Contract Services

Contract Services
CONTRACT: - An agreement enforceable by law made between two or more persons by which rights
are acquired by one or more to act for bareness on the part of the others. (Indian Contract Act
1872).
CONTRACT: - “an agreement between two parties negotiates a business deal”.
OUTSOURCING: - is a conscious business decision to move internal work to an external provider.
Outsourcing means that the company divests itself of the resources to fulfil a particular activity to
another company to focus more effectively on its own competence (NEVI, 2000)
Outsourcing is the decision and subsequent transfer process by which activities that constitute a
function, that earlier have been carried out within the company, are instead purchased from an
external supplier (Axelsson and Wynstra, 2002)
A number of outside contractors offer a variety of cleaning services of hotels. Outside contractors
are available for nearly any cleaning task that needs to be done, including outside laundry and dry
cleaning services, floor cleaning and care, outside window cleaning, overhead cleaning and masonry
cleaning, descaling and scouring of restroom fixture. Hotels are increasingly opting for contract
services and outsourcing to sustain cost-effective housekeeping operations and to ensure that the
resources and assets of the property are utilized to the maximum.
“Outsourcing” is a conscious business decision to move internal work to an external provider. A

“contract” can be defined as an agreement between two parties negotiating a business deal. Both
these terms are used interchangeably. However, while all outsourcing involves a contract, all
contracts are not necessarily related to outsourcing. For instance, you can have internal staff on
contract as well.
ESSENTIAL ELEMENTS OF CONTRACT:
1. Offer and acceptance:

In order to create a valid contract, there must be a 'lawful offer' by one party and 'lawful
acceptance' of the same by the other party.
As per the contract act:
 Section 2 (a) of the Contract Act defines Offer as – ‘when one person signifies to another his
willingness to do or to abstain from doing anything, with a view to obtaining the assent of
that other to such act, he is said to make an offer'.
 Section 2 (b) of the Contract Act states that, ‘when the person to whom the offer is made
signifies his assent there to, the offer is said to be accepted.
2. Legal relation
In case, there is no such intention on the part of parties, there is no contract. Agreements of
social or domestic nature do not contemplate legal relations.
1
3. Capability:
The parties to an agreement must be competent. If either of the parties does not have the
ability to contract, the contract is not valid.
According to the contract law following persons is incompetent to contract.
 Minor: A person less than age of 18 is minor.

 Any person who is unable to understand the term and condition of contract at the time of its
formation is unsound mind.
 Persons disqualified by law to which they are subject.
4. Free consent: 'Consent' means the parties must have agreed upon the same thing in the
same sense. An agreement should be made by the free consent of the parties.
According to Section 14, Consent is said to be free when it is not caused by
i. Coercion
ii. Undue influence
iii. Fraud
iv. Mis-representation
v. Mistake.
5. Certainty:
 According to Section 29,"Agreement the meaning of which is not certain or capable of being
made certain are void. “
 For e.g. : A agree to sell to B,100 ton of oil, there is nothing to show what kind of oil
intended, the agreement is void due to the absence of certainty. But if A is dealer of coconut
oil only agree to sell B,100 ton of oil, the nature of A’s trade is sufficient to show the kind of
oil, and this will be a valid contract.
6. Promise of performance
 Condition for a contract should be capable for performance .If the act is impossible in itself,
physically or legally, if cannot be enforced at law. For example: If A and B makes an
agreement that if B encloses a space with the help of two straight lines then A will pay him
Rs. 1000 otherwise B will be liable for paying Rs. 500 to A.
RESULT: This is an impossible work. Two straight lines cannot enclose a space, hence contract is not
valid.
7. Writing and registration:

 An oral Contract is a perfectly valid contract, expect in those cases where writing,
registration etc. is required by some statute.
 In India writing is required in cases of sale, mortgage, lease and gift of immovable property,
negotiable instruments; memorandum and articles of association of a company, etc.
 Registration is required in cases of documents coming within the scope of section 17 of the
Registration Act.
2
All the elements mentioned above must be in order to make a valid contract. If any one of them is
absent the agreement does not become a contract.
 Points to consider when choosing outsourced and In-house services:

 Their cost
 The quality of the services Convenience
 20-30% more productivity
 Steps in Determining and Implementing Contract:
Evaluating costs Setting Objectives Appraising results
 The types of outsourcing contracts in housekeeping are:

 Complete cleaning programmes
 Regular, selected cleaning within an establishment to assist the existing housekeeping staff
for example, public area cleaning in the night.
 Periodic cleaning services like window cleaning, cleaning of carpets.
 Hiring contracts for linen, equipment, conference utilities etc.
 Leasing contracts for equipment’s, furniture and furnishings.
 Consultancy services, where a housekeeping expert visits the hotel and guides the staff on
achieving professional standards.
Areas of housekeeping that may be on contract basis:
 Cleaning – special cleaning, public area cleaning, carpet and floor cleaning.
 Linen hire – entire hotel or specialized linen like banqueting items
 Equipment and furniture hire
 Laundry
 Flower arrangements and decorations
 Pest control
 Horticulture and landscaping
 Eco-friendly garbage disposal
 Other services like shoe-polishing machines
Outsourcing Processes
THE STRATEGIC PHASE:
Three main questions in the Strategic phase.
• Focus on core competence?

What is the motive to outsource? • Focus on efficiency / effectiveness?
• Focus on service?
•Transaction cost approach (Williamson, 1983;
What activities are candidates for outsourcing? Arnold, 2000)
• Core competence approach (Quinn and Himler, 1994)
• Transaction cost approach(Williamson, 1983;
What qualifications should a supplier require? Arnold, 2000)
• Core competence approach (Quinn and Himler, 1994)
3
THE TRANSITION PHASE
 Outsourcing transition can be very complex.

 The transfer should be conducted using project management principles:
 Assignment of a dedicated project manager by Sound transition plan and Project
timeline with milestones
 Outsourcer should provide training and support to provider if necessary.
THE OPERATIONAL PHASE:
 It is in the operational phase that the outsourcing will deliver its expected results. Successful
outsourcing depends heavily on close cooperation with the supplier. McQuiston (2000)
identifies six core values as being critical to a successful outsourcing relationship. In cases
where trust and interpersonal relationships are not present, parties try to arrange for
dealing with these risks and uncertainties by detailed outsourcing contracts following
are the risk associated with the contracts:
 Technical risks: related to the extent to which the supplier is able to provide the desired
functionality and performance
 Commercial risk: related to the uncertainty with regard to the price we will pay and the costs
that we will incur when having outsourced our activities to the supplier
 Contractual risks: e.g. does the contract in sufficient detail describe the performance that is
expected from the supplier?
 Performance risks: related to the chance that the supplier is not capable of doing the job he
was hired for.
A number of authors stated that in dealing with these risks, detailed contracts will not solve the
problem. Trust and partnership are more important.

Contract Services

Uploaded by

Copyright:

Available Formats

Contract Services

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Contract Services

Uploaded by

Copyright:

Available Formats

Contract Services

CONTRACT: - “an agreement between two parties negotiates a business deal”.

OUTSOURCING: - is a conscious business decision to move internal work to an external provider.

“Outsourcing” is a conscious business decision to move internal work to an external provider. A

ESSENTIAL ELEMENTS OF CONTRACT:

1. Offer and acceptance:

As per the contract act:

According to the contract law following persons is incompetent to contract.

 Minor: A person less than age of 18 is minor.

According to Section 14, Consent is said to be free when it is not caused by

7. Writing and registration:

 Points to consider when choosing outsourced and In-house services:

 Steps in Determining and Implementing Contract:

Evaluating costs Setting Objectives Appraising results

 The types of outsourcing contracts in housekeeping are:

Areas of housekeeping that may be on contract basis:

THE STRATEGIC PHASE:

Three main questions in the Strategic phase.

• Focus on core competence?

 Outsourcing transition can be very complex.

THE OPERATIONAL PHASE:

You might also like