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U TERMINATION OF CONTRACT

This document discusses various clauses related to contract termination. It states that: 1) For a breach of a core contract term, the suffering party can elect to terminate the contract by giving written notice, and if the issue is not remedied within 30 days then termination takes effect. 2) The contract can also be terminated for convenience with 60 days written notice from the purchaser. 3) The purchaser can terminate for default reasons such as failure to commence work, with 15 days written notice. 4) Force majeure events such as natural disasters can provide grounds for an extension if properly notified, but not termination. 5) Liquidated damages up to 10% may

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Govindarajan Bangaru
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38 views

U TERMINATION OF CONTRACT

This document discusses various clauses related to contract termination. It states that: 1) For a breach of a core contract term, the suffering party can elect to terminate the contract by giving written notice, and if the issue is not remedied within 30 days then termination takes effect. 2) The contract can also be terminated for convenience with 60 days written notice from the purchaser. 3) The purchaser can terminate for default reasons such as failure to commence work, with 15 days written notice. 4) Force majeure events such as natural disasters can provide grounds for an extension if properly notified, but not termination. 5) Liquidated damages up to 10% may

Uploaded by

Govindarajan Bangaru
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Termination of contract

• For breach of every contract term, the suffering party can claim
damages. Some terms are core or heart of the contract, while the other
terms are supportive and subsidiary. For the breach of a subsidiary part,
the suffering party cannot terminate the contract. However, for the
breach of a core part, the suffering party can elect to terminate the
contract. The contract will get terminated only when the suffering party
communicates his decision of termination. If not, the contract will subsist
and both the parties must continue to perform their duties. On
termination, both the parties get discharged from their respective duties.
Termination of contract
• Clause- 10.25

• The Purchaser may at any time on breach of this Contract by the


Contractor give him a written notice of such breach. If the
Contractor does not take appropriate measure to the satisfaction
of the Purchaser within a period of 30 days after issuance of such
notice to remedy that breach, then the Purchaser may terminate
this Contract at any time there after stating therein the date of
termination. The Contractor shall then be liable to the Purchaser
in accordance with the Clause- 10.25 hereinabove
Termination of contract (contd)
Termination for Convenience

• The contract shall be terminated if due to any unforeseen circumstances


which may lead to the foreclosure of the project for reasons such as
resource crunch, non-availability of funds, and for other administrative
resource etc. Purchaser shall however, give 60 days prior written notice to
the contractor of the effective date of termination.
• Contractor shall be compensated only for the quantum of work/services
he has rendered till effective date of foreclosure. Any other claims like
compensation for loss in profit, compensation for loss of reputation etc. or
any other consequential damages if any claimed by the Contractor shall
not be given by the Purchaser.
Termination of contract
Termination for default
• The Purchaser reserves the right to terminate this Contract at any time either in part or in full due to

reasons such as the Contractor failed to commence work, abandoned the work during progress,

neglected to proceed and progress, failed to perform his obligations, by giving a notice of not less than

fifteen (15) days.

• The Contractor upon receipt of such notice shall discontinue the work on the date and to the extent

specified in the notice, make all reasonable efforts to obtain cancellation of all orders and Contracts to

the extent they are related to the work terminated and terms satisfactory to the Purchaser, stop all

further sub contracting or purchasing activity related to the work terminated and assist the Purchaser in

maintenance, protection and disposition of the works acquired under the Contract by the Purchaser. The

Purchaser shall pay to the Contractor the cost incurred in accordance with the Contract terms and rates

as decided by the Purchaser till the date of termination as compensation. No consequential damages

shall be payable by the Purchaser to the Contractor in the event of termination.


Termination of contract (Contd)

• In the event that the Associate is not performing the


contractual obligation or the main Contractor intends to
change the Associate on whose strength the Contract was
bagged by the Contractor, the Contract will be terminated at
the Cost & Risk on Contractor.

• If the contract is terminated due to the default of the


Contractor, the “initial advance” would be deemed as
interest bearing advance at prevailing rate applicable to cash
credit facility at the time of issue of IFBto be compounded
quarterly.
Force Majeure
 Natural phenomena, including but not limited to floods, droughts,
earthquake and epidemics.
 Acts of any Government, domestic or foreign including but not limited to war,
declared or undeclared priorities, quarantines, embargoes.
 Provided either party shall within 15 days from the occurrence of such a
cause notify the other in writing of such cause.
• If the Contractor suffers delay in the due execution of the contractual
obligations due to delays caused by Force Majeure as defined above, the
agreed time of completion of the work covered by this contract and of the
obligations of the Contractor shall be extended by a period of force majeure,
provided, that on the occurrence of any such contingency, the Contractor
immediately reports to the Purchaser in writing, the cause of delay with
requisite documentary evidence and also the remedial steps being taken and
the expected period of interruption
46.LIQUIDATED DAMAGES (LD)
Liquidated Damages, not as a penalty, is agreed upon
between parties in the contract towards time delay.
Liquidated Damages can also be prefixed towards
shortfall in performance parameters agreed in a
contract.
46.LIQUIDATED DAMAGES (LD)

•If the contractor fails in the due performance of the contract within the time

agreed the purchaser shall levy Liquidated Damages, not as penalty, at the

rate of 0.5 % per week of delay or part thereof non-utlizable portion of

works/Supplies subject to ceiling of 10 % of the non-utlizable portion of

works/Supplies.

•Before exercising the right to levy or waive Liquidated Damages the purchaser

shall clearly make sure the cause for delay. If the party to the cause of delay

could not be clearly established, the purchaser shall issue a letter granting

Time Extension, however retaining the right to analyse the cause of delay and

levy Liquidated Damages at the time of Final bill/closure of contract.


DEDUCTION FROM CONTRACT PRICE
All costs, damages or expenses which the purchaser had incurred due to
default, negligence, failure of the contractor in performing his
obligations agreed in the contract, for which the contractor is liable, shall
be claimed by the purchaser. All such claims shall be billed by the
purchaser to the contractor regularly as and when they fall due.
Thank you

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