--- title: "Contract law and labour law in Nepal" subject: "Engineering Professional Practice" chapter: 5 key: "semester_8/engineering_professional_practice:contract-law-labour-law-nepal" source: https://www.bctengineer.com/q/semester_8/engineering_professional_practice/contract-law-labour-law-nepal site: BCT Engineering --- # Contract law and labour law in Nepal Engineering Professional Practice · Chapter 5: Regulatory Environment - Asked in: 2074 Magh, 8 marks - Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14 - Page: https://www.bctengineer.com/q/semester_8/engineering_professional_practice/contract-law-labour-law-nepal - Whole chapter: https://www.bctengineer.com/md/semester_8/engineering_professional_practice/chapter-5 ## Question Explain contract law and labour law in Nepal. ## Short answer Contract law in Nepal, governed by the Muluki Civil Code 2074, requires offer, acceptance, lawful object, and free consent; breach allows compensation. Labour law under the Labour Act 2074 sets 8-hour workdays, 48-hour weeks, overtime at 1.5 times pay, and provides for leave, social security, and safe working conditions. ## Answer #### Contract law **Contract law** governs agreements between parties that are legally enforceable. In Nepal it is contained in the **Muluki Civil Code 2074** (the Contract Act 2056 was earlier the main law and is now replaced by the Code), and in public works it is supported by the **Public Procurement Act 2063 and Regulations 2064**. **Main provisions:** - **Valid contract** needs offer and acceptance, competent parties (age 18, sound mind), free consent, lawful object and consideration. - **Written form** is needed where the law requires; signed and, if required, registered. - **Void and voidable** contracts: illegal or uncertain agreements are void; consent obtained by fraud, threat or undue influence is voidable. - **Performance and breach:** parties must perform; on breach the injured party can claim compensation, specific performance or cancellation. - **Damages and remedies:** only actual and reasonably foreseeable loss; a time limit applies to claims. - **Special contracts:** sale of goods, lease, agency, guarantee, partnership and construction contracts. - **Dispute settlement:** negotiation, mediation, arbitration under the Arbitration Act 2055, or court. #### Labour law **Labour law** protects workers and regulates employer-employee relations. The main law is the **Labour Act 2074** with the Labour Rules 2075, the Contribution-Based Social Security Act 2074 and the Trade Union Act 2049. **Main provisions:** - **Appointment:** written appointment letter; types: regular, work-based, time-based, casual, part-time; probation up to 6 months. - **Working hours:** 8 hours a day and 48 hours a week; rest after 5 hours of work; overtime allowed within the limit and paid at 1.5 times the normal rate. - **Remuneration:** minimum wage fixed by the government; bonus (as per Bonus Act) and equal pay for equal work. - **Leave:** weekly day off, public holidays, home leave, sick leave, maternity and other leaves. - **Social security and benefits:** provident/contribution fund, gratuity, insurance, accident compensation. - **Safety and welfare:** safe workplace, protective equipment, child labour prohibited. - **Discipline and termination:** by proper procedure with notice and reason. - **Trade unions and collective bargaining**, and settlement of labour disputes through the Labour Office and Labour Court. #### Example linking both laws A construction company in Nepal hires a site engineer by an appointment letter (labour law: working hours, overtime, leave, contribution fund), and signs a works contract with a municipality (contract law: offer, acceptance, consideration, time, penalty for delay). If the company delays, the municipality may claim liquidated damages under the contract; if the company does not pay overtime, the engineer may complain to the Labour Office. ## Check yourself The answer's key points as multiple-choice questions, with the correct option and why. 1. Which set lists the requirements of a valid contract? A. Offer and acceptance, competent parties, free consent, lawful object and consideration B. Only a written paper C. Only a signature and a witness D. Only payment in advance Answer: A. A valid contract needs offer and acceptance, competent parties, free consent, lawful object and consideration. (Key point: Valid contract) 2. A contract made through fraud, threat or undue influence is A. void from the start B. voidable C. fully valid D. a labour contract Answer: B. Consent obtained by fraud, threat or undue influence makes a contract voidable; illegal or uncertain ones are void. (Key point: Voidable contract) 3. On breach, the injured party can claim A. any imaginary loss B. compensation, specific performance or cancellation C. only an apology D. only a fine to the state Answer: B. Remedies are compensation, specific performance or cancellation; damages cover actual, foreseeable loss. (Key point: Remedies on breach) 4. Under the Labour Act, overtime is paid at A. the normal rate B. 1.5 times the normal rate C. double the normal rate D. half the normal rate Answer: B. Overtime within the limit is paid at 1.5 times the normal rate. (Key point: Overtime rule) ## Related in Engineering Professional Practice - [Business law and labour law in Nepal](https://www.bctengineer.com/question.md?key=semester_8%2Fengineering_professional_practice%3Abusiness-labour-law-nepal) — Engineering Professional Practice, chapter 5, asked 2× - [Labour law awareness; worker falls from height](https://www.bctengineer.com/question.md?key=semester_8%2Fengineering_professional_practice%3Alabour-law-worker-death) — Engineering Professional Practice, chapter 5 ## Related in other subjects - [BOOT contract and its importance in Nepal](https://www.bctengineer.com/question.md?key=semester_8%2Fconstruction_management%3Aboot-contract-nepal) — Construction Management, chapter 5, asked 4×