GOVERNMENT CONTRACTS

Business Law CIA 1

 Government Contracts as per Article 299
Article 299 (1) of The Constitution of India 1949 states that, “All contracts made
in the exercise of the executive power of the Union or of a State shall be
expressed to be made by the President, or by the Governor of the State, as the
case may be, and all such contracts and all assurances of property made in the
exercise of that power shall be executed on behalf of the President or the
Governor by such persons and in such manner as he may direct or authorize”
1 Underlying Principles
2
3
4
Fairness

Public Interest

Non- Arbitrariness

Contractual Liability &

Provision of Judicial
Review
Public Interest

1 No Nepotism or Bias

State/ Public owned property not

2 absolute discretion of Exec.

Framing the Regulatory Polices in our

3 favour
 Without Bias,
All Fairness, In 1
Good Faith
Reasonableness
2 (Article 14)
State Cant act Doctrine of
arbitrarily Fairness
3
Also applicable
4 in Exec decisions
without law
 ‘Contracts’ & ‘Govt. Contracts’
 In respect of Government Contracts the provisions of Article 299(1) must
be complied with, in addition to the provisions of the Indian Contract Act.

 State of Bihar v. Majeed, K.P.Chowdhary v State of Madhya Pradesh- no

difference in enforceability and interpretation, implied contract
 Formation of Govt. Contracts
 The executive power of the Union of India and the States to carry on any
trade or business, acquire, hold and dispose property and make contracts is
affirmed by Article 298 of the Constitution of India.
 If the formal requirements required by article 299 are complied with, the
contract can be enforced against the Union or the States.
Article 299

be expressed to be made by the President or

1 by the Governor of the State

that power shall be executed on behalf

of the President or the Governor by
2 such person and in such manner as he
may direct or authorize.

Neither the President nor the Governor

3 shall be personally liable in respect of any
contract or assurance made or executed
for the purpose of any enactment relating
to Government of India.
 A contract complying with the Article can be enforced by or against the government. It is
subject to the general provisions of the contract law ,and its terms cannot be changed by
resorting to Article 14 of the constitution . A contract not complying with any of the
conditions of Article 299(1) of the Constitution is not binding on or enforceable by the
Government , and is absolutely void , though not so for collateral purposes , and cannot
be ratified. No damages can be claimed for breach unless the contract is complete under
this article.
The provisions have been embodied to protect the general public as represented by the
government. The terms of the Article have therefore been held to be mandatory and not
merely directory. This means that a contract not couched in the particular form stipulated
by Article 299(1) cannot be enforced at the instance of any of the contracting parties.
Neither the government can be sued and held liable for the breach of such a contract nor
can the government enforce such a contract against the other contracting party.
Requirements of Government Contracts

Every contract
must be Every contract
executed by a Every contract
must be
person must be
executed on
authorized by expressed to
behalf of the
the President be made by the
President or
or the President or
the Governor
Governor the Governor
 Implied Contract By Government
if such implied contracts
between the government
and another person were
allowed, they would in
effect make Article 299(1)
useless.
K.P.Chowdhary v State
of Madhya Pradesh 4 3
Can not be an implied
1 contract between the
government and
2 another person
For a person who had a
contract with the
government which was not
executed at all in the
manner provided under
Article 299(1) could get
away by saying that an
implied contract may be
inferred on the facts and the
circumstances of the
particular case