Performance bank guarantee
S DEB
(Querist) 06 September 2013
This query is : Resolved
Before signing a contract the contractor has to furnish a performance bank guarantee for honouring the commitments entered into under the contract.
In case after signing the formal contract the contractor suddenly comes up to say that he made a mistake in the price calculation and wants to cancel the contract, in this sutiation can performance bank guarantee be invoked when the contractor admits the mistake and when there was no performance at all ?
Guest
(Expert) 06 September 2013
Mr. Deb,
Bank Guarantee is taken as a token of security to meet with the expected loss or expenditure/ indirect cost having been incurred by any department in case of no performance or poor performance, etc., in the contract. Once the contract agreement is signed, there is no scope for consideration of the plea of the contractor for any calculation mistake. The bank guarantee has to be invoked if the contractor fails to do the job or underperforms in violation of any clause of the agreement within the stipulated time as shown in the agreement.
So no performance or faulty performance within the agreed timeframe, his bank guarantee will have to be encashed from the bank by the department. At the discretion of the competent authority, the contractor can also be blacklisted to debar him from participating in future tenders.
Rajendra K Goyal
(Expert) 06 September 2013
If the Bank Guarantee has been issued, handed over to the person in whose favor it is issued, it can be evoked, subject to the provisions of Bank Guarantee.
Sankaranarayanan
(Expert) 06 September 2013
nothing more advise need for the query. well advised by mr Dhingra . No more word need to advise.
