CONTRACT LAWS & CLAIMS

INDIAN CONTRACT ACT-1872

CLAUSE 11

Who are competent to contract?Every person is competent to contract who is of the age of majority according to the law to

which he is subject and who is of sound mind and is not disqualified from contracting by any law

to which he is subject.

Interpretation

A person who has not yet attained the age of majority is a minor. Minors are offered special

positions under law since they are not expected to be mature enough to make any sound decision

in making a particular contract in their own interests.

A sound mind implies that the person entering in to the contract must understand what he is

doing and form a rational judgment as to whether he is about to do in his interest or not. He

should also have a clean record of conduct without any indulgence in fraud, criminal cases, and

other violation of laws else he is not authorized to enter the contract.

Illustration

A sale deed executed by a minor!

In one of the cases it was found that” a defendant even though he is a minor, executed one of the

deed sales. It is in respect of a 5 number of plots in favor of other defendant”. This cannot be

argued that this is altogether a ‘void transaction’ even as the other person didn’t receive any

rights, titles or interest from the minor. It further appears that the minor has executed the same

deal sale after becoming major to the same party; as the original deal was ineffectively conveyed

in favor of party.

This whole transaction is can be declared as a void contract and it couldn’t be perfected by the

subsequent ratification.

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CONTRACT LAWS & CLAIMS

Note

The age of majority is 18 years as per Indian constitution except when a guardian of minor’s

person has been appointed by court which is 21 years.

CLAUSE 12

What is a sound mind for the purposes of contracting?A person is said to be of sound mind for the purpose of making a contract if at the time it, he is

capable of understanding it and of forming a rational judgment ‘as to its interests. A Person, who

is usually of unsound mind, but occasionally of sound mind, may make a contract when he is of

sound mind’s person, who is usually of sound mind, but occasionally of unsound mind, may not

make a contract when he is of unsound mind.

Interpretation

A sound mind implies that the person entering in to the contract must understand what he is

doing and form a rational judgment as to whether he is about to do in his interest or not.

Illustrations

1. A patient in a lunatic asylum, who is at intervals of sound mind, may contract during

these intervals.

2. A sane man who is delirious fewer or who is so drunk that he cannot understand the

terms of contract or form a rational judgment as to its effects of interests cannot conduct

while such delirium or drunkenness lasts.

3. In one of the cases it was – ‘A property worth of about Rs 25000 was agreed to be sold

by a person for Rs 7000 only by a sale deed. The mother of the vendor pleaded, that he

was of an unsound mind and a congenial ideat who was incapable of understanding the

transaction and thus prayed for setting aside the sale transaction. The said contentions

were duly proved and the sale transaction was kept aside. The burden of proving the

unsound mind contention lies entirely on the person who wants to set the contract aside.

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CONTRACT LAWS & CLAIMS

FIDIC: RED BOOK

CHAPTER-6 -STAFF AND LABOUR

6.1 Engagement of Staff and Labour

Except as otherwise stated in the Specification, the Contractor shall make arrangements for the

engagement of all staff and labor, local or otherwise, and for their payment, feeding, transport

and, when appropriate, housing.

Interpretation

This clause imposes the basic obligation upon the contractor to obtain and provide for his own

staff and labour. All the facilities are to be provided to them which may be mandatory as per

court of law or specific to the conditions prevailing in the project

6.2 Rates of Wages and Conditions of Labour

The Contractor shall pay rates of wages, and observe conditions of labour, which are not lower

than those established for the trade or industry where the work is carried out. If no established

rates or conditions are applicable, the Contractor shall pay rates of wages and observe conditions

which are not lower than the general level of wages and conditions observed locally by

employers whose trade or industry is similar to that of the Contractor.

Interpretation

It states that the contractor shall not exploit the labour by denying or paying low wages. They

should be paid as per the minimum wage levels established by the concerned industry. If such

data is not available they are paid according to the wages observed in the trade practices of

similar contracts executed in that period.

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CONTRACT LAWS & CLAIMS

6.3 Persons in the Service of Employer

The Contractor shall not recruit, or attempt to recruit, staff and labor from amongst the

Employer’s Personnel.

Interpretation

The contractor is discouraged from recruiting the employer personnel for the project, which is

violation of ethics and laws.

6.4 Labour Laws

The Contractor shall comply with all the relevant labour Laws applicable to the Contractor’s

Personnel, including Laws relating to their employment, health, safety, welfare, immigration and

emigration, and shall allow them all their legal rights.

The Contractor shall require his employees to obey all applicable Laws, including those

concerning safety at work.

Interpretation

The contractor will accomplish with all the local legislation regulations and rules of public

bodies, local bye laws national and state level authorities and companies affected by works.

All his employees shall also obey the same norms and laws regarding work. In failure they are

liable for penalties.

6.5 Working Hours

No work shall be carried out on the Site on locally recognized days of rest, or outside the normal

working hours stated in the Contract Data, unless:

(a) Otherwise stated in the Contract,

(b) The Engineer gives consent, or

(c) The work is unavoidable, or necessary for the protection of life or property or for the safety

of the Works, in which case the Contractor shall immediately advise the Engineer.

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Interpretation

The contractor is not entitled to work at nights, at weekends, bank holidays etc; unless the

engineer allows him to do so. In emergency the contractor intimates the engineer as soon as

possible stating that it is unavoidable.

6.6 Facilities for Staff and Labour

Except as otherwise stated in the Specification, the Contractor shall provide and maintain all

necessary accommodation and welfare facilities for the Contractor’s Personnel. The Contractor

shall also provide facilities for the Employer’s Personnel as stated in the Specification.

The Contractor shall not permit any of the Contractor’s Personnel to maintain any temporary or

permanent living quarters within the structures forming part of the Permanent Works.

Interpretation

The labour and staff of various grades working under the contractor are entitled to benefits such

as housing and other provisions as it is the liability of the contractor to provide the same unless

otherwise specified.

6.7 Health and Safety

The Contractor shall at all times take all reasonable precautions to maintain the health and safety

of the Contractor’s Personnel. In collaboration with local health authorities, the Contractor shall

ensure that medical staff, first aid facilities, sick bay and ambulance service are available at all

times at the Site and at any accommodation for Contractor’s and Employer’s Personnel, and that

suitable arrangements are made for all necessary welfare and hygiene requirements and for the

prevention of epidemics.

The Contractor shall appoint an accident prevention officer at the Site, responsible for

maintaining safety and protection against accidents. This person shall be qualified for this

responsibility, and shall have the authority to issue instructions and take protective measures to

prevent accidents. Throughout the execution of the Works, the Contractor shall provide whatever

is required by this person to exercise this responsibility and authority.

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CONTRACT LAWS & CLAIMS

The Contractor shall send, to the Engineer, details of any accident as soon as practicable after its

occurrence. The Contractor shall maintain records and make reports concerning health, safety

and welfare of persons, and damage to property, as the Engineer may reasonably require.

Interpretation

The contractor shall be careful to keep the site in safe and working order. He is liable to make all

the provisions which enable good living conditions on site. Suitable appropriate measures have

to be taken for prevention of epidemics by creating hygiene surroundings. He shall take the

responsibility in implementing safety, welfare, and environment norms.

In case of any accident he will inform the same to the engineer in charge and get the concerned

approvals.

6.8 Contractor’s Superintendence

Throughout the execution of the Works, and as long thereafter as is necessary to fulfill the

Contractor’s obligations, the Contractor shall provide all necessary superintendence to plan,

arrange, direct, manage, inspect and test the work.

Superintendence shall be given by a sufficient number of persons having adequate knowledge of

the language for communications and of the operations to be carried out (including the methods

and techniques required, the hazards likely to be encountered and methods of preventing

accidents), for the satisfactory and safe execution of the Works.

Interpretation

The contractor shall provide all the necessary management and supervision throughout the

project. It includes various functions such as planning, staffing, leading, directing, and

coordinating on issues related to progress of work. This can be achieved only by recruiting right

men for the right job in adequate quantity. Competent persons in their trades work together for

the successful accomplishment of job without any hazards.

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CONTRACT LAWS & CLAIMS

6.9 Contractor’s Personnel

The Contractor’s Personnel shall be appropriately qualified, skilled and experienced in their

respective trades or occupations. The Engineer may require the Contractor to remove (or cause to

be removed) any person employed on the Site or Works, including the Contractor’s

Representative if applicable, who:

(a) persists in any misconduct or lack of care,

(b) carries out duties incompetently or negligently,

(c) Fails to conform with any provisions of the Contract, or

(d) Persists in any conduct which is prejudicial to safety, health, or the protection of the

environment.

If appropriate, the Contractor shall then appoint (or cause to be appointed) a suitable replacement

person.

Interpretation

All the personnel of the contractor should be skilled and competent in their respective trades,

adding value to the project by their qualifications, skills, and experiences. The engineer has the

authority to remove the contractor personnel in cases where he is found with misconduct in

dealing with the parties, negligence/ incompetence in hi duty, violating norms and standards.

If these charges are proved to be evident then the contractor may remove him from the concerned

position

6.10 Records of Contractor’s Personnel and Equipment

The Contractor shall submit, to the Engineer, details showing the number of each class of

Contractor’s Personnel and of each type of Contractor’s Equipment on the Site. Details shall be

submitted each calendar month, in a form approved by the Engineer, until the Contractor has

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CONTRACT LAWS & CLAIMS

completed all work which is known to be outstanding at the completion date stated in the

Taking-Over Certificate for the Works.

Interpretation

This clause states that the contractor is required to maintain all the records in a certain prescribed

manner of his labour and equipment; such as temporary records, vouchers, monthly statements

etc. such statements are to be submitted periodically approved form the engineer until the taking

over certificate has been issued.

6.11 Disorderly Conduct

The Contractor shall at all times take all reasonable precautions to prevent any unlawful, riotous

or disorderly conduct by or amongst the Contractor’s Personnel, and to preserve peace and

protection of persons and property on and near the Site.

Interpretation

This states that the contractor must take all the precautions to ensure that any riots or unlawful

incidents don’t occur at premises of work place. Actions should be taken up on all those found

guilty on such grounds to restore peace and harmony.

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