Every day, while we skim through the newspaper, we could see a lot of tenders invited by the Government for supply of goods/services from public or organizations to undertake projects of public interest. In order to undertake the tender in fair manner as well as to protect the individual’s interest, regulations are in place. As per the section 2(h) of Indian Contract Act 1872, a contract is an agreement between parties that can be enforceable by law. So, in our case, as Central or State Government is a party, it is called Government contract. The government contract is similar to other contracts but with the additional requirement of compliance with Article 299 of the Indian Constitution.
The article 299 can be interpreted as:
(1) The provision to make government contracts lies with Executive power of Centre and States. The contract should be expressed to be made by the President incase of Central government contract or by the Governor incase of State government contract. Also, the contract should be executed by the person authorized on behalf of the President or the Governor depending upon the case.
(2) Neither the President nor the Governor is held liable for anything related to the execution of the contract. This also applies to any person executing the contract on behalf of others.
A contract will be valid only if it emerges through offer and acceptance with the above conditions of Article 299 of Indian Constitution being met.
The underlying principles of government contracts are reasonableness and fairness which is in accordance with Article 14 of Indian Constitution. This means that the government or representative should not act in favour of anybody and should explain with reason for the action.
It is important to note that the section 70 of the act prevents any party from enjoying the benefits unfairly from the contract at the expense of other party. It mandates a party under contract to do activities expected in lawful manner. The law is applicable to government as well. So, it may be considered that Section 70 is a supplement to Article 299.
ACCEPTANCE & REVOCATION:
A tender is similar to quotation of prices. It is converted into standing offer only when tender is approved. So, a contract in such case arises only when order is placed based on tender. In addition, each order with acceptance can be regarded as a separate contract. But, there are provision for revocation (cancellation) of tender. Just like tenderer can revoke the tender, so is the acceptor can refuse to place any orders for supply of goods/services. Also, there is provision to ignore the lowest tenderer if there is a genuine reason to do so. The acceptance should be done before the lapse of offer.
The proposals can be revoked by notice of revocation before communicating the acceptance, lapse of time given for acceptance, failure to accept the required condition and due to death or insanity of offeror. In comparing with English law, an acceptance once made is irrevocable in nature.
REFERENCES:
- http://www.legalserviceindia.com/article/l42-Government-Contracts.html
- Dr. Avtar Singh (2018), Business Law, Eleventh edition, Eastern book company.
- https://indiankanoon.org/doc/1084525/
- https://www.lawsenate.com/dispute-resolution-services/tender-and-contract-services.html
- https://gtpac.org/2017/02/06/update-on-government-contracts
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