Give
the meaning and purpose of the following
Earnest
money
Arbitration
Earnest
money
It is the amount collected from
the contractors along with the tender form and is usually between 1% to 2% of
the total estimated cost of the work and is kept with the owner until the
contract is allotted.
Purpose
of collecting the earnest money.
The earnest money collection
makes it possible to refrain contractors in financial crisis or un-interested
contractors from filling the tender. Hence, less competition between
contraction.
The owner reserves a right to
restore the money if he finds that the rates quoted are either too low or too
high thus making it an unbalanced tender.
The owner can confiscate the
earnest money if on opening of the tender the contractor refuses to accept the
tender.
Arbitration
It is a process in which
parties under a contract having disputes settle them judicially by resorting to
an impartial person or committee of experts without approaching the court of
law.
Purpose
of Arbitration
Court delays are a frequent
tradition and hence arbitration facilitates quick results.
Legal formalities,
technicalities can be avoided.
The proceeding can be conducted
in private.
Expert and sound judgement can
be achieved for various technical and skillful problems.
It can be conveniently carry
out at any place suitable to both the parties.
The parties are benefited by
reduction in cost also.
