19MBA512A: The Casual Meeting Between Mohan, a Purchase Manager with his Junior Manager - Management Assignment Help

Assignment Task:

Task:

Part A: (Individual Task) (10+15 marks) A.1 Based on the below Problem question and case study analyse the below questions:

CASE STUDY The casual meeting between Mohan, a purchase manager with his junior manager and the manager from contract team led to discussion on the recent issues the public sector company they work is facing in the contract management arena. Mohan highlighted how their company is facing issue relating to repeated delay from the supplier side and this is leading to issue of their commitment to the clients not being met. The manager from the contract team, clearly mentioned that the Liquidated Damages clause in the General Conditions of Contract provision help in ensuring these issues are tackled. Mohan suggested to the manager from the contract team to increase the Liquidated Damages amount by increasing the percentage of contract value charged as LD. Mohan also suggested increasing the cap of Liquidated Damages from the existing 5% of total contract value as provided in their company contract template would be a better idea. But manager from contract team was agitated at the suggestion from Mohan and mentioned that the contract cannot be used as tool for pressurising their suppliers and contractors and mentioned that legally it may not be a possible approach. Mohan was not convinced with the statement and further pursued to understand the legal issues pertaining to liquidated damages. But the manager from contract team was not free to explain and mentioned that during another meeting they can discuss about the same. The junior colleague of Mohan (who recently joined the organisation) asked Mohan about the Liquidated Damages clause and sought his help in understanding the relevance of liquidated damages. With the aim of explaining the concept of liquidated damages in a better manner to his junior colleague and also clarify his own doubts Mohan approached his friend who works as a legal consultant. After the discussion, Mohan was provided the case of ONGC v Saw Pipes1, a land 1 (2003) 5 SCC 705 mark case decided by the Supreme Court of India in 2003. The brief-facts and details of the case are provided below: Facts2: ONGC has entered into a contract with Saw Pipes for procuring casing pipes. Saw Pipes was not in a position to deliver the casing pipes on time. The steel material supplier to Saw Pipes was affected by Steel Mill strikes in Europe. Hence Saw Pipes could not provide the casing pipe on time to ONGC and requested extension of time of contract. Saw Pipes requested for an extension of 45 days’ time for execution of the order in view of the reasons beyond its control. By a letter, the time for delivery of the pipes was extended by ONGC with a specific statement that the amount equivalent to liquidated damages for delay in supply of pipes as per the contract would be recovered from the Saw Pipes. Saw Pipes was against the recovery of liquidated damages. Dispute reached the Supreme Court of India. Saw Pipes was trying to argue that unless the exact monetary loss could be determined, the damages cannot be claimed. ONGC contended that once a pre-determined liquidated damages clause is agreed upon, the exact monetary loss need not be proved. The relevant clause of contract is provided below:

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