Armed Forces’ Programme

AFP
1

Business & Corporate Law

(BCL)

Prof. Parul Gupta

PhD (Faculty of Law-JMI, New Delhi), LL.M., PGDBM

Dr. Parul Gupta

 SESSION 4
2

Tenders and Its’ Types

Swiss Challenge Method of
Tendering,
Standard Form Contracts,
Letter of Intent &
Memorandum of Understanding

Dr. Parul Gupta

 Tender and Its’ Types
3

Tender – An Invitation to Offer

A letter from one party to another
acknowledging or expressing willingness
and ability to do business

Types
 Open Tenders
 Select /Invited/ Limited Tenders

 Multi Stage Tenders

 Negotiated/ Single Tenders

Dr. Parul Gupta

 Tendering Process
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1. Tender process is determined

2. Request for tender (RFT) is prepared
invitation to tender, request for proposal (RFP), expression of interest (EOI), and call for

bids etc .
 Tender Request Documents
 Description of the goods and services to be procured
 Conditions of tender
 Evaluation criteria
 Submission content and format
 Process rules and information
 Conditions of Contract

Dr. Parul Gupta

 Tendering Process
5

3. Tenders are invited

4. Suppliers respond
5. Evaluation and selection
6. Notification and debriefing
7. Contracts established and managed

In Canada- Contract A & Contract B

Dr. Parul Gupta

 Swiss Challenge Method of Tendering
6
 An innovative method adopted by governments for
awarding contracts.
 Suo motu unsolicited Proposals

 Solicited Proposals at the behest of the Government

 Two parties in this method

1. Original Proponent
2. Challengers
 The original proposer shall have the opportunity to take up the
project on highest offer, and in the event he refuses, the highest
bidder shall have right to implement the project.

Dr. Parul Gupta

 Swiss Challenge Method of Tendering
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Case 5.1: Ravi Development Vs Shree Krishna

Prathishthan and Others

Discussion Point
Was the award of project to Developers,
legal?

Take Away

Dr. Parul Gupta

 Swiss Challenge Method of Tendering
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Judgment and Explanation

It was held that The contention of the SCM being
unfair, and not transparent was false as the
public notice for tender issued by MHADA had
clearly mentioned about the said method, the rule
of “First right to refusal” to the “originator of the
proposal.” So it was concluded that the existence
of the “originator of the proposal” was very much
in the knowledge of the other builders at the time
of responding to the NIT.
Take Away
SCM – A valid process of Tendring
Dr. Parul Gupta
 Swiss Challenge Method of Tendering
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 The Supreme Court provided broad parameters to be followed by the

state/authority for smooth implementation of SCM
 The state/authority should publish in advance the nature of SCM
and particulars;
 publish the nature of projects that can come under such method;

 mention/notify the authorities to be approached

 mention/notify the various fields of the projects

 set rules regarding time limits on the approval of the project and
respective bidding;
 the rules should be followed after a project has been approved by
the respective authorities;
 all persons interested in such developmental activities should be
given equal and sufficient opportunity to participate in such
venture and there should be healthy inter-se competition amongst
such developers.

Dr. Parul Gupta

 Bid Security/Earnest Money
10
Deposit (EMD)
A bid security is an amount of money that may
be calculated as a percentage of the budget
estimate of a procurement requirement or a
percentage of a bidder’s bid price.
Required of firms that submit offers in
response to an invitation for bids
Used by the client as a protection against
bidders withdrawing their bids prior to the
end of their bid validity period, or for refusing
to sign the contract.

Dr. Parul Gupta

 Performance Security
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It is an amount guarantee for the

performance of a contract
It is not a part of the purchase price and can
not be adjusted towards the final purchase
price.
It can not be forfeited unless a damage is
proved to have happened due to the breach of
contract.
Without full proof of loss, forfeiture of
security deposit will amount to penalty.

Dr. Parul Gupta

 Bid Security
12

The bid security must be surrendered

to the client if the bidder:

 (i) withdraws their bid before the end of

the bid validity period,
 (ii) fails to sign the contract after the
notification of award, or
 (iii) fails to provide a performance
security, if required.

Dr. Parul Gupta

 Bid Security – Legal Position
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“An offer can be withdrawn before its

acceptance”

Case 5.2:National Highways Authority

of India v. Ganga Enterprises

Discussion Point
Whether the forfeiture of security deposit is contrary
to rights provided by Indian Contract Act?

Dr. Parul Gupta

 Bid Security – Legal Position
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Judgment & Explanation

The Supreme Court held that a person could withdraw
the offer prior to acceptance without penal
consequences, held that the Indian Contract Act
merely provides that a person can withdraw his offer
before its acceptance. But withdrawal of an offer,
before it is accepted, is a completely different aspect
from forfeiture of earnest/security money which has
been given for a particular purpose.
The whole purpose of such a clause i.e. to see that only
genuine bids are received would be lost if forfeiture
was not permitted.”

Dr. Parul Gupta

 NEXT SESSION
15

SESSION 5

Void Agreements
Wagering Agreements
Contingent Contracts

Dr. Parul Gupta

 16

Dr. Parul Gupta