'At all times' and 'from time to time': the clause that cannot be enforced
Your regional office must issue a storage-and-handling contract for a 12,000 MT godown. The legal cell has cleared the draft and the operative clause reads: 'The contractor shall at all times maintain the stock in good condition and shall be liable to make good any shortage or deterioration, provided that the shortage exceeds the tolerance limit notified by the Corporation from time to time, and provided further that loss arising from force majeure shall be excluded. The Corporation's decision on the quantity of stock shall be final.' Two bidders have sought clarifications. The first asks whether 'at all times' covers the period when the Corporation's own watchman holds the godown keys. The second asks whether the tolerance limit in force is the one on the date of the contract or the one revised later. Your predecessor's note on the file says: 'Standard clause. Issue as it stands.' The godown must be handed over in three weeks, and re-tendering would cost two months.
1. Identify three defects in the clause, give the two possible readings of each, and state the reading you would insist on as the contract-issuing authority. Then answer the 'issue as it stands' note.
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Defect 1: 'at all times'. Reading A: the contractor is liable for the stock even when the Corporation's own watchman holds the keys and the contractor has no access. Reading B: liability runs only while the contractor has lawful custody. Insist on B, with custody defined by a joint key register and a signed handover and take-back protocol. You cannot hold a party liable for a period in which you have excluded it, and a court would read that period out of the clause anyway - so the only thing Reading A achieves is to raise every bidder's price against a risk the Corporation will lose in arbitration.
Defect 2: 'notified ... from time to time'. Reading A: a later revision applies retrospectively, so today's tolerance can be tightened next year and applied to past shortages. Reading B: revisions apply only from the date of notification, prospectively. Insist on B, with notification in writing and a stated effective date. Otherwise no bidder can price the risk, and every bid will carry a contingency premium that the Corporation pays for no return.
Defect 3: 'The Corporation's decision on the quantity of stock shall be final'. Reading A: final and binding, ousting any dispute resolution. Reading B: final for interim operational purposes, subject to the contract's dispute clause. Insist on B, and replace the unilateral determination with joint weighment at handover and take-back, signed by both parties, disputes going to arbitration. A party cannot be the final judge of the very shortage for which it is claiming.
A fourth, softer defect sits in 'good condition' and 'make good', both left undefined.
On 'issue as it stands'. Ambiguity does not become harmless by being standard. A bidder prices the worst reading, so the Corporation pays for the ambiguity in the tender itself and again in litigation. Saving two months now is not a reason to write a clause that will be argued for the whole contract term.
2. Rewrite the clause in about 70 words so that each defect is closed, without shifting risk to the Corporation beyond what the facts justify.
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Suggested redraft (66 words):
'14. The contractor is responsible for the stock from joint handover until joint take-back and shall compensate the Corporation for any shortage or deterioration beyond the tolerance limit in force on the date of this contract, as revised by written notice effective only from the date of that notice. Force majeure loss is excluded. Quantities shall be determined by joint weighment; disputes go to arbitration.'
Why each change was made.
- 'at all times' becomes a defined custody window, so the clause matches who actually holds the keys.
- 'from time to time' becomes a prospective written notice, so the contractor can price the risk.
- 'the Corporation's decision ... final' becomes joint weighment with arbitration, so the Corporation is not judge in its own cause.
- 'to make good' is replaced by 'shall compensate', which is a money obligation and does not force the Corporation to argue about whether physical replacement was tendered.
- Force majeure is retained, because striking it would shift an uninsurable risk to the contractor and be paid for in the bid.
A redraft is only useful if the custody window matches the operational reality: the key register and the handover protocol must be written before the contract is signed, not after the first dispute.
3. A colleague proposes changing 'shall be liable to make good any shortage' to 'shall be liable for any shortage'. Explain the difference in effect and say which you would choose.
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The two phrases create different obligations.
'Make good' is a restitution obligation: the contractor must restore the missing quantity, either in kind or by paying its value, so the Corporation ends up with the stock position it contracted for. It points towards replacement or a quantified payment.
'Liable for' is a damages obligation: the Corporation must prove its loss, the contractor may argue mitigation, and the measure becomes market or replacement value at the date of breach rather than the value on the books. In a foodgrain contract that opens an argument about whose valuation applies - issue price, MSP, or the price on the day the shortage is discovered.
Which to choose. Neither on its own. Keep the restitution idea but define the measure, for example: 'shall make good any shortage by replacement in kind of the same specification or, at the Corporation's option, by payment at the issue price prevailing on the date the shortage is detected.' Fixing the valuation removes the only real dispute, and the option protects the Corporation when replacement grain is unavailable at short notice.
The colleague's version is not wrong in law, but it is weaker in practice: it converts a simple arithmetic claim into a valuation argument, and the Corporation is the party with the weaker bargaining position once the stock has already gone.