A Lawyer’s Guide to GeM Contracts & Terms & Conditions You Cannot Ignore
Unlock Lucrative Opportunities
Government auctions in India present significant opportunities for businesses and individuals to acquire valuable assets ranging from vehicles, real estate, industrial equipment, coal, scrap materials, to mineral rights, often at attractive prices. Understanding the nuances of these auctions can lead to profitable investments and strategic growth.
Why Understanding GeM Contracts Is a Mission-Critical Priority
GeM contracts are executed under a standardised format governed by government procurement rules.
However:
Every buyer can add special terms
Every category has predefined compliance
Every product has technical & legal obligations
Failure to adhere can result in:
Liquidated damages (LD)
Risk purchase penalty
Debarment
Payment delays
Litigation before Government departments
This blog ensures you understand these risks before signing the contract.
Anatomy of a GeM Contract: What Exactly Are You Signing?
A GeM contract generally consists of:
a) Standard Terms & Conditions (STC)
Applicable across all orders; non-negotiable.
b) Product/Category Specific T&C
Technical parameters, warranty norms, QC requirements.
c) Buyer Added Special Conditions (BAC)
This is where most sellers miss hidden obligations—like installation, extended warranty, or additional documentation.
d) Financial Terms
Payment cycle, taxes, RA conditions.
Tip from Leegal: Always download the contract PDF and review the “Special Terms” section thoroughly.
Critical Terms & Conditions You Cannot Ignore
Delivery Timeline & Location Compliance
Government buyers enforce strict delivery norms.
Delivery within the exact stipulated timeline
No unofficial extension
Delays attract LD penalties
Delivery location must match contract precisely
Transportation, insurance & unloading often fall on the seller
Why it matters:
Even a one-day delay can trigger penalties.
Liquidated Damages (LD) Clause
GeM imposes a standard LD penalty:
0.5% per week of delay
Maximum 10% of order value
Waivers are rare and require strong justification.
Common mistake:
Sellers assume buyers will be lenient—they will not.
Risk Purchase (RP) Clause
If you fail to deliver on time, the buyer can:
Buy goods from another vendor
Recover the excess cost from you
Deduct directly from your pending payments
This is one of the most financially dangerous clauses on GeM.
Warranty, AMC & CMC Responsibilities
Category-specific warranty requirements are mandatory.
On-site support
Replacement timeline
Mandatory AMC for certain products
Documentation proof of service
Ignoring warranty obligations can lead to payment hold.
Inspection & Quality Compliance
Many categories require:
Pre-dispatch inspection
Third-party laboratory testing
OEM authorization
QC certificates
Batch testing reports
Non-compliance leads to rejections and penalties.
Payment Terms – Know Your Cash Flow
Depending on the buyer entity, payments follow:
10-day
30-day
45-day cycles
Your responsibility:
Timely bill generation
Warranty card/installation report submission
Uploading delivery challans
No documentation = payment delay.
Reverse Auction (RA) Linked Contract Terms
If RA was conducted:
Auto-extension applies
Minimum decrement rule applies
Final contract value is based on RA L1 price
Sellers must maintain bid logs for audit clarity.
Hidden Red Flags Sellers Usually Miss
These are the silent deal-breakers:
Buyer adds custom installation requirement
Location is remote or multi-site
Warranty requirement higher than market norm
Unusually short delivery period
Mandatory certifications not readily available
Unclear packaging instructions
“Delivery at buyer’s risk and cost” clauses
Leegal Recommendation: Always request a pre-bid clarification before quoting.
Common Legal Disputes Faced by Sellers on GeM
Based on our legal desk insights, the top disputes include:
Delay-related LD deductions
Warranty service non-compliance
Goods rejected after inspection
Payment held due to document mismatch
Risk purchase claims
Delivery to incorrect location
Incorrect specification or catalog mismatch
Most disputes happen due to oversight during contract acceptance, not during delivery.
How Sellers Can Legally Protect Themselves
Here’s a compliance framework recommended by Leegal Advisors:
Pre-Bid Due Diligence
Pre-Bid Due DiligenceRead the contract in advance
Assess delivery feasibility
Validate certifications
Maintain Proper Documentation
Delivery challans
Installation reports
RA screenshots
Email communication trail
Internal SOP for Order Execution
Checklist for dispatch
Warranty record system
QC verification before shipping
Legal Vetting of High-Value Orders
Especially orders above ₹5 lakh.
How Leegal Supports Sellers in GeM Contract Compliance
As a full-suite legal & procurement consultancy, Leegal helps you with:
Contract vetting
Clause-by-clause legal review
Compliance strategy
Risk mitigation planning
Documentation assistance
Drafting of clarifications
Handling disputes with government departments
Support in LD/RP/Warranty cases
Our aim is to ensure your business grows compliantly, confidently, and profitably on GeM.
Conclusion
GeM is a massive opportunity—but one wrong contract acceptance can cost you lakhs in penalties.
Understanding GeM terms & conditions is not just legal awareness;
it is risk management, business strategy, and long-term compliance
Strategic Insight
Strategic Foundations: Delve into the core principles that underpin successful tendering, providing a strategic foundation for all subsequent stages.
Initiation to Award: Gain clarity on the overarching objectives, key decision points, and strategic considerations from the initiation of the process to the final award stage.
Risk Assessment: Understand how a strategic approach involves a thorough risk assessment, enabling organizations to proactively address potential challenges.
End-to-End Perspective
Holistic View: Explore the tendering process from an end-to-end perspective, ensuring a holistic understanding of how each phase contributes to the overall success of procurement.
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Navigating Complexity
Clear Navigation Strategies: Uncover strategies for navigating the complexities of the tendering process, offering a clear roadmap for effective decision-making.
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Guidance for All: Tailor content to be accessible for both seasoned professionals, providing strategic insights, and newcomers, offering foundational knowledge to demystify the process.
Breaking Down the Tendering Process
Navigate the tendering process seamlessly with our in-depth guide, breaking down the journey into distinct stages. Explore a step-by-step breakdown, delve into the intricacies of initiation, planning, preparation, and unravel the critical evaluation and award stages.
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- Expert Legal Guidance
- Comprehensive Compliance Assistance
- Tailored Tender Strategies
- Contract Review and Negotiation
- Dispute Resolution Support
- Identifying Suitable Tenders
Step-by-Step Breakdown
Comprehensive Overview: Dive into a comprehensive breakdown, offering a step-by-step guide to the entire tendering process.
Clarity in Action: Experience clarity as we dissect each stage, demystifying the complexities and providing a roadmap for successful navigation.
Strategic Insights: Gain strategic insights at each step, empowering you with the knowledge needed to make informed decisions.
- Feature: Delve into a comprehensive breakdown that leaves no aspect of the tendering process untouched.
- Significance: Ensures a thorough exploration, providing readers with a complete understanding of the intricacies involved in tendering.
- Feature: Experience clarity in action as each stage is dissected, unraveling complexities for enhanced understanding.
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Feature: Gain strategic insights at every step, empowering readers to make informed decisions.
Significance: Provides readers with the knowledge and strategic acumen needed to navigate the tendering process with confidence and efficacy.
Feature: The breakdown offers a holistic understanding, connecting the dots between each stage for a seamless procurement journey.
Significance: Ensures that readers comprehend how each stage contributes to the overall success of the tendering process.
Feature: The chapter is crafted with an accessible learning approach suitable for newcomers and seasoned professionals alike.
Significance: Fosters an inclusive learning environment, making the intricacies of tendering accessible to a diverse audience.
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