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ARTICLE · 22 SEPTEMBER 2020

Termination Of Contract In Public Interest: An Ominous Move

Shardul Amarchand Mangaldas & Co
Shardul Amarchand Mangaldas & Co
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Shardul Amarchand Mangaldas & Co

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On July 27, 2020, the Ministry of Defence ("MoD") released the draft Defence Acquisition Procedure 2020 ("DAP 2020") which is expected to come into force on September 1, 2020.

IndiaGovernment, Public Sector
Kanishk
Kanishk
Aditya Mitra
Aditya Mitra
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On July 27, 2020, the Ministry of Defence ("MoD") released the draft Defence Acquisition Procedure 2020 ("DAP 2020") which is expected to come into force on September 1, 2020.

One of the important changes introduced in the Standard Contract Document of DAP 2020 is the provision granting the Buyer (i.e. the MoD) the right to terminate a contract in public interest. Even though the heading of the clause indicates that the right should be exercised only in "public interest", the actual provision does not even use the phrase "public interest" let alone define it. This provision as recorded under Clause 22A.7 essentially states that "The BUYER shall have the right to Terminate the Contract in whole or in part at any time by giving the SELLER a written notice, [•] days prior to such Termination". It effectively bestows a unilateral right to the MoD to terminate the contract at will. Ignoring the obvious and potentially confusing disconnect between the provision and

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