Para 9.4.8 — GOODS_MANUAL

GOODS_MANUAL

9.4.8 Warranty Clause 1. If included, in the case of Works and Capital Equipment, the Warranty clause in the Contract warrants that Goods supplied by the Contractor would continue to conform to the description and quality during the specified warranty period (usually, 24 months after delivery or 18 months from the date of placement in service, whichever is sooner). Obligations of the contractor under the warranty clause shall survive even though The Goods may have been inspected, accepted, installed/ commissioned, and paid for by the Procuring Entity or the contract is terminated for any reason whatsoever. In the procurement of goods other than capital equipment (and in the case of low-value capital goods, say up to rupees one lakh), a warranty clause is not called for. 2. The Procuring Entity shall promptly notify in writing to the contractor, during the period above if the said goods/ stores/ articles are discovered not to conform to the description and quality or have deteriorated, otherwise than by fair wear and tear (the decision of the Procuring Entity in that behalf being final and conclusive). 3. Upon receipt of such notice, the contractor shall, within 14 days (or within any other period, if stipulated in the contract), expeditiously repair, or replace the defective Goods or parts thereof, free of cost, at the ultimate destination. The Contractor shall take over the replaced parts/ Goods after providing their replacements, and no claim shall lie on the Procuring Entity for such replaced parts/ Goods after that. 4. A penalty of 0.5% (half per cent, or as specified in the contract) of the contract value for every week of delay in response time beyond the specified time as detailed above shall be recoverable from the Performance/ Warranty Guarantee. The maximum penalty for warranty failure will be 5% (Five per cent) of the contract value during the whole warranty period. If there is further such delay after reaching this limit, the Procuring Entity shall be entitled to encashment of the whole of Performance/ Warranty Guarantee Bonds, besides recording the adverse performance of the contractor for future tenders. 5. In case of any rectification of a defect or replacement of any defective Goods during the warranty period, the warranty for the rectified/ replaced Goods shall remain till the original warranty period. 6. If the contractor, having been notified, fails to rectify/ replace the defect
(s) within 21 days (or within any other period, if stipulated in the contract), it shall amount to a breach of Contract for default, and the Procuring Entity shall avail any or all remedial action
(s) thereunder, including forfeiture of Warranty/ Performance Bank Guarantee.
9.5. Cost Control - Prices, Taxes and Payments 1. Prices to be charged by the contractor for the supply of Goods and provision of incidental Works/ Services shall be fixed and firm and same as the corresponding prices quoted by the contractor in its bid or during negotiations, if any, and incorporated in the contract except for any price adjustment authorized in the contract. 2. As mentioned in para 6.6-2) above, if the prices charged are discovered to be higher than any controlled or regulated price, the Procuring entity shall have the right to either recover the overcharged amount or to terminate the contract, treating it as a misdemeanour or breach of contract and take any or all punitive remedies available thereunder.
3. The Procuring Entity shall not pay for the consignment of incomplete components unless the full useable Scope of Goods (as per the contract/ Schedule of Requirement) has been received. Deficiencies in incidental Works/ Services shall also amount to incomplete delivery. Spares would not be paid for unless the primary Goods are received.
4. Price and Exchange Variation Clauses: a) In case the contract provides for a Price Variation Clause (PVC) or Exchange Rate Variation (ERV) clause or variation on any other account, the price shall be subject to adjustment on a quarterly basis, as per such clauses, only during the original Delivery Period. With the payment of such variations, no additional individual claim shall be admissible on account of fluctuations in market rates, increases in taxes/any other levies/tolls, etc. b) Please refer to para 6.6-5) for provisions of PVC (formula, base date, supply date, time lag for both base/ supply dates, lower and upper cap on PVC); c) Any increase due to such variations during the extended delivery period, beyond the original delivery period, shall not be paid by the Procuring Entity; however, it shall be entitled to any reduction during this period under the Denial Clause. d) Calculations for all variations should be based on the basic price without taxes and duties. Therefore, contracts involving customs duty, foreign exchange fluctuations, GST, duties and taxes, the percentage and element of duties and taxes included in the price should be specifically stated, along with the selling rate of foreign exchange element considered in the calculation of the price of the imported item. Taxes/ duties and penalties, e.g., LD, etc., if any, chargeable and payable ad-valorem shall be charged at the nett price after variations. e) If the Contract provides for some inputs to be supplied by the Procuring Entity free or at a fixed rate, or advance or stage payments have been already made, the value of such inputs and advance/ stage payments shall be excluded from the value of the Goods supplied in the relevant quarter for payment/recovery of price variation. f) If there is a downward price trend, the Contractor may tend to hide this fact. Therefore, while claiming payments where such variations are applicable, the contractor must submit its calculations for each invoice, even if the payment on account of these variations is zero. Price reductions due to such variations must be passed on to the Procuring Entity. Care should be exercised to finalise the price before final payment is made and after obtaining data and documents in support of claims for escalation, if any. Where the suppliers submit no such claims, an examination of whether there has been a downward trend in the cost, which the contractor may not bring out, is required. At any rate, an undertaking should be obtained from the contractor to the following effect in case it becomes necessary to make the final payment before he has submitted the required data/documents related to the PVC:
“It is certified that there has been no decrease in the price because of a decrease in price variation indices in the price variation formula. In the event of any decrease of such indices that come to light later regarding the payment claimed by us, we shall promptly notify the purchaser, and we undertake to refund and agree to the purchaser deducting from our future payment due any excess payment made to us in this regard.” g) Notwithstanding the above formalities, it should be appreciated that it is in the interest of the purchaser to be vigilant about downward variation, and it is, therefore, the basic responsibility of the purchase officers to make sure that the benefits of downward variation, wherever it occurs, are fully availed of.

GOODS_MANUAL

9.4.8 Warranty Clause 1. If included, in the case of Works and Capital Equipment, the Warranty clause in the Contract warrants that Goods supplied by the Contractor would continue to conform to the description and quality during the specified warranty period (usually, 24 months after delivery or 18 months from the date of placement in service, whichever is sooner). Obligations of the contractor under the warranty clause shall survive even though The Goods may have been inspected, accepted, installed/ commissioned, and paid for by the Procuring Entity or the contract is terminated for any reason whatsoever. In the procurement of goods other than capital equipment (and in the case of low-value capital goods, say up to rupees one lakh), a warranty clause is not called for. 2. The Procuring Entity shall promptly notify in writing to the contractor, during the period above if the said goods/ stores/ articles are discovered not to conform to the description and quality or have deteriorated, otherwise than by fair wear and tear (the decision of the Procuring Entity in that behalf being final and conclusive). 3. Upon receipt of such notice, the contractor shall, within 14 days (or within any other period, if stipulated in the contract), expeditiously repair, or replace the defective Goods or parts thereof, free of cost, at the ultimate destination. The Contractor shall take over the replaced parts/ Goods after providing their replacements, and no claim shall lie on the Procuring Entity for such replaced parts/ Goods after that. 4. A penalty of 0.5% (half per cent, or as specified in the contract) of the contract value for every week of delay in response time beyond the specified time as detailed above shall be recoverable from the Performance/ Warranty Guarantee. The maximum penalty for warranty failure will be 5% (Five per cent) of the contract value during the whole warranty period. If there is further such delay after reaching this limit, the Procuring Entity shall be entitled to encashment of the whole of Performance/ Warranty Guarantee Bonds, besides recording the adverse performance of the contractor for future tenders. 5. In case of any rectification of a defect or replacement of any defective Goods during the warranty period, the warranty for the rectified/ replaced Goods shall remain till the original warranty period. 6. If the contractor, having been notified, fails to rectify/ replace the defect
(s) within 21 days (or within any other period, if stipulated in the contract), it shall amount to a breach of Contract for default, and the Procuring Entity shall avail any or all remedial action
(s) thereunder, including forfeiture of Warranty/ Performance Bank Guarantee.
9.5. Cost Control - Prices, Taxes and Payments 1. Prices to be charged by the contractor for the supply of Goods and provision of incidental Works/ Services shall be fixed and firm and same as the corresponding prices quoted by the contractor in its bid or during negotiations, if any, and incorporated in the contract except for any price adjustment authorized in the contract. 2. As mentioned in para 6.6-2) above, if the prices charged are discovered to be higher than any controlled or regulated price, the Procuring entity shall have the right to either recover the overcharged amount or to terminate the contract, treating it as a misdemeanour or breach of contract and take any or all punitive remedies available thereunder.
3. The Procuring Entity shall not pay for the consignment of incomplete components unless the full useable Scope of Goods (as per the contract/ Schedule of Requirement) has been received. Deficiencies in incidental Works/ Services shall also amount to incomplete delivery. Spares would not be paid for unless the primary Goods are received.
4. Price and Exchange Variation Clauses: a) In case the contract provides for a Price Variation Clause (PVC) or Exchange Rate Variation (ERV) clause or variation on any other account, the price shall be subject to adjustment on a quarterly basis, as per such clauses, only during the original Delivery Period. With the payment of such variations, no additional individual claim shall be admissible on account of fluctuations in market rates, increases in taxes/any other levies/tolls, etc. b) Please refer to para 6.6-5) for provisions of PVC (formula, base date, supply date, time lag for both base/ supply dates, lower and upper cap on PVC); c) Any increase due to such variations during the extended delivery period, beyond the original delivery period, shall not be paid by the Procuring Entity; however, it shall be entitled to any reduction during this period under the Denial Clause. d) Calculations for all variations should be based on the basic price without taxes and duties. Therefore, contracts involving customs duty, foreign exchange fluctuations, GST, duties and taxes, the percentage and element of duties and taxes included in the price should be specifically stated, along with the selling rate of foreign exchange element considered in the calculation of the price of the imported item. Taxes/ duties and penalties, e.g., LD, etc., if any, chargeable and payable ad-valorem shall be charged at the nett price after variations. e) If the Contract provides for some inputs to be supplied by the Procuring Entity free or at a fixed rate, or advance or stage payments have been already made, the value of such inputs and advance/ stage payments shall be excluded from the value of the Goods supplied in the relevant quarter for payment/recovery of price variation. f) If there is a downward price trend, the Contractor may tend to hide this fact. Therefore, while claiming payments where such variations are applicable, the contractor must submit its calculations for each invoice, even if the payment on account of these variations is zero. Price reductions due to such variations must be passed on to the Procuring Entity. Care should be exercised to finalise the price before final payment is made and after obtaining data and documents in support of claims for escalation, if any. Where the suppliers submit no such claims, an examination of whether there has been a downward trend in the cost, which the contractor may not bring out, is required. At any rate, an undertaking should be obtained from the contractor to the following effect in case it becomes necessary to make the final payment before he has submitted the required data/documents related to the PVC:
“It is certified that there has been no decrease in the price because of a decrease in price variation indices in the price variation formula. In the event of any decrease of such indices that come to light later regarding the payment claimed by us, we shall promptly notify the purchaser, and we undertake to refund and agree to the purchaser deducting from our future payment due any excess payment made to us in this regard.” g) Notwithstanding the above formalities, it should be appreciated that it is in the interest of the purchaser to be vigilant about downward variation, and it is, therefore, the basic responsibility of the purchase officers to make sure that the benefits of downward variation, wherever it occurs, are fully availed of.

Para 9.4.8 — GOODS_MANUAL

Original Rule Text

Para 9.4.8 — GOODS_MANUAL

Original Rule Text