Para 9.8 - Breach of Contract | KartavyaDesk
Original Rule Text
a) Default in Performance and Obligations: if the contractor fails to deliver any or all the Services 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 the firm be dissolved under the Partnership Act, the Procuring Entity may consider it as a breach of Contract. c) Liquidation: if the contractor is a company being wound up voluntarily or by order of a Court or a Receiver, Liquidator or Manager on behalf of the Debenture-holders is appointed, or circumstances shall have arisen which entitle the Court or Debentureholders to appoint a Receiver, Liquidator or Manager, the Procuring Entity may consider it as a breach of Contract.
What This Means
Para 9.8 of the Manual for Procurement of Non-Consultancy Services outlines what constitutes a breach of contract by the contractor. Essentially, it protects the government (the 'Procuring Entity') if the contractor fails to fulfill their agreed-upon duties. This includes not delivering services on time, failing to maintain the necessary equipment or facilities promised in the contract, or becoming insolvent or liquidated. If any of these situations occur, the government has the right to consider the contract broken and take appropriate action, such as terminating the contract and seeking damages. This rule applies to all contracts for non-consultancy services entered into by government entities and affects both the government agency and the contractor.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- •Failure to deliver services or meet contractual obligations on time constitutes a breach of contract.
- •Insolvency or liquidation of the contractor can be considered a breach of contract.
- •The Procuring Entity (government agency) has the right to consider the contract breached if any of these situations occur.
- •Maintaining production capability (equipment & facilities) as per the contract is a key obligation.
- •Breach of the Code of Integrity is also a reason for contract breach.
Practical Example
The Department of Rural Development awarded a contract to 'Sunrise Cleaning Services' for cleaning services in 50 government schools for a period of one year at a cost of ₹50 Lakhs. After six months, Sunrise Cleaning Services consistently failed to clean the schools according to the agreed-upon schedule and standards. Furthermore, they stopped maintaining the cleaning equipment they had initially promised to use. The Department, after issuing several warnings, invoked Para 9.8(a) of the Manual, citing default in performance and obligations as the reason for considering the contract breached. They then terminated the contract and initiated the process of finding a new contractor. In another scenario, if Sunrise Cleaning Services had declared bankruptcy during the contract period, the Department could have invoked Para 9.8(b) and considered the contract breached.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What does 'Procuring Entity' mean in this context?▼
What actions can the Procuring Entity take if a breach of contract occurs under Para 9.8?▼
Does Para 9.8 apply to all types of government contracts?▼
What constitutes 'insolvency' under Para 9.8(b)?▼
If a contractor faces temporary financial difficulties but is still trying to fulfill the contract, can Para 9.8 be invoked immediately?▼
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 of the Manual for Procurement of Non-Consultancy Services, which of the following situations would NOT be considered a potential breach of contract by the contractor?
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