Legal Aspects of Professional

Engineering In Nepal
The Nepalese Legal System It Affects The Practice of Engineering:
• The Nepalese legal system significantly affects the practice of
engineering by setting regulations, standards, and legal frameworks
that engineers must follow.
• These laws are designed to ensure the safety, quality, and
professionalism of engineering work while protecting public interest,
environment and ethical standards.
• By enforcing these regulations, the legal system ensures that
engineering practices are safe, ethical, and contribute to the country's
development without compromising public safety or environmental
integrity.
• Failure to comply with these laws can lead to serious legal and
professional consequences.
1. Licensing and Regulation
2. Compliance with Building Codes
3. Environmental Laws
4. Contract Law and Professional Liability
5. Intellectual Property Laws
6. Labor Laws and Workplace Safety
7. Public Procurement and Government Regulations
8. Ethics and Professional Conduct
Provision For Private Practice And For Employee Engineers:
• Both private practice engineers and employee engineers operate
under distinct provisions that govern their rights, duties, and
responsibilities.
• The legal framework ensures that both categories of engineers adhere
to professional standards while safeguarding public welfare and
safety.
• Private practice engineers operate independently and are subject to
business regulations, contract law, and greater professional liability.
• Employee engineers have protections under labor laws and enjoy job
security and workplace benefits but must work under the contractual
and operational frameworks of their employers.
 Aspect Private Practice Engineers Employee Engineers
Must be licensed by NEC to practice Also licensed by NEC, but works under an
Licensing
independently. employer.

Professional Personally liable for project outcomes and Employer often bears liability; engineer may still
Liability safety. face professional accountability.

Contractual Works based on an employment contract with a

Workplace Responsible for ensuring safety in Protected under labor laws and employer’s
Safety projects. responsibility for safety.

Ethical Must adhere to NEC’s Code of Ethics; Bound by employer’s code of conduct and NEC’s
Conduct liable for violations. ethical standards.

No guaranteed security; depends on client Protected by labor laws; entitled to job security
Job Security
contracts. benefits.

Dispute Handled through contract law and civil Disputes handled under labor laws and labor
Resolution litigation. courts.
Contract Law:
• Contract is an agreement between two or more than two persons to
do or not to do something, which can be enforceable by law.
• According to Contract Act 2023 Nepal, a contract is an agreement
between two or more than two parties to do or not t o do any
business.
• Without an offer and acceptance, there cannot be a contract.
• Contract Act is formulated in 2056 BS.
• After entering a contract, if any party breaches the contract, legal
action can be taken as per the contract act 2056.
Elements of a Contract
1. Offer and Acceptance:
Contract exists whenever a person advances a proposal to a person,
who accepts it.
• Offer can be specific or general.
• Contract does not exist if no acceptance is received within the
specified period of time.
• The person who offers a proposal can not bind the person with the
statement that if the notice of rejection is not given then he shall be
deemed to accept the offer.
• No contract exists if the offerer dies or become insane before the
proposal is accepted.
2. Consideration:
• It includes the cause, motive or impelling influence that induces a
contracting party to enter into contract.
• It is defined as something with value that is exchanged by the
contracting parties.
3. Capacity to Contract:
• For a contract to be legal and valid, all the parties entering into
contract must be capable.
• According to contract act, idiots, drunkards, insane and children
below 16 years are not capable of signing a contract.
4. Lawful Purpose:
• The contract is invalid if the two parties agree to perform a job
against the law of country.
5. Possibility of Performance:
• If two parties agree up on impossible jobs, the contract is invalid.
6. Free Consent:
• Contract should not involve fraud, undue influence and deceit.
7. Certainty:
• The contract that can not be carried out because of various reasons
are not valid.
8. Legal Relationship:
• There should be a clear intention of parties to enter into a contract
with all the necessary documents.
9. Written:
• Verbal agreement can not be considered as a contract.
• Contract should be written agreement.
10. Two or More Competent Parties:
• Contract is made between two or more parties.
Types of Contract
1. Valid Contract:
• If all the elements of contract are present, it is said to be a valid
contract.
2. Voidable Contract:
• The contracts that will not be valid if the concerned party desire to
make it void are called voidable contracts.
• The following contracts are voidable:
a) Forceful contract
b) Contract due to undue influence
c) Contract involving fraud or misstatement.
3. Void Contract:
• A contract that is not considered as a valid contract is known as void
or null contract.
• The following contract are void:
a) Contrary to statutory law
b) Impossible job performance
c) Contrary to public policy and welfare
d) Signed by incompetent parties
Importance of Contract
1. It makes legal agreement between the parties.
2. It specifies what the contractor must do and what the owner must
pay.
3. It specifies what will be done if any party fails to perform.
4. It defines what is and what is not included in a contract.
5. It specifies how the contract will be terminated.
6. It states the responsibilities of all the parties involved.
Tender (Bid):
• Tender is an offer in written by the person who offers the tender to
execute some specified work or to supply some specified goods at a
certain rate within fixed time frame under certain conduction of
agreement.
• It is the first step in formulation of contract.
Necessity of Tender:
1. Tender is performed to select the best contractor.
2. It helps to achieve quality output.
3. It helps in gaining work at competitive price.
4. It maintains transparency.
Tendering Process:
1. Determine tender process:
• The organization requesting the tender determines the type of
tender to be used.
• It may be open tender, select tender, multi stage tender or invited
tender.
2. Prepare request for tender:
• The request for tender is prepared which must include what is
required, the contractual requirements and how the contractors
should respond.
• It is the invitations for the suppliers to provide a competitive offer
to win a contract.
• It may be Request for Quotes(RFT), Request for Proposal(RFP),
Expression of Interest(EOI), invitation to tender(ITT).
3. Invite tender:
• The invitations are send to the contractors.
4. Suppliers respond:
• The supplier should collect all the required documents.
• The supplier then submits the response in the right format on time
and at the right location.
5. Evaluation and selection:
• Each tender will be checked for compliance.
• The tender will then be evaluated against the criteria specified in the
tender documentation.
• The tender that offers the best value of money will be selected.
6. Notification and Debriefing:
• The successful contractor will be notified and advised to write the
outcome.
• The unsuccessful tenderers are also advised and offered a debriefing
interview.
7. Contract Establishment:
• A formal agreement between the successful contractor and the
relevant agency is established.
Tender Notice:
• Tender notice is the information inviting bids from competent
contractors.
• It should be published in national newspapers.
• It should include all the necessary detail information about the
project.
Information in Tender Notice:
1. Name and address of the public entity inviting bid.
2. Nature of work and its location.
3. Place of delivery of goods to be supplied, the services to be
delivered and the construction work to be performed.
4. The amount of bid security and validity period of the bid.
5. Date, time and place where and when the tender document is
available.
6. Cost of tender document.
7. The place, manner, deadline for the submission of the bidding
documents.
8. Provision of e-bidding and its process
9. The place, date and time for the opening of bids
10. Expected date of acceptance of successful bids
Contract Documents:
• The papers that form complete document for agreement of the
works is contract document.
• The contract document explains the size, type and the quality of the
works, its mode o f construction, payments, design and drawing,
working drawing, legal bindings, obligations, etc. for the smooth
execution of the work.
• Any misunderstanding in the work is explained under the basis of
the contract document.
A tender document is prepared under the following sections, which
forms a contract document
1. Invitation for bidders
2. Bids distribution
3. Instruction to bidders
i. General
ii. Bidding document
iii. Submission of bids
iv. Bid openings and Evaluation
v. Award contract
vi. Bidding data
4. Forms of bid, qualifications, information, letter of acceptance and
agreement.
5. Conditions of contract
I. General
II. Time control
III. Quality control
IV. Cost control
V. Finish the contract
6. Specifications
7. Drawings
8. Bill of quantities,
9. Security forms
•Bid security
•Performance bond
•Performance Bank Gurantee (conditional)
•Performance Bank Gurantee (unconditional)
•Bank Gurantee for Advance Payment
Liability and Negligence:
•Liability is a troublesome responsibility.
•It is a legal binding or an obligation.
•When enough attentions towards all parties are not paid, liabilities are
likely to occur.
•Liabilities occur because o f negligence in performance.
•Negligence involves a failure on one party to act the way an ordinary,
reasonable person would act.
•Negligence can result in a physical injury, property damage and other
type of loss.
Relationship To Foreign Firms Working In Nepal:
• Foreign firms working in Nepal, particularly in engineering and
construction sectors, have a defined legal and professional
relationship with the Nepalese legal system.
• This relationship is governed by various laws and regulations to
ensure that foreign firms operate in a transparent, ethical, and
legally compliant manner while contributing to Nepal's
development.
Key Aspects of The Relationship Between Foreign Firms and
Nepal:
1. Licensing and Registration of Foreign Firms
2. Joint Ventures with Local Firms
3. Compliance with National Building Codes and Local Regulations
4. Labor Laws and Employment of Foreign Engineers
5. Public Procurement and Government Contracts
6. Dispute Resolution and Legal Protections
7. Taxation and Financial Regulations
8. Technology Transfer and Capacity Building
Foreign Investment and Technology Transfer Act (FITTA) 2075
(2019):
•Foreign Investment and Technology Transfer Act (FITTA) 2075
(2019) is a key legal framework in Nepal that governs foreign
investments and the transfer of technology into the country.
•The act aims to create a favorable environment for foreign investors
while safeguarding Nepal’s national interests, promoting economic
growth and fostering technology transfer.
How can a foreign investor invest in Nepal for recognition as
foreign investment?
•Investment in shares of a company in foreign currency.
•Reinvestment of earnings from foreign investment
•Lease financing in airlines, ships, plants, machinery, construction
equipment and other similar equipment up to the prescribed threshold.
•Amount received by public or listed companies through banking
channels by issuing securities in the foreign capital market.
•Investment made through technology transfer; in an industry
established in Nepal.
•Investment through establishment and expansion of industry in
Nepal.
How is Technology Transfer defined under this act?
“Technology transfer” means any transfer of technology to be made
under an agreement between an industry and a foreign investor on the
following matters:
• Patent, design, trademark, goodwill, technological specificity,
formula, process.
• User’s license, technological know-how sharing or use of
technological knowledge.
• Provision of foreign technical adviser, management and marketing
service, or other technological skill or knowledge
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