Report No. 61
Building Contracts
1A.2. Hudson's definition of building contracts.- According to Hudson:1
"A building or engineering contract may be defined, for the purpose of this book, as an agreement under which a person (in this book called variously the builder or contractor), undertakes for reward to carry out for another person (variously referred to as the building owner or employer), works of a building of civil engineering character."
1. Hudson Building & Engineering Contracts, (1965), p. 1.
1A.3. Works: the essential feature.- The essential nature of the contract is the carrying out of works1
1. See also paras. 1A.7 and 1A.20, infra.
1A.4. New Works or repairs.-
A works contract may comprise new works, and also repairs, for example, the operations of the Central Public Works Department are divided primarily into two categories, "original works" and "repairs". It has been stated1 that "original works" comprise all new constructions, whether of entirely new works or of additions and alternations to existing works or replacement or remodelling of existing buildings. Repairs include operations undertaken to maintain buildings and works in proper condition. The works on which expenditure does not exceed Rs. 75,000 are classified as minor works and those on which it exceed Rs. 75,000 as major works. All original works and repairs costing more than Rs. 5,000 and relating to Central Civil buildings are to be executed through the agency of the Central Public Works Department. Prior concurrence of the Ministry of Works and Housing is necessary for entrusting civil works to any agency other than the Central Public Works Department.".
1. Report of the Study Team on C.P.W.D. (July 1965), p. 13.
1A.5. Materials a valuable part of total cost.-
Materials do constitute a valuable part of the total cost of works. And that is why the question often arises whether a works contract can be treated as a sale for the purposes of laws taxing sales.
1A.6. Materials a valuable part-C.P.W.D. and department works.-
It has been estimated,1 in the case of works constructed for the C.P.W.D. that materials and stores account for nearly two-thirds of the cost of works2 (In the case of departmental execution of works, the Government has to arrange for all the requirements of materials and stores).3
1. Report of the Study Team on C.P.W.D. (July 1965), p. 78.
2. Report of the Study Team on C.P.W.D. (July 1965), p. 71.
3. As to the practice regarding payment, see pa,ra. 1A.18, infra.
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