A contract is the legal document made in writing between two or more than two parties to perform certain task in exchange of money. The contract make sense only when it has its elements which are; offer, acceptance, consideration, legality and mutual consent.
Fig: Contractual image prepared by ChatGPT
In context of Nepal, as per the Clause no. 2.3 of General Condition of Contract (GCC) of Standard Bidding Document (SBD), the documents forming the contract shall be interpreted in the following order of priority.
- Contract Agreement
- Letter of Acceptance
- Letter of Technical Bid and Price Bid
- Special Conditions of Contract (SCC)
- General Conditions of Contract (GCC)
- Specifications
- Drawings
- Bill of Quantities (or schedule of prices for lump sum contracts) and
- Any other document listed in the SCC as forming the part of Contract.
This means the contract follows the above order and whenever the problem or any legal issues arises, the order of priority remains valid and whichever comes first will define the legality of contract.
Let's discuss the above listed priority order one by one:
Contract agreement: It is the legal document when both parties join hands to perform certain task in exchange of money. The name of both employer and contractor or supplier with the name, address and description of works to be performed under this contract in mentioned in the contract. The agreement also includes the contract amount and other related documents that deemed to form and constructed as part of the agreement. The agreement is duly signed by the representatives of the employer and the contractor along with their respective witnesses.
Letter of Acceptance: It is a letter issued by employer to the contractor/Supplier notifying that their bid has been accepted and ask the bidder to contact the employer to sign the formal contract agreement within the defined period of time along with Performance Guarantee issued by a commercial bank or financial institution eligible to issue Bank Guarantee as per prevailing Law in Nepal.
Letter of Technical Bid and Price Bid: It is one of the mandatory document to be filled by the bidder. Failed to comply this document result in the rejection. In the letter of Technical Bid, the bidders declare that they are eligible to take participation for the respective bidder as per the prevailing law of Nepal. If the declaration if found to be manipulated or made any changes on the form, legal action are taken against them.
In the letter of Price bid, the bidder quote actual bidding amount and any discount or condition if offered by bidder shall be mentioned in this form. Both the Letter of Technical and Price Bids must be accomplished by the bidder in their letterhead clearly showing the complete name
and address.
Special Condition of Contract (SCC): It is in the priority list before General Condition of Contract (GCC) as this part of the document supplement GCC. The Special Conditions of Contract
(SCC) contain provisions that the GCC require be specified for a particular
bidding process. The Employer should include at the time of issuing the Bidding
Document, all information that the GCC indicate shall be provided in the SCC.
General Condition of Contract (GCC): The GCC contain standard provisions that have been designed to remain
unchanged and to be used without modifying their text. This Section provides the General
Conditions of Contract that will apply to the Contract for which the Biding document
is issued. The GCC clearly identify the provisions that may normally need to be specified for a
particular bidding process and require that such information be introduced through the SCC.
Specifications: Specifications are mentioned in the Works Requirement Section of Bidding Document. These are the detailed, legally binding written documents that defines the quality, workmanship, standards and materials for a project. The specifications follows the standard code that is why it is bind by the law. It also helps in the quality control and assurance of any projects.
Drawings: Drawings are the technical document that are prepared in appropriate scale and it provide the roadmap for the construction or manufacturing project. It is one of the crucial part of any contract agreement. Drawings are also given in the Work Requirement section of the bidding document where bidder get clear picture of the project.
Bill of Quantities (BoQ): The Bill of Quantity provides estimated information on the itemized quantities in
sufficient detail to distinguish between the different classes of Works to be performed by
the bidder and enable to the Bidder to prepare priced bill of quantities
efficiently and accurately. It is last but not the least in the priority list of the contract agreement document.
Any Other documents listed in the SCC as forming the part of the Contract: It is any additional document mentioned in SCC other than above priority list. For example; any Amendments and Negotiation, made during the implementation phase. Any kind of variation or change in unit or quantities if forms a part of the project that can be mentioned here and made a part of contract agreement.