The Indian Contracts Act 1872
It is a act which creates right between both the parties of the owner and the contractor. Both the parties are eligible to create the norms they want inside the contract but all the norms should be lawful. The promises which are simply made but are not legalized, than they are not considered as Contract.
CLAUSE 2 - Interpretation
What is a Proposal?
It is a way of showing willingness to something to Buy or do a work. It is the will of other person to accept the proposal or not. If a person accept it than the proposal becomes a promise in which the person who proposed the proposal is knows as “Promisor” and the one who accepts is “Promisee”.
Law says - Proposal cannot be withdrawn.
What is Notice Inviting Tender (NIT)
It is an invitation send by the government to the people about items or the work for requesting there proposals of performing the work.
NIT can be withdrawn since they are not proposals they are just invitation.
Note:- An agreement which is not enforceable by law is considered as VOID (not valid)
We we see the Void agreement with an example-
Consider a boy borrows money from his landlord, As the boy looks like major so landlord did not considered to check the age proof of boy. Instead of age proof he asked the boy security. So for security purpose boy says to landlord you can break my fixed deposit if I don’t return the money within 3 years. This was documented or recorded. But after 3 years, boy did not return the money so when landlord claimed to break his fixed deposit. Boy said he was minor when agreement was made so landlord cant approach law until and unless the boy decide to reverse this.
In the above example, The agreement was made but the norm does not come under law. Since it was not coming under the norms of law, it can be termed as void which is not valid case.
“Voidable” – Avoidable
Example - In case, if a contractor feels that there is a clause in the document that makes him incur loss then he can approach the law and move out of the contract and avoid the contract altogether.
In case of client not having acquired land fully but the document says delay due to this wont be compensated and contractor wants to withdraw, he can by law.
CLAUSE 3- Communication Acceptance and Revocation of Proposals
l Communication, acceptance and revocation of proposal should be written in such a manner that both the parties (contractor and client) and the third party can understand it.
l LOI is given to the most desired contractor so that he can get ready and mobilize before LOA is given.
Letter of intent (LOI) - A letter of intent (LOI) is a document outlining the general plans of an agreement between two or more parties before a legal agreement is finalized.
Example: Client tell what all the requirements he want in the contract and on his will he gives the LOI, no offer being made.
Letter of acceptance (LOA) - The purpose of the Letter of Acceptance is to confirm that the Employer accepts technical and commercial part of the contractor's Letter of Tender, except the Contract Terms and Conditions.
Example : Client actually award the contract to a contractor.
Once contractor was given LOI and thought it was LOA and he mobilized everything. He went to site with all material which was guarded. Security did not allow him inside the site and called the client. Client told the security to make an entry and let him in. Contractor set up everything, made all preliminary arrangements and then asked the Client to issue the drawings. Client then realized that there was no LOA and drawings were not ready .Any delay due to this would have to be borne by him.
Here, although there was no written LOA by his action but when Client asked security to make contractor to enter in the site , the Client converted the LOI Into LOA.
CLAUSE 4- Communication when complete
l Moment at which LOA has been dispatched by the client is the moment at which contract gets formed.
l Contractor has to sign the agreement and complete it within the given time frame.
l Revocation of tender can be done before the last date.
l Revocation of LOA - Client send the another revocation letter through speed post.
We can see this with an example such that
If the client send the LOA first to the contractor and then client sends another revocation letter through speed posts. If the revocation letter reaches the client before the LOA , such a contractor has to be revoked.
If the LOA reaches the contractor first then contract is to be accepted by the contractor. OR
If both LOA or the revocation letter reaches at the same time to contractor then the letter contractor picks up first decides whether it is to be accepted or revoked.
CLAUSE 5 – Revocation of proposals and acceptance
l Acceptance is mandatory in contract.
l Acceptance should be done by “Authorized person”.
There are many cases where there is no acceptance but still it is a valid contract. These cases comes under “missing”. We discuss it with an example.
Example - Say someone putting up a notice about their missing child and promised to reward money to the person who brings the child. If someone finds the child, he obviously wont be having a written letter of acceptance to find the boy. Once he return the child he gets eligible for the reward, But should be aware of the reward. At that time he cant come back and claim it. He can receive the reward and is valid.
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