2007-12-03

NPM 052-2004

Requesting Entity: Municipality of Calauag, Quezon

Issues Concern: Substitution of the 10% Retention Money

 

Details

Whether the cash retained by the procuring entity could be replaced with an irrevocable standby letter of credit.

Pursuant to Section 62.1 of the IRR-A, a warranty shall be required from the supplier for a minimum period of one (1) year, in the case of equipment, in order to assure that manufacturing defects shall be corrected, to warrant that the goods supplied are free from patent and latent defects, and to warrant that all conditions imposed under the contract have been fully met.

Based on the foregoing, the proposed irrevocable letter of credit may be accepted by the [procuring entity] provided that said irrevocable standby letter of credit specifically states that it is intended to answer for the performance of corrective work for any manufacturing defects, to warrant that the goods supplied are free from patent and latent defects, and to warrant that all conditions imposed under the contract have been fully met by the supplier.