When is a contract effective?

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When is a contract effective?

Post by Abecedarian on Fri Sep 14, 2012 4:42 pm

The Invitation to Bid states that the goods are deliverable by 08 September 2012 until September 8, 2013. The Notice of Award was delivered and received by the LCRB on 11 September 2012. The Performance Security is effective 12 September 2012 until 12 September 2013. The Notice to Proceed states that the contract is effective 13 September 2012 until 13 September 2013.

Among these dates, when the contract takes effect?
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Re: When is a contract effective?

Post by elib on Fri Sep 14, 2012 4:54 pm

hi Abecedarian,

it will be the latter, 13sept2012-2013 as thats what the irr specifically provides.

please see irr 37.4.1.

cheers....
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Re: When is a contract effective?

Post by Abecedarian on Sat Sep 15, 2012 3:54 pm

Hello Elib,

So, there will be a day that the service provider will provide services without a performance security.
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Re: When is a contract effective?

Post by elib on Sat Sep 15, 2012 8:06 pm

hi Abecedarian,

no, there shouldn't be days not bonded.

in your case, the performance security should be adjusted as what the contract conditions needs.

in my opinion, there will be no problem for the insurer to adjust as they are infact aware that the performance bond validiy starts at contract effectivity date and is coterminus with the project.

cheers....
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Re: When is a contract effective?

Post by regina avelino on Mon Sep 17, 2012 9:37 am

elib wrote:hi Abecedarian,

no, there shouldn't be days not bonded.

in your case, the performance security should be adjusted as what the contract conditions needs.

in my opinion, there will be no problem for the insurer to adjust as they are infact aware that the performance bond validiy starts at contract effectivity date and is coterminus with the project.

cheers....

hi sir elib, just want to comment on the underlined. performance security should remain valid until issuance by the procuring entity of the certificate of final acceptance. thanks.



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Re: When is a contract effective?

Post by Abecedarian on Mon Sep 17, 2012 2:18 pm



Which is ahead, the execution of the contract or the presentation of the performance security. I am asking because there was a time that the LCRB asked a copy of the contract to be used in applying for a performance security.
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Re: When is a contract effective?

Post by elib on Mon Sep 17, 2012 3:58 pm

regina, thanks for your additional comment.

Abecedarian,

posting of performance bond and other required docs should be presented first as it is a condition precedent to the contract signing, then it will be followed by the NTP wherein the contract effectivity date is provided.
LCRB asked a copy of the contract to be used in applying for a performance security
yes, it is a general practice for a bonding company to ask for the contract and/or draft contract so that they can appropriately consider the value of premiums the contractor will pay based on the risk allocated to them ,from the contract.

if a signed contract is not yet available then a draft contract in my opinion will suffice the requirement of the bonding compnay.

at this stage the contract effectivity date is insignificant to the bonding company's as its primary objective is to value the premiums and to know the risks involve and how long the bond will be provided in favor of the pe.

other task mentioned above follows.

hope this helps...

cheers....

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Re: When is a contract effective?

Post by engrjhez® on Tue Sep 18, 2012 9:17 am

Abecedarian wrote:

Which is ahead, the execution of the contract or the presentation of the performance security. I am asking because there was a time that the LCRB asked a copy of the contract to be used in applying for a performance security.

Performance Security must be submitted PRIOR to execution of contract.

Instead of the contract (as may be required to present), you may submit a copy of Notice of Award which stipulates among others the award of the procurement and the requisite to "post the necessary Performance Security within 10 days" in accordance with Instruction to Bidders. Smile
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Re: When is a contract effective?

Post by alpha1 on Tue Sep 18, 2012 11:09 am

[quote="engrjhez®"][color=purple]
Abecedarian wrote:

Which is ahead, the execution of the contract or the presentation of the performance security. I am asking because there was a time that the LCRB asked a copy of the contract to be used in applying for a performance security.

Section 39.1 of the Revised IRR "To guarantee the faithful performance by the winning bidder of its obligations under the contract in accordance with the Bidding Documents, it shall post a performance security prior to the signing of contract. (emphasis mine)
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Re: When is a contract effective?

Post by elib on Tue Sep 18, 2012 6:31 pm

engrjhez®,

this maybe out of the topic....but i need some enlightement

can you please further explain, why is it enough for a bonding company just to have an NOA at hand.

isn't it, that they need more signigicant information which the NOA could not provide.(for valuing reasons and knowing the risk allocated to them by the contract)

NOA only provides us information that an award have been given to a particular contractor and informing the latter of additional requirements to be submitted prior to contract execution, which, could be insufficient for a bonding company to render a performance bond.

kindly educate us....


cheers....
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