interest on advance payments- not recovered

Non invocation of Risk Purchase

Defective equipment received after warranty

Delay in lodging claim for insurance Damage Bad storage

AMMENDMENT TO CONTRACT

For enhancement of contract rates, concurrence of IFA has to be sought unless price variation clause is
already incorporated in the contract

Price Variation Clauses/ Exchange Rate variation clauses have necessarily to be vetted by the IFA

Any ammendment has to be approved by the authority which had approved the original contract

TERMINATION OF CONTRACT

Contract may be terminated when

The supplier fails to honour any part of the contract

The contractor is found to have made any false or fraudulent declaration or statement to get the
contract or he is found to be indulging in unethical or unfair trade practices.

Both parties mutually agree to terminate the contract.

The item offered by the supplier repeatedly fails in the quality inspection

Any other special circumstances leading to justify the cancellation or termination of a contract must be
justified and duly recorded

General Principles for Contract


TENDER CONDITIONS PROVIDE THE BASIC CLAUSES OF A CONTRACT

The terms of contract must be precise, definite and without any ambiguities.

Standard forms of contracts should be adopted wherever possible, if not, legal and financial advice
should be taken in drafting the clauses.

Price Variation Clause to be provided only in long-term contracts, where the delivery period extends
beyond 18 months
The contract should also contain the mode and terms of payment.

The terms of a contract, including the scope and specification once entered into, should not be
materially varied.

All contracts shall contain a provision for recovery of liquidated damages for defaults on the part of the
contractor.

A warranty clause should be incorporated in every contract

Suitable provision for settlement of disputes to be incorporated

ACCEPTANCE OF CONTRACT

Contract is deemed to come in to force with the acceptance of the tender, as per mutually agreed terms
and conditions contained in the TE and the firms offer.

Acceptance of the same is to be conveyed by the supplier within seven days of receipt of the supply
order.

If the contract is not received within the stipulated period, the supply order is deemed to have been
fully accepted by the firm.

EFFECTIVE DATE main conditions

The Effective date of the Contract will be the date on which the last of the following conditions is
complied with:-

Date of signing the contract

(b)Performance Bond is furnished by the SELLER in requisite format.

Receipt of Bank Guarantee for advance payment to be issued by SELLER.

Performance

The term Performance of contract means that both, the promisor, and the promisee have fulfilled their
respective obligations, which the contract placed upon them. For instance, A visits a stationery shop to
buy a calculator. The shopkeeper delivers the calculator and A pays the price. The contract is said to
have been discharged by mutual performance.

The parties to a contract must either perform, or offer to perform, their respective promises, unless
such performance is dispensed with or excused under the provisions of this Act, or any other law.

Promises bind the representatives of the promisor in case of the death of the latter before performance,
unless a contrary intention appears in the contract.

Thus, it is the primary duty of each contracting party to either perform or offer to perform its promise.
For performance to be effective, the courts expect it to be exact and complete, i.e., the same must
match the contractual obligations. However, where under the provisions of the Contract Act or any
other law, the performance can be dispensed with or excused, a party is absolved from such a
responsibility.
Example

A promises to deliver goods to B on a certain day on payment of Rs 1,000. A expires before the
contracted date. As representatives are bound to deliver the goods to B, and B is bound to pay Rs 1,000
to As representatives.

Actual breach of contract on the due date of performance:

Sometimes, on the due date of performance, one party fails to perform his obligations. In such cases,
the other party is discharged from the performance of his obligations and can hold the guilty party liable
for the breach of contract.

Example:

X agreed to sell his car to Y on 1st June. But on 1st June X refused to sell the car to Y. On Xs refusal to
sell the car, there occurred a breach of the contract. And Y can hold X liable for the breach of contract.

But sometimes the party, who has failed to perform the contract on due date, subsequently expresses
his willingness to perform the same. In such cases, whether he can perform the contract or not will
depend upon the fact whether or not the time was the essence of the contract (i.e., whether the time
was the essential condition for the formation of the contract)

If the time was the essence of the contract, the failure to perform the contract within the specified time
results in breach of the contract. And if the time was not the essence of the contract, the other party
may accept performance and claim compensation for delayed performance.

Anticipatory Breach of Contract

It occurs when prior to the due date of performance, the promisor absolutely refuses or disables himself
from the performance of his obligations. In other words, it is a declaration by one party of his intention
not to perform his obligations under the contract. Thus, the anticipatory breach is the premature
destruction of the contract, i.e., the repudiation of the contract before due date of performance.

Example

P was engaged as D's courier on a continental tour to last from June I for 3 months at $10 per month.
Before June I, D, cancelled the appointment and informed P of the same. It was held that it was a clear
case of anticipatory breach of contract and P may sue D for damages without waiting till June I.

A agrees to marry B. Before the agreed date of marriage he marries Z

W agrees to sing at L's theatre on and from a certain date. Before the date she enters into a long term
contract to sing at a different theatre.

Legal remedies

A legal remedy, also judicial relief or a judicial remedy, is the means with which a court of law, usually in
the exercise of civil law jurisdiction, enforces a right, imposes a penalty, or makes another court order to
impose its will.

Legal Remedies in Contracts


A breach of contract occurs when one party does not follow through with the promises made in the
contract, and the other party is considered injured, or not whole in some way, generally financially.
When this happens, the courts have several ways of making the injured party whole again.

Suggested Remedies

Adequate focus at the time of drafting tender document

Clarity of purpose

Legal safeguards to be incorporated

Vendors interests also should be safeguarded

Responsibility centres to be identified

Processing for payment in prescribed time frame

There are several remedies the court may use to settle the score:

Compensatory damages

Consequential damages

Expectation damages

Punitive damages

Nominal damages

Liquidated damages

Mitigated damage

There are three crucial categories of remedies in common law system. One is from the law courts of
England, and is seen in the form of a payment of money to the victim. This payment is commonly
referred to as damages. Compensatory damages compensate an injured victim or plaintiff, and punitive
damages punish someone who because of fraud or intentional conduct, is deemed to deserve
punishment. Punitive damages serve the function in civil law that fines do in criminal law.

Court procedure

Civil procedure. Civil procedure is the body of law that sets out the rules and standards that courts
follow when adjudicating civil lawsuits (as opposed to procedures in criminal law matters).

The system of courts that interprets and applies the law is collectively known as the judiciary. The place
where a court sits is known as a venue. The room where court proceedings occur is known as
a courtroom, and the building as a courthouse; court facilities range from simple and very small
facilities in rural communities to large buildings in cities

Conclusion
While framing the pre-qualification conditions, it should be kept in view that the purpose of any
selection procedure is to attract the participation of reputed and capable firms with proven track-
records. The PQ conditions should be exhaustive, yet specific. The factors that may be kept in view while
framing the PQ criteria are namely,

(a) The nature of the work;

(b) The scope of work involved in the project;

(c) Likelihood of availability/experience of firms for such works;

(d) volume/amount of the work;

(e) Financial status.

Before according administrative approval for any project

It is necessary to establish techno commercial viability in terms of rate of return

Evaluate the available alternatives to ensure an optimum utilization of public funds

One time purchase of capital plant and machinery should be justified by reference to actual intended
use. The equipments must conform to the latest specification and technology available in the market

The obsolescence factor the life of the equipment, availability of spares, etc. should be kept in view
while deciding the procurements.

Gross over-designing cannot be justified on the basis of unpredictable long-term futuristic demands.

Preparation of estimates for contracts is an area, which needs special emphasis. A well-defined scope of
work and a realistic market rate estimate can prove to be a vital input for successful execution of a
contract with high standards of quality.

Wide publicity should be generated for better competition and to avoid cartel formation and favoritism
to select firms. Tender notice should be published in select national and local dailies with a large
circulation. Tender notices may also be displayed on the notice boards of other organizations.

In order to generate fair and adequate competition, it is important that sufficient time, depending upon
the magnitude and complexity of the project should be given to the bidders to submit their bids
Real Estate Sale Agreement

[Insert the name of the buyer] (Buyer) and [Insert the name of the seller] (Seller)
hereby enter into this Real Estate Sale Agreement (Agreement) this [insert the date] day of
[insert the month], [insert the year] for the following described real property:

[Insert full legal description]

Which is commonly known as: [insert full street address]

1. Payment Terms. Buyer and Seller agree to the following payment terms:

a. The full purchase price of the property is $[insert the amount of the accepted offer].

b. Buyer shall deliver to Seller earnest money in the amount of $[insert the amount of
earnest money agreed upon] no later than two (2) days from the date of this Agreement.

c. Earnest money shall be delivered to [insert name of trust company] at [insert address
of trust company], to be held in trust until this Agreement is fully executed or terminated by one
of the parties.

d. All property taxes, as determined on the date of closing, shall be prorated between
Buyer and Seller as of the date of delivery of the deed.

2. Easements and Restrictions. [Describe any easements or restrictions]

3. Included Property. [List or describe all included property]

4. Home Inspection. Buyer shall pay for a home inspection to be conducted before closing.
Renegotiation of this agreement shall occur only if said home inspection reveals a major defect,
which will cost more than $500, individually, to repair. Buyer shall be responsible for all repairs,
which are not major repairs and do not cost more than $500, individually.

5. Financing. This agreement is contingent upon Buyer being approved for financing in the
amount of $[insert the amount to be mortgaged], from [insert the name of the mortgage
company].

6. Disclosures. [Insert required and/or voluntary disclosures]

7. Default. If either party fails to comply with this contract, he or she will be in default, and the
other party may (a) enforce specific performance, seek such other relief as may be provided by
law, or both, or (b) terminate this contract and receive the earnest money as liquidated
damages, thereby releasing both parties from this contract.

8. Closing. [Insert closing information].


SELLER BUYER

____________________________________ ____________________________________

[Insert name of seller] [Insert name of buyer]

Subscribed and sworn to before me this ____ day of ______________ 20______.

____________________________________

Notary Public
Sally Kumon
555 Main St.

Redding, CA 55555

sborrower@gmail.com

(215) 555-1212

March 2, 2015

Johnny Lusmond

1212 Jefferson Ave.

Redding, CA 55555

Re: Contract Termination

Dear Mr. Lusmond,

As we discussed in person last week, please be advised that I am terminating our service contract which
began June 2014 at the end of this month, March 31, 2015. I will keep your company in mind in the case
that we need additional assistance on our retail project.

Please find enclosed full payment for the month of February and March. This should bring us up to date.
Thank you for your work with our company, it has been a pleasure to work with you and your team.

Sincerely,

Sally Kumon
CONTRACT FOR THE SALE OF USED CAR

This is a contract made between the Seller, [insert name of Seller], and the Buyer, [insert name of
Buyer], for the sale of Sellers [insert year, make, and model of vehicle].

The vehicle is a [insert detailed description of the car, including interior and exterior color and features].

The VIN number is [insert VIN number], and the odometer reads [insert odometer reading] as of [insert
date].

The date of sale is [insert date of sale]. Buyer agrees to pay to Seller the purchase price of $[insert
purchase price] to be paid in [insert type of payment accepted].

The car is sold AS IS. Seller makes no warranties about the condition of the car.

Seller will provide the Buyer with the vehicles title and [insert list of any other required documents,
such as a recent smog test report, inspection, etc.]

______________________________ ______________

Seller Date
[Insert Sellers typed name]

______________________________ ______________

Buyer Date
[Insert Buyers typed name]

______________________________ ______________

Witness Date
[Insert Witnesss typed name]
Contract for Deed

[Insert name of buyer] (Buyer) and [Insert name of seller] (Seller) hereby agree as follows:

1. Property. This agreement concerns the following described real property:

[Insert legal description]

Which is commonly known as: [insert full street address]

2. Easements. [Describe any easements]

3. Liens and Encumbrances. [Describe any liens or judgments against the property]

4. Payment Terms. Buyer shall make payment to Seller as follows:

a. Monthly Payments. [Describe the monthly payments]

b. Interest. Interest shall be calculated at a simple [insert interest rate] and shall be
compounded annually.

c. Late Payments. Payment is due on the 1st of each month, and shall be considered late
if not paid by the close of business on the 15th of said month. A late fee of $25.00 shall apply to
all late payments.

d. Term of Contract. Payments shall be due beginning on [insert first due date] with a
final balloon payment due on [insert final due date], for a contract term of [insert number of
months of contract] months.

5. Duties and Obligations. The parties shall have the following duties and obligations:

a. Maintenance of Property. [Describe who is responsible and how]

b. Insurance. Buyer shall maintain at least [insert minimum amount of insurance] in


liability insurance on the property for the duration of this agreement.

c. Property Taxes. Property tax shall be the responsibility of Buyer and is included in the
monthly payment amount.

d. Use of the Property. [Describe who may use it and how]

6. Conveyance. [Describe when and how title will be given to buyer]

SELLER BUYER
__________________________________ __________________________________

[Insert name of seller] [Insert name of buyer]

Subscribed and sworn to before me this ____ day of ______________ 20______.

__________________________________

Notary Public