(Source: The Law of Administrative contracts Teaching Material
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 requirements. In addition to consent and object requirements, the law also shows the possibility of agreeing in favor of a given form or a form by the normal operations of the law [art.1678 (a) and Art. 1719 by virtue of Art. 1676]. Thus, the law either prescribes adherence to a certain form (Arts. 1724 & 1725), or parties may agree to make their contracts in a written form. Art.1724 makes mandatory that contracts with administrative authorities be made following a written form. Any contract to which a government agency is a party, including any type of employment contract, should be made in writing. In public administration, officials do not stay in office indefinitely rather they may leave their office by election, removal or resignation. Once they leave their office it is difficult to ascertain the content of the contract entered into during their stay in office but that continues to be effective even after they leave their office. Moreover, oral contract opens a room for corruption since keeping information is difficult.
As was noted before, Art. 1676 warrants the use of Title XII on contracts in General by explicitly stating “… regardless of the nature thereof and the parties there to.” Because of this, Art. 1678 and consequent provisions that govern the formation of a valid contract will also be valuable in our consideration. In addition, Articles 3140-3145 and 3134-3136 will be considered. By presuming that you have made an intelligible discussion on the General contracts aspect of the law, our concentration will be on the special part of the law that governs administrative contracts proper. Let us consider the validity requirements.
1.3.1 Validity Requirements
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.”
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 .Such capacity may emanate from law or practice (i.e. specific activities or functions). Sometimes capacity may also emanate from authorization. Authorization might be a single venture or still a sort of double standard effectuated in a cumulative modicum with other prerequisites.
c. An administrative agency is still duty bound to assert its financial capacity. To this end “procuring entities shall be responsible for certifying the availability of funds to support the procurement activity before signing a contract “(Art.7(1) (e) of Proclamation No.430/2005)
Here it is worth raising two questions. The first is, “Does lack of credit have a consequence of invalidating administrative contract?” the second is Can such an act be counted as ultra vies?
To address these questions, it is good to consider articles 3142 & 401 of the civil code and Art.7 (1) (c) of the proclamation. In a crystal clear phraseology, Art. 3142 validates an administrative contract formulated regardless of credit requirement. To be specific, acontract concluded by an administrative authority shall be valid not with standing that such authority has not received the necessary credits for the performance of the contract. On the other hand, Art. 401(1) tries to expose what an ultra vires constitutes. Thus,Acts performed by the bodies referred to in this chapter are in excess of the powers given to them by law or without the absence of the conditions or formalities required by law shall be of no effect.
Art 401 serves at least two purposes. Firstly it tries to tell us what ultra vires activities are. Next to this, it sanctions the activities by declaring them as nearly void.
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…”
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.
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. What is there in the document expresses the consent. One cannot later modify the consent as written by the one expressed orally.
On top of the prescription under Art 1724, some administrative contracts should be formed following procedures of tender. This will be discussed in depth in our consequent discussion of “modalities of formation.”