Contractual Liability of the State
Chapter Thirty-Eight
Syllabus topic 3.3, "Contractual Liability"
Pages 229 to 234 of 396
In one line
The Government can make contracts, but only in the form Article 299 prescribes, and a contract that does not meet that form is void, however honest the dealing.
In the words a student can write in an exam: Article 298 empowers the Union and the States to carry on trade and to make contracts for any purpose, and Article 299(1) prescribes the form: every contract made in the exercise of the executive power of the Union or a State must be expressed to be made by the President or the Governor, and must be executed on behalf of the President or the Governor by such persons and in such manner as he may direct or authorise. A contract not satisfying those requirements is void and unenforceable against the Government; but Article 299(2) protects the President, the Governor and the executing officer from personal liability, and a party who has performed under a void contract may recover under section 70 of the Indian Contract Act 1872.
The power to contract
Article 298 provides that the executive power of the Union and of each State extends to the carrying on of any trade or business, and to the acquisition, holding and disposal of property, and the making of contracts for any purpose.
Two points follow. First, the Government does not need a statute authorising each contract; the executive power suffices, which is consistent with Rai Sahib Ram Jawaya Kapur v. State of Punjab, AIR 1955 SC 549, holding that the executive may act without prior legislation so long as it does not infringe rights or contravene a law. Second, because the power is executive, it is subject to the constitutional limits on executive power in Articles 73 and 162.
The form: Article 299(1)
Article 299(1) provides 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 that 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 authorise.
That yields three requirements, and they are the heart of the topic.
| Requirement | What it means |
|---|---|
| 1. Expressed to be made by the President or the Governor | The contract must state on its face that it is made by the President or the Governor, not by the department, the ministry or the officer |
| 2. Executed on behalf of the President or the Governor | The signature must be for and on behalf of the President or Governor |
| 3. By a person authorised to do so | The person signing must have authority from the President or Governor, direct or delegated |
The rest of this chapter
Module one is free. The rest of LL.B. 3 Years Semester 3 is part of the bundle.
You are reading a chapter from a later module. Everything in module one of every subject stays free, and so does every question paper and the syllabus.
See the semester for ₹798 Already bought it? Sign in
Free either way: question papers, the syllabus, and module one of every subject.
The rest of this subject
These notes are cut from the University's printed syllabus. Open the syllabus itself, or the past papers, for the same subject.