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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CONTRACT LAWS & CLAIMS
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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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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