Public procurement and Indian Contract Act

Vishnu S Warrier
Founder, Lex-Warrier Foundation


Government organizations procure a wide variety of goods and services and undertake execution of works in pursuance of their duties and responsibilities. Government procurement or public procurement is the procurement of goods, services and construction on behalf of a public authority, such as a government agency. It is necessary because governments cannot produce all the inputs for the goods they provide themselves. Thus, the Government has the right to enter into contract with anybody, though he may not be the highest bidder. Public interest is the prime consideration in the matter of the tender invited by the State and it should see that, it gets the best price for the works entrusted by it to private individuals. On the same time, Article 14 of the Indian Constitution prohibits the State from arbitrarily choosing a contractor at its will and pleasure. It has to act reasonably, fairly and in public interest in awarding procurement contracts. At the same time, no person can claim a fundamental right to carry on business with Government. A procurement contract besides being a commercial transaction is also a legal transaction. There are a number of commercial/mercantile laws that are applicable equally to the private sector and public procurement, such as the Indian Contract Act, Sales of Goods Act, Arbitration and Conciliation Act, and so on. Although a public procurement professional is expected to have a working knowledge of the following basic laws relating to procurement, yet he is not expected to be a legal expert. If standard contract forms are used, the procurement official can discharge his normal functions without frequent legal help. In case any complex legal issue arises, or a complex contract beyond the standard contract form is to be drafted, an appropriate legal professional may be associated with the procurement from an early stage. The elements and principles of contract law and the meaning and import of various legal terms used in connection with the contracts are available in the Indian Contract Act, 1872 read with the Sale of Goods Act, 1930. Some of the salient principles relating to contracts are set out briefly in this paper.

Keywords: Public procurement, law of tendering, Indian Contract Act, Sales of Goods Act, Arbitration and Conciliation Act

Preferred Citation:

Vishnu S Warrier, Public procurement and Indian Contract Act, The Lex-Warrier: Online Law Journal (2019) 4, pp. 196 – 201, ISSN (O): 2319-8338

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