Tenders and Contracts MCQ with answer and solution

Concept

Earnest Money Deposit

Formula

No

Step-by-step solution

- Understand that EMD requires liquid financial instruments - Recognize that property documents are immovable assets and cannot serve as liquid security - Select option d

Explanation

Earnest Money Deposit (EMD) must be submitted using liquid financial instruments like demand drafts, bank guarantees, fixed deposit receipts, or online payments that the tendering authority can easily realize. Property documents represent immovable assets and cannot be readily converted into cash or processed as financial security during a tender process, which is why EMD cannot be accepted in the form of property documents.

Shortcut

Remember: EMD must be "liquid cash/bank" (DD, FD, NSC), NOT "immovable property".

Common mistake

Students often misread "cannot" as "can" and select standard acceptable forms like Demand Draft, or they mistake valid financial instruments like National Savings Certificates as unacceptable.