MODULE 6

AWARD OF CONTRACT
COURSE OBJECTIVES
On successful completion of the course, trainees should
be able to:

 Understand the basic principles of contract law.

 Explain what constitutes a valid contract.
Outline the content of contract documents for goods,
works, and service contracts.
 CONTRACT

A contract is a voluntary agreement between two or

more competent parties that is legally binding and
enforceable.
TYPES OF CONTRACT

 Simple or Special
 Bilateral or Unilateral
 Valid or Void
 Lumpsum
 Framework Agreements
ELEMENTS OF A CONTRACT

Offer
 The act in which a party called an offeror
expresses a willingness to enter into an agreement
which is binding under law with another party
called an offeree is known as an offer
… CONT’D
A valid and enforceable offer, must be definite,
clear, and concise. An offer can be revoked (offers
within a timeframe) or terminated (death, insanity)
under certain conditions.

An offer can also be negotiated to create a

counter-offer.
Acceptance
When an offer is accepted it transforms into a
valid legal contract.

Revocation: Until an offeree indicates his/her

acceptance of an offer, the offeror is by law granted
the liberty to withdraw or revoke his offer.
 
… CONT’D
An express or implied statement made by the offeree to show a
full admission of the terms described in the offer by the offeror is
termed acceptance.
There should be no counter proposal and it must be clearly
communicated to the offeror by the offeree. Silence does not
constitute acceptance. Acceptance can be communicated through:
Written
Oral
Electronic Acceptance e.g. E-mail, fax, telephone
 Rejection
An offer comes to an end when it is expressly rejected outright by the
offeree.
 Instances of such rejection in law:
A counter offer.
 Lapse of time: An offer is said to have been terminated when
acceptance is not indicated to the offeror within the time specified for
acceptance.
 Failure of Condition Precedent: Where an offer is impinged upon
certain conditions being fulfilled before the offer takes place, if those
conditions are not fulfilled, the offer cannot be complete but rather end.
 Death: In a contract situation the death of either party to the offer
before acceptance brings the offer to an end.
Intention to create legal relationship
 

This can also be called the form of the contract. There

should be an intention to create a legal relationship
by the parties involved. In commercial transactions,
for example between purchasers and suppliers, it is
presumed that the parties have an intention to create a
legal relationship.
FACTORS CONSIDERED IN SELECTING
CONTRACT TYPE

o Nature of procurement.
o Level of risk.
o Value for money.
o Cost control.
o Organizational requirements.
TERMS OF THE CONTRACT

These are the conditions of contract which can be

extracted from the standard tender documents if
available in the case of public procurement. It is
the do’s and don’ts of the contract & must be
clearly described under the terms of contract.
t
CAPACITY OF THE PARTIES TO
CONTRACT

This refers to a party’s legal eligibility to enter into a contract.

Example of condition that make a person legally able to enter
into a contract include state of mind & age limit.

The Object of the Contract must be legal

A contract cannot be signed for a party to carry out an illegal

act. Examples of illegal acts include the sale of stolen items,
illegal drugs..
CONSENT

 The agreement must be free from: Misrepresentation, Duress,

Undue influence.
Misrepresentation: This is a remedy available to a person
who has been induced into a contract by relying on a statement
made by another person which s/he knows at the time of
making same for the execution of the contract to be untrue.

 Discharge or forfeiture Clause

 A contract is discharged when the obligations created under
the contract ceases to be binding on the parties.
REMEDIES FOR BREACH OF CONTRACT

A contract is breached when the binding

agreement is not honored.
It can be caused by one or both parties. It can be
due to non-performance or interference with the
other party’s performance.
Examples of remedies are liquidated damages.
AWARD OF CONTRACT
The advertisement for tender constitutes an invitation to
bid.
The submission of tender documents (with the form of
tender duly signed) constitutes a bid.
Then the vendor who emerges as the lowest responsive
evaluated bidder is given a letter of award which constitutes
an offer.
After the vendor accepts the offer it is acceptance and
submits the required securities (performance
bond/guarantee) the contract can now be drafted and
signed by the parties and their witnesses.
PPA AWARD OF CONTRACT
SECTION 68

The contract shall be awarded to the bidder that has

submitted the lowest evaluated and substantially
responsive bid that meets only the evaluation criteria as
specified in the bidding documents.
CONTRACT DOCUMENTS
Works:
 Form of Bid
 Letter of Acceptance
 Contract Agreement
 Contract data sheet
 Conditions of Contract
 Bill of Quantities (BOQ)
 Drawings
Security Form
 Goods :

• Form of Bid
• Letter of Acceptance
• Contract Agreement
• Contract data sheet
• Conditions of Contract
• Specifications
• Price Schedules
• Security Forms
Services:

Agreement
Technical Proposal
Financial Proposal
Terms of Reference (TOR)
General Conditions of Contract
Special Conditions of Contract
Security Forms (if any)
GROUP WORK

Brainstorm on importance of contract

management & monitoring & note down your
discussions.
CONTRACT MANAGEMENT
It is the process that enables both parties to a
contract to meet their obligations in order to
deliver the objectives required from the contract.
It also involves building a good working
relationship between the MDA’s and supplier.
MONITORING CONTRACTS
PERFORMANCE

 Contract monitoring is a regular process of

evaluating supplier’s performance based on
measurable deliverables and verifying supplier’s
compliance with the terms and conditions of the
contract.
THE PURPOSES OF
MONITORING
Improve program performance through early
identification of questions and issue resolution.
Identify potential problems that may require additional
scrutiny.
Evaluate supplier’s performance controls to ensure there
is a reliable basis for validating service deliverables.
Assure that financial documentation is adequate and
accurate so that costs will not be questioned later on.
SUCCESS FACTORS IN
CONTRACT MANAGEMENT
Good preparation
 An accurate assessment of needs helps create a clear output-based
specification. Effective evaluation procedures and selection will ensure that the
contract is awarded to the right supplier.
 

The right contract

 The contract is the foundation for the relationship. It should include aspects
such as allocation of risk, the quality of service required, and value for money
mechanisms, as well as procedures for communication and dispute resolution.
CONT’D
Service delivery management and contract administration
 Effectivegovernance will ensure that MDA’s gets what is
agreed, to the level of quality required. The performance
under the contract must be monitored to ensure that MDA’s
and the public continue to get value for money.
Relationship management
 Mutual trust and understanding, openness, and
communications are important to the success of the
fulfillment of the formal contract terms and conditions.
CONT’D
Knowledge
 Those involved in managing the contract must understand the
business fully and know the contract documentation inside
out.
Flexibility
 Management of contracts usually requires some flexibility on
both sides and willingness to adapt the terms of the contract to
reflect a rapidly changing world. Problems are bound to arise
that could not be foreseen when the contract was awarded.
THANK
YOU