IACCM Contract Management Forum

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2019-07-03 07:09:15

Validity of Contract

If a buyer awards a call off contract after a framework expires (even though they started sourcing exercise prior to framework expiry), is the call off contract valid?
 •  Lifecycle Management Group Ltd  •   2019-07-18 15:26:25
If I understand you correctly, no. It IS possible to call off a contract if the end of the contract is after the expiry of a framework agreement. But if the Framework Agreement has already expired, it isn't possible (legally) to award a call off contract subject to that Framework Agreement. The fact you had started the process before the FA expired unfortunately makes no difference.
 •  Neptune Marine Service Ltd  •   2019-07-22 01:21:53
I will tend to differ here, as if both the parties have agreed to call off contract which is subject to terms and conditions of frame work agreement. Potentially it is a legally biding document.
 •  Lifecycle Management Group Ltd  •   2019-07-22 07:50:20
Replying to Gaurav's response: The contract would (at least initially) be valid between the parties. However, assuming this is an above-threshold call off, the courts would not consider this to be a compliant procurement according to the Public Contracts Regulations 2015. This would mean that any decision to call off from an expired framework would be able to be challenged. The courts would have the power to set aside the contract and/or award damages.
 •  Neptune Marine Service Ltd  •   2019-07-23 00:14:50
Hi Michael,

Thanks for the revert. However, if you see my initial response:- The Service Order is signed b/n parties which will be subject to general terms and conditions of MSA.

Keeping in mind the MSA will normally have following sections and Service Order will have scope and pricing:-

- Frame work
- General Terms & Conditions

The Service Order on its own shall act a contract. Perfect example how companies use Model Contract. [ LOGIC for UK]

With regards to court, I will tend to rely on freedom of contract, and a court will look at the parties' actions and communications, to decide what a reasonable person would have understood the parties' intentions to be, rather than what they may subjectively have intended.

Gaurav Seth
 •  Lifecycle Management Group Ltd  •   2019-07-23 07:36:31
I wonder if we are talking at cross purposes. I had assumed this was an above-threshold call off from a Public Sector Framework (governed by Public Contracts Regulations 2015). If it is, I'm simply pointing out that it would not be compliant with the Regulations to call off from an expired framework. I agree there would be a contract between the parties but, if the call off is subject to PCR 2015, then it would be subject to challenge. The real issue is whether another party feels they have the basis for a challenge. They could make the case that, instead of calling off from an expired framework, the Regulations would require them to use a current framework or to run a full, properly advertised tender. Of course, if the framework in question is not an EU Public Sector framework, not governed by PCR 2015, then I can't disagree with you.
 •  Neptune Marine Service Ltd  •   2019-07-23 08:11:24
@ Michael, my answer was not subject to Public Sector Framework (governed by Public Contracts Regulations 2015) and were solely relied on Western Australian contracts law. I have just read the article on the above regulation, and you might be right on public contracts subject to said regulation.

"Anonymous"- Who started this discussion. I hope you have a better picture on this issue.
 •  Lifecycle Management Group Ltd  •   2019-07-23 09:28:26
@Guarav. I agree. It would be useful to understand the parameters of the original question from Anonymous.
@Anonymous Is it a Public Sector framework? Is it in the EU? Is it governed by Public Contracts Regulations 2015?
 •  Crown Commercial Services  •   2019-07-23 13:03:21
Dear Michael and Gaurav,

Many thanks for your responses, they are much appreciated. the framework in question is a UK public sector framework. And to clarify the question, if buyers have (and can evidence) that they have completed evaluation and made a selection of which supplier they will award a call-off contract to, whilst the framework was live, can they proceed and award the call-off contract if the framework has subsequently expired?

Best regards
 •  Lifecycle Management Group Ltd  •   2019-07-23 13:56:38
Hi Mark

Given that it is governed by PCR 2015, and assuming it is an above-threshold requirement, this would not be a compliant call off and therefore at risk of challenge. The bottom line is the framework would no longer be valid, so a call off would not be compliant.

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