Appendix 2 — GOODS_MANUAL

1.2 Persons Authorised to Make and Execute Contracts on Behalf of Governments As per Article 299 (Part XII – Finance, Property, Contracts and Suits) of the Constitution of India, all contracts on behalf of the Union Government or state Governments are to be entered into and executed by authorised persons on behalf of the President of India or Governor of the state, respectively. The President of India, the Governor of the state and the authorised persons who enter into or execute such contracts are granted immunity from personal liability under this article. That is why, above the signatures of such persons, on the contract documents, the legal phrase “For and on behalf of the President of India/the Governor of State” is written to signify this fact. In a state Government, the persons who are authorised to do so are listed in the DFPR. Various Departments expand upon provisions of DFPR by issuing SoPP. Rule 224 (1) & (2), Chapter 8: Contract Management of the GFR, 2017 also covers this aspect.

1.3 Other Mercantile Laws A procurement contract, besides being a commercial transaction, is also a legal transaction. Several commercial/mercantile laws are applicable equally to the private sector and public procurement, such as the Indian Contract Act, the Sales of Goods Act, the Arbitration and Conciliation Act, and so on. Although a public procurement professional is expected to have a working knowledge of the following basic laws relating to procurement, yet he is not expected to be a legal expert. If standard contract forms are used, the procurement official can discharge his normal functions without frequent legal help. In case any complex legal issue arises or a complex contract beyond the standard contract form is to be drafted, an appropriate legal professional may be associated with the procurement from an early stage. Salient features of these mercantile laws relating to Procurement are summarised below.

2.0Salient Features of the Indian Contract Act 2.1 Legal Aspects Governing Public Procurement of Goods - Introduction 1. A public procurement contract, besides being a commercial transaction, is also a legal transaction. Several laws may affect various commercial aspects of public procurement contracts. A public procurement professional is expected to be generally aware of the implications of following basic laws affecting the procurement of goods; however, they are not expected to be a legal expert. Where appropriate in complex cases, legal advice may be obtained. In other categories of procurement, an additional set of laws may be relevant:

Article 19 (1)

(g) of the Constitution of India (under Part III – ‘Fundamental Rights’) grants all its citizens the right “to practise any profession or to carry out any occupation, trade or business”. Article 14 of the Constitution (under Part III – ‘Fundamental Rights’) grants all persons the right “to equality before law or equal protection of law within the territory of India”. This has been interpreted by courts to ensure that every citizen/ person in India has a right to get equal opportunity to bid for and be considered for a public procurement contract. However, this provision does permit the stipulation of reasonable eligibility or pre-qualification criteria for the selection of successful bidders in a public procurement contract. Thus, a public procurement organisation should be ready to prove in court that no eligible bidder has been denied reasonable and equal opportunity under this article to bid and be considered for the concerned contract.

Appendix 2: Legal Aspects of Public Procurement 1.0Relevant Provisions of the Constitution of India 1.1 Equality for Bidders

2.2 Elementary Legal Practices 2.2.1 What is a Contract? The proposal or offer when accepted is a promise, a promise and every set of promises forming the consideration for each other is an agreement and an agreement if made with free consent of parties competent to contract, for a lawful consideration and with a lawful object is a contract.

2.2.2 Proposal or Offer When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of the other to such act or abstinence, he is said to make a proposal or offer. In a sale or purchase by tender, the tender signed by the bidder is the proposal. The invitation to tender and instructions to bidders do not constitute a proposal.

2.2.3 Acceptance of the Proposal When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise.

2.2.4 What agreements are contracts? An agreement is a contract enforceable by law when the following are satisfied. A defect affecting any of these renders a contract un-enforceable.

a) The Constitution of India; b) Indian Contracts Act, 1872; c) Sale of Goods Act, 1930; d) Arbitration and Conciliation Act, 1996, read with the Arbitration and Conciliation (Amendment) Act, 2015 and 2021; e) Mediation Act, 2023 f) Competition Act, 2002, as amended with Competition (Amendment) Act, 2007; g) Micro, Small and Medium Enterprises Development (MSME Development) Act, 2006; h) Information Technology Act, 2000 (IT Act, regarding e-procurement and e-auction, popularly called the Cyber Law); i) Right to Information (RTI) Act 2005; j) Central Vigilance Commission Act, 2003; k) Delhi Special Police Establishment Act, 1946 (basis of the Central Bureau of Investigation); l) Prevention of Corruption Act, 1988; m) The Foreign Trade (Development and Regulation) Act, 1992 and the Foreign Trade Policy (EXIM Policy), 2015; Foreign Exchange Management Act (FEMA), 1999; and FEMA (Current Account Transactions) Rules, 2000.

2. The elements and principles of contract law and the meaning and import of various legal terms used in connection with the contracts are available in the Indian Contract Act of 1872, read with the Sale of Goods Act 1930. Some of the salient principles relating to contracts are set out briefly in this chapter.