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CMA Foundation · Fundamentals of Business Laws and Business Communication · Breach of Contract and Remedies for Breach of Contract

A contract with a Government department does not necessarily bring a party within the Exception to Section 74 (whole sum payable). What does the Explanation to the Exception say?

The Explanation states that a person who enters into a contract with Government does not necessarily thereby undertake any public duty, or promise to do an act in which the public are interested. So the Exception for whole-sum liability does not automatically apply.

  1. AA person who contracts with Government necessarily undertakes a public duty
  2. BA person who contracts with Government does not necessarily undertake a public duty or promise an act in which the public are interestedCorrect
  3. CGovernment contracts are always governed by the penalty rule
  4. DGovernment contracts are outside Section 74 completely

Explanation

The Explanation says that entering into a contract with Government does not necessarily mean undertaking a public duty or promising an act in which the public are interested. So the Exception does not apply automatically to every Government contract. The general rule of reasonable compensation may still apply.

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