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Para 9.8 - Breach of Contract | KartavyaDesk

Goods Manual

Original Rule Text

9.8. Breach of Contract, Remedies and Termination 9.8.1 Breach of Contract 1. In case the contractor undergoes insolvency or receivership, neglects, or defaults or expresses inability or disinclination to honour his obligations relating to the performance of the contract or ethical standards or any other obligation that substantively affects the Procuring Entity’s rights and benefits under the contract, amount to a breach of Contract. Such defaults could include inter-alia: a) Default in Performance and Obligations: if the contractor fails to deliver any or all the Goods or fails to perform any other contractual obligations (including Code of Integrity or obligation to maintain production capability (equipment & manufacturing facilities) based on which contract was awarded) within the period stipulated in the contract or within any extension thereof granted by the Procuring Entity it shall be treated as a breach of Contract. b) Insolvency: If the contractor or any partner thereof, shall at any time, be adjudged insolvent or shall have a receiving order or order for the administration of his estate made against him or shall take any proceeding for composition under any Insolvency Act for the time being in force or make any conveyance or assignment of his effects or enter into any assignment or composition with his creditors or suspend payment or if

What This Means

Para 9.8 of the Manual for Procurement of Goods, 2017, deals with what happens when a contractor breaks the contract they have with the government. This section outlines situations considered a 'breach of contract,' such as the contractor going bankrupt, failing to deliver goods on time, or not meeting the ethical standards agreed upon. It essentially protects the government's interests when a contractor doesn't fulfill their promises. This rule applies to all government procurement contracts and affects both the government departments (the 'Procuring Entity') and the companies or individuals they hire (the 'Contractors').

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Key Points

  • •Defines 'breach of contract' in government procurement.
  • •Includes insolvency, failure to perform, and ethical violations as breaches.
  • •Protects the Procuring Entity's rights and benefits under the contract.
  • •Covers failure to deliver goods or maintain production capability.
  • •Triggers remedies and potential termination of the contract.

Practical Example

Imagine the Ministry of Textiles awarded a contract to 'WeaveWell Industries' to supply 10,000 meters of Khadi cloth by December 31st for a government initiative. However, WeaveWell fails to deliver any cloth by the deadline, citing 'unforeseen circumstances' without proper justification. Furthermore, an investigation reveals WeaveWell outsourced the production to a third party, violating the contract's clause requiring them to maintain their own manufacturing facilities. This constitutes a breach of contract under Para 9.8. The Ministry can now invoke remedies, potentially terminating the contract and seeking compensation for the losses incurred due to WeaveWell's failure.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Frequently Asked Questions

What happens if a contractor declares bankruptcy during the contract period?▼
If a contractor becomes insolvent or enters receivership, it's considered a breach of contract under Para 9.8. The procuring entity can then take steps to terminate the contract and pursue other remedies.
Does failing to meet ethical standards constitute a breach of contract?▼
Yes, if the contract includes ethical standards or a Code of Integrity, failing to adhere to them is considered a breach under Para 9.8.
What are some examples of 'failure to perform' under this rule?▼
Failure to deliver goods or services within the agreed-upon timeframe, failure to maintain production capability as specified in the contract, or any other violation of contractual obligations are examples of 'failure to perform'.
If a contractor is unable to deliver on time due to unforeseen circumstances, is it automatically a breach?▼
Not necessarily. The procuring entity will assess the situation, considering the nature of the unforeseen circumstances and whether the contractor took reasonable steps to mitigate the impact. Proper justification and communication are crucial. However, prolonged or unjustified delays can lead to a breach determination.
What remedies are available to the government in case of a breach of contract?▼
The remedies can include terminating the contract, forfeiting the contractor's security deposit, recovering damages for losses incurred, and blacklisting the contractor from future government contracts. The specific remedies will depend on the terms of the contract and the severity of the breach.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Test Your Knowledge

Question 1 of 3

According to Para 9.8.1 of the Manual for Procurement of Goods, 2017, which of the following situations constitutes a breach of contract by a contractor?

Related Rules

Para 9.4Manual for Procurement of Goods, 2024 - Para 9.4 - Chapter 9Para 9.5.5Manual for Procurement of Goods, 2024 - Para 9.5.5 - Chapter 9Para 1.8.2Manual for Procurement of Goods, 2024 - Para 1.8.2 - Chapter 1Para 2.2.2Manual for Procurement of Goods, 2024 - Para 2.2.2 - Chapter 2Para 2.2Manual for Procurement of Goods, 2024 - Para 2.2 - Chapter 2

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