Penalty during foreclosure of contract

Sushanta Kumar Mishra (Querist) 02 November 2016 This query is : Resolved
a contract for transportation of cola was awarded for a period of 3 years. The management decided to foreclose the contract after 2 years of execution. There will not be any penalty on the remaining period of one year is quite clear. However, whether there will be any shortfall penalty during the the 2 years of work period? The shortfall penalty clause of the contract stipulates that the penalty will be finalised every month.

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Devajyoti Barman (Expert) 02 November 2016
What is the actual dispute as your query looks like an academic one.

Rajendra K Goyal (Expert) 02 November 2016
Refer the terms of agreement.

Kumar Doab (Expert) 02 November 2016
The explicit terms of the agreement may be referred.

adv.bharat @ PUNE (Expert) 02 November 2016
It depend up on the terms of agreement.

R.K Nanda (Expert) 02 November 2016
nothing to add more.

Guest (Expert) 02 November 2016
In what capacity or concern with the contract or contractor you have asked the question?

Sushanta Kumar Mishra (Querist) 03 November 2016
In our case we have awarded a contract for transportation of coal from the coal face to the railway siding.
The exact provision in the NIT is quoted as below: -
2. Clause No. 9.4 of General Terms and conditions of NIT-645: -
“9.4 Foreclosure of contract in full or in part- If at any time after acceptance of the tender, the company decides to abandon or reduce the scope of the work for any reason whatsoever the company, through its Engineer-in-Charge, shall give notice in writing to that effect to the contractor. In the event of abandonment/reduction in the scope of work, the company shall be liable to pay the contractor at the contract rates full amount for works executed and measured at site upto the date of such abandonment/reduction in the work.”
In our case the contractor stopped the work 3 months before the scheduled completion of work and the company did not require the self same work also. In this case if we go for the foreclosure of the contract, then will the shortfall penalty for the period in which the contractor actually executed the work be applicable as per the terms and condition of the contract?

Guest (Expert) 03 November 2016
Facts are not sufficient to arrive at some conclusive opinion.

Please clarify, did you issue any notice to the contractor why he stopped the work 3 months before in violation of the agreement? If not any reason for the same?

adv.bharat @ PUNE (Expert) 03 November 2016
Author need to explain the query raised by expert.

Rajendra K Goyal (Expert) 03 November 2016
Discuss in detail with local lawyer.

Kumar Doab (Expert) 03 November 2016
Discuss in detail and in person with a very able counsel.

Guest (Expert) 03 November 2016
You may like to follow the advice of Shri Rajendra K Goyal and Shri Kumar Doab, as above.

P. Venu (Expert) 03 November 2016
The matter requires professional consultation.

Ms.Usha Kapoor (Expert) 08 February 2018
Discuss in detail WITH EXPERT LAWYER.

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