PPCC Training Manual 9 (1).doc

The tender document should specify the time allowed

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The tender document should specify the time allowed for these procedures. The procuring entity should observe the validity period of the tender security, normally thirty days beyond the validity period of the tender and initiate the contract award in due time for the process to be completed before this period expires. In international competitive bidding, which is very similar to public bidding by Government agencies, a contract normally comes into existence through the acceptance of the lowest evaluated bid. This would contrast with private procurement in which a contract is usually negotiated through extensive exchanges between the parties, including oral communications and correspondence. 9.2 Form of Contract The provisions of some national laws permit the conclusion of transactions in oral form which, however, might not comply with the national law of one of the contracting parties which may require a contract to be in the written form. Even where such a requirement does not exist, it is advisable for the parties to establish the contract in the written form to avoid later disputes as to what terms were actually agreed upon. It is also advisable for the contract to provide that it may only be modified by agreement in writing. The World Bank requires that contracts are concluded in writing. 9.3 Formation of the Contract A clear statement on when the contract become binding is important because certain contract clauses could be connected with this date, e.g. Delivery Time, Warranty, Validity of performance Guarantee, etc. The question when a contract becomes binding is closely connected with the form of the contract and the express will of the parties. As a general statement, we could accept that: 'A contract comes into being when the parties have reached agreement on all essential points in the form required by the applicable law'. The World Bank Standard Bidding Document for Procurement of Goods clearly opt for the alternative of linking the formation of the contract to the Purchaser's 56
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notification of award. The same principle applies under the United Nations Convention on Contracts for the International sale of Goods, according to which an "acceptance of an offer becomes effective at the moment the indication of assent reaches the offered. In the Bid Form attached as section VIII to the World Bank Standard Bidding Documents, the bidder acknowledges his agreement with this principle in the following language; "Until a formal contract is prepared and executed, this bid, together with your written acceptance thereof and your notification of award shall constitute a binding Contract between us." The same principle- which has so far never been questioned under the applicable laws of any country borrowing from the Bank- is repeated in the Standard Bidding Documents, section II Instruction to Bidders.
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