The Law of Administrative
contaracts
Teaching Material
Prepared by:
Wondwossen Wakene
(University of Gondar,Faculty of Law)
Prepared under the Sponsorship of the Justice and Legal
System Research Institute
2009
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Administrative Contracts, System Research Institute, Administrative Contracts, Validity Requirements, Modalities of Formation, Under the Proclamation, Manner Of Performance, Forced Performance, Variation Clause, Revision Clauses. This is not a lecture notes. Its teaching material for a complete course. It was prepared by faculty of law.
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The Law of Administrative
contaracts
Teaching Material
Prepared by:
Wondwossen Wakene (University of Gondar,Faculty of Law)
Prepared under the Sponsorship of the Justice and Legal
System Research Institute
Chapter III
Chapter IV
CHAPTER V
- 2.3.1.1.1 Form of Notice …………………………………………………… - 2.3.1.1.2 Time of Notice …………………………………………………… - 2.3.1.2 Forced Performance …………………………………………………. - 2.3.1.3. Cancellation of Administrative Contracts ……………………… - Introduction …………………………………………………………………………………. Concession
- 3.1 Definition ………………………………………………………………………………..
- 3.2 Variation clause (3213) …………………………………………………….............
- 3.3 Revision clauses (3214) ………………………………………………………………
- 3.4 Duration of Concession ………………………………………………………………
- 3.5 Termination of Concession Contracts …………………………………………....
- Introduction …………………………………………………………………………………. Contracts of Public Works
- 4.1 Definition of Public Works …………………………………………………………..
- 4.2 Formation of the Contract ……………………………………………………….. ..
- 4.3 Performance of the Contract ……………………………………………………. ..
- 4.3.1 Rights of Administrative Authorities …………………………………………
- 4.3.1.1 Right to Supervise……………………………………………………………
- 4.3.1.2 Right to Direct ……………………………………………………………….
- 4.3.1.3 Right to Demolish (3256) ………………………………………………..
- 4.3.2 Rights & Duties of the Contractor …………………………………………..
- 4.3.3 Payment: Modalities and Time ……………………………………………….
- 4.3.3.1 Modalities ……………………………………………………………………
- 4.3.3.2 Time of Payment ……………………………………………………………
- 4.3.4.1 What is Acceptance? …………………………………………….
- 4.3.4.2 Effect of Acceptance (Art.3281) …………………………………….. ..
- 4.3.3 Payment: Modalities and Time ……………………………………………….
- 4.3.1 Rights of Administrative Authorities …………………………………………
- 4.4 Revision of Contract …………………………………………………………………
- 4.4.1 Unilateral Modification: The Contractor …………………………………..
- 4.4.2 Unilateral Modification; the administrative authority………………….
- 4.4.3 Revision by a Court …………………………………………………………….
- 4.4.1 Unilateral Modification: The Contractor …………………………………..
- 4.5 Non-performance of Contracts of Public Works ……………………………..
- Introduction ……………………………………………………………………………… Arbitration of Administrative Contracts
- 5.1 Arbitration in general …………………………………………………………….
- 5.2. Arbitration of Administrative Contracts ……………………………………….
Back in the days of Adam Smith who preached the laissez faire argument with the effect of diametrically insulating the state from the market, the role of the state was exponentially limited to enabling the state to undertake only its “traditional” functions.
As per Adam Smith, the state was advised to let the market alone. The state should put its hands off the market but without forgetting to create internal peace and order, facilitating the market by formulating a peaceful environment and without directly intervening in the market. To this end, the state should establish institutions like the police, courts and parliaments. Such an impact on the economy as caused by leaving the market alone however would not outlive such a condition as the Great Depression. The Great Depression proved the fact that markets cannot operate by their forces alone-rather to some extent the state should regulate the market. Next generation political economists devised the WELFARE state where we have a state which regulates the market- that provides public services such as education ,health, transport, water, light ,sanitation, recreation etc.
Thus, apart from its traditional functions, the state was also conferred with those additional functions listed above. Basically the state used to institutionalize its coercived force to carry out its protection function. But with the growth in the type and nature of functions and because the appropriate way of attaining goals as the case may be is entering into contract. Either by its coercive force or its right to enter in to contract the state strives to carry out its ever growing functions.
To this end of utilizing its contracting capacity, government enters into a special type of contract called administrative contract. Note that it is from this background, apart from other things, that administrative contracts derive their peculiar feature.
1.2 Administrative Contracts and Other Forms of
Contracts: General Overview
Because of the need to carry out its functions, government, via its branches, will embark upon different activities which inevitably will invite the interplay of its branches and the private sector. These branches other wise known as administrative agencies assist government to properly take its tasks of service provision among other things. It is therefore while these agencies carry out their functions that they use the law of administrative contracts to their ends. The ends are public services, the means administrative contracts.
If this is so, administrative contracts are contracts under the strict sense of the law but only an” administrative” one (see for example Art. 1676(2) cum Art.1675 of Ethiopian civil code with Art.3131 of the same). But this nature of the contract i.e. being an administrative contract makes the same different from the beginning to the end from other types of contracts that we know.
Our inquiry therefore will be what is there in administrative contracts? What grain of difference does the qualification administrative add over non-qualified contracts?
One basic addition by the qualification is associated with prerogative matters. Because administrative agencies favorably enjoy the presumption of acting on behalf of the public and because public interest is overriding enough to put aside even basic principles of the law the agencies will enter into an arrangement where the platform is squarely fitted to their play than to the other contracting party.
law expressly disqualifies a contract to be an administrative contract? Both instances are the experiences of Ethiopia. Let us begin with the first. In the civil code we have such articles as Article 3207 and 3244 which expressly qualify contracts as administrative contracts. As to the second instance, we have the Mining Proclamation No.52/1993 which disqualifies contracts concluded by the administrative authorities with other parties under Art. 55(2).
The second implication of Art.3132 (1) is that parties may qualify expressly a contract as an administrative contract. An issue worth raising at this juncture will be „are all contracts administrative contracts merely because they are qualified as such by the parties? ‟ Among other things, a contract qualified as such by the parties on face value cannot be considered as an administrative contract unless one of the parties is an administrative authority.
For one other reason to be consequently discussed i.e. for content consideration a contract merely qualified as an administrative contract by the parties will not also be an administrative contract. What about a contract that involves an administrative authority but not qualified as such by the parties? Stated otherwise are all contracts that make one of the parties an administrative authority administrative contracts? René David says As a French legal scholar and as I think it fit, in our classification of law, public law should be distinguished from private law. Especially it is important to separate civil law from administrative law…contracts made by public officials have this [special trait] which enable us call them administrative contracts and treat them separately from civil law.[emphasis]
This, as it may, the civil code proceeds to say- “ … Connected with an activity of the public service and implies a permanent participation of the party contracting with the administrative authorities in the execution of such service ”
The previous element is more or less concerned with the form of the contract, meaning the name the parties give to their contract when they first form it. The form it takes confers the contract a special nature.
Here we are concerned with the content of the contract, that is itsobject which determines the nature of the contract. Based on the object and the manner of meeting their object together with the type of the parties and their manner of participation in executing the object of the contract, we have another mechanism of distinguishing administrative contracts from ordinary contracts.
The object : this is one of the ways which is helpful to distinguish administrative contracts from the rest of the contracts.Art.3207 (1) identifies one of the objects as an activity of a public service”. In turn we have to consider what a public service is in our law.
Public service Any activity which a public community has decided to perform for the reason that it to be necessary in the general interest and considered that private initiative was inadequate for carrying it out shall constitute a public service.
According to Art 3207(1) two reasons make “any activity” a “public service” without which the activity cannot be considered so. What are these reasons? One of these reasons is necessity. This necessity should
To elucidate, if we are to make the requirements under Art. 3132 optional then we are saying that mere qualification of a contract as an administrative contract will make the same an administrative contract. Sticking to the second extreme will however force us to consider all the elements under Art. 3132 and their affirmative existence to say a contract and administrative contract. Which one position do you think is reasonable? Why?
No less important is the difference between “administrative agencies‟‟ and “public enterprises”. We say this is important because the law prescribes in addition the nature of one of the parties to an administrative contract .As observed above, the law says one of the parties to an administrative contract should be an administrative authority. But what is an administrative authority? Does it also mean public enterprise? Consider Art 2(f) of Proclamation No.430/2005- “Procuring entity means public body, which is partly or wholly financed by Federal Government budget, higher education institutions and public institutions of like nature”.
From this it is possible to infer that at least two things make an entity an administrative body. The first is the source of income of the entity. If the entity partly or wholly derives its income from the government, there is a possibility to consider it a public body which can enter into administrative contracts. On the other hand the purpose of the organ makes it an administrative body.
Comparison: Genre and View Comparison Here our basic concern will be comparing and contrasting administrative contracts and other types of contracts on one hand, and the common law and civil law on the other hand. Administrative contracts are similar to other types of contracts because of their formation, validity requirements and the form. On the other
hand, administrative contracts are different from other contracts because of their formation, content and execution.
Let us briefly explain the points- But first what do you think are the views of the two legal systems towards administrative contracts? The common law views administrative contracts just like other ordinary contracts whose consequences will show up to be the treatment of parties as equal members to the venture. No party will enjoy priority. Both are equal parties to and in the case. As a consequent incidence, the common law requires no new or special law governing administrative contracts. There is only one contract law regime that governs all the instances.
These outlooks will naturally lead to the adjudication of cases that involve administrative contracts by the ordinary courts of law. Perspective change is observable under the civil law system where parties to administrative contracts are unequal, whose case will be governed by a special regime and adjudicated by special tribunals (i.e. administrative tribunals). This is specially the case in France.
1.3 Formation of Administrative Contracts.
Legally the life of a contract begins at its formation after parties have consented to be bound by it, if parties have the capacity to legally express their consent and if the object of their contract is succinctly defined, plausible and lawful. [Art. 1678] Short of this, the law either declares the contracts void or puts the possibility of voidability as the case may be. Normally the requirements under Art. 1678 are those which determine the viability of any contract. Under this very normal condition, exceptional situations are envisaged with regard to formality
There is in general no better evidence of the justice of an arrangement than the fact that all persons whose interests are affected by it have freely and with full knowledge consented to it. In the famous maxim of Hobbes „„there is not ordinarily a greater sign of the equal distribution of any thing than that every man is contented with his share”. Consent is evidential of a right and constitutive of the same. Because of this philosophy therefore we give a paramount place to consent. Short of consent no evidence and no right.
These justifications can be gathered from Art. 1679 and Art. 1680, while the former talks about the constitutive nature of consent, the latter talks about the evidentiary role of the same. Read Art. 3134 and identify the role played by consent. What is the role?
Under Art. 3134, it is the contract concluded by the administrative agencies that proves the existence of consent. Meaning mere conclusion of a contract by an administrative body implies the existence of consent on the part of the administrative body. It partly reads “…, the conclusion of a contract by the administrative authorities implies an express manifestation of will on their part”
Hence, we derive consent from the specific form that the contract follows. Because Art.1724 prescribes the making of an administrative contract in a written form, this is indicative of the existence of consent on the part of the administrative agencies.
As a formal and not simple agreement the law does not require the mere existence of consent but its manifestation in some particular form. The law requires therefore proving consent as expressed by the parties. What can be counted as special under administrative contracts however may be the insufficiency of implied consent. Ordinary contracts envisage
the possibility of deriving consent from silence under exceptional circumstances. On the part of administrative contacts always one has to prove the existence of express consent. Nowhere therefore silence does amount to acceptance. To be specific, Art.3134 (2) says “Where an authority competent to approve a contract keeps silent, such silence shall not, in the absence of a formal provision, be deemed to amount to approval.”
Capacity Administrative contracts are made by artificial persons be it the administrative agency or the contractor which is usually a business organization.
Capacity, under such circumstances, means a different thing. It cannot be about a mental state nor can it be about chronology. Rather, capacity is all about establishment, registration or license. Generally, capacity is either legal or technical. Let us begin with the contractor.
Basically any juridical or physical person that wants to conclude a contract with administrative agencies should have: A. Technical and professional capacity B. Legal capacity C. Financial capacity D. Fiscal capacity What about administrative authorities? What capacity should they have? a. The administrative agency should have legal personality which means it should be established through a proclamation or regulation. b. Next to this validity question and after its positive determination the agency should possess the capacity to enter into contracts
At other times consent might not be this. Rather consent might be approval (Art. 3144) where by no consent is expected to be expressed until and unless “…such approval is given.
This is usually the case “where the conclusion of the contract is subjected to the necessity of a further approval…”
Object The object of a valid contract should be lawful and possible next to being defined (determined). Art 1711 leaves the parties to freely determine the object of their contracts the extent of the freedom however being “the restrictions and prohibitions as are provided by law.”
You can therefore infer from this that both parties involved in a contract have a say on the object of the contract. Art.1711 thus underscores the fact that object determination is not one way traffic. Peculiar however to administrative contracts, administrative agencies are entitled to formulate in advance model specification, general clauses and common directives (Art 3135) .Predominantly administrative contracts have objects determined by administrative agencies.
However, it is good to note the fact that the legal limit under Art. 1716 is applicable to objects determined by administrative contracts. Can you justify this assertion?
Next to insuring the participation of parties in determining the object of their contracts, the law also wants to maintain the integrity of the object on the face of the law. Though determined by anyone, still the object should be clearly stated in an understandable manner (Art.1714). An administrative contract should also have a possible and lawful object. To a very large extent parties are free to agree together upon any matter
as they please. Limitations are however there-party in the interests of parties and partly on behalf of the public. There are instances where the law admits of no abatement and many in which it will admit of no addition by way of agreement.
Form Under normal circumstances, compliance to formality requirements is not necessary. (Art.1678(c))
Never the less under those circumstances where the law prescribes, any one has to comply with the prescription. One instance of form prescribed by the law relates to any contract binding the Government or a public administration” underArt.1724)
The requirements of the law here are two. The contract should be made in writing and it should be registered. We can explain of the two fold purposes of the law.
- Designed as a pre-appointed evidence of the fact of consent and of its forms to the intent that this method of defining rights and liabilities may be provided with the safeguards of permanence, Certainty and publicity. Because a contract is law (Art.1731) and because some of the features of a good law with an “ internal morality” per Lon Fuller are permanence, determinacy and publicity writing down a contract caters” the law” these qualities. The quality of publicity conferred on contracts by following Art. 1724 does also serve the ends of Art12 of the FDRE constitution by manifesting the transparency theory.
Any necessary formality has the effect of drawing a sharp line between the preliminary negotiations and the actual agreement and so prevents the parties from drifting by inadvertence into unconsidered consent.