Commercial Contracts INdia

By definition, commercial contracts represent a combination of commercial and legal factors. For businesses and organizations, the key requirement is to ensure that the legal arrangements allow the full commercial benefits to be realized.

In the day-to-day course of business, regardless of the size of your operation, it is fundamental to regulate and document your business relationships.

To do this, your commercial contracts with suppliers, customers, distributors and agents must be drafted in a way which properly protects your business interests.

Weak or non-existent commercial contracts make a business unstable. Sound legal advice is therefore essential when drafting these documents to prevent your business from entering into one-sided agreements and avoid time-consuming and financially dangerous repercussions in the event of breaches of contract, or if the matter needs to be taken to court.

It is important to make sure that all of your business contracts are drawn up professionally and are legal watertight, as it is essential that both parties understand the terms included and are aware of their rights and responsibilities afforded by the contract. Poorly worded contract terms could have serious implications for both parties and their stakeholders.

Usually, the following are included in commercial contracts:

·         Parties: The names and addresses of all the contracting parties should be clearly stated.

·         Definitions and Interpretations: Explanations of the specific meaning of any terms defined in the contract.

·         Payment Provisions: Outlines the exact price to be paid for the goods or services provided and the date or dates for payment to be made should be clearly set out.

·         Description of Good or Services: A specific description of the goods or services that will be provided under the contract, including the level of service if the contract is for services.

·         Term of contract: Specifies the length of the contract.

·         Timescale: The specific timescale for the project should be noted including any deadlines that have to be met.

·         Limitation of liability: For example, 'Neither party shall have any liability to the other party for a claim of loss of profits.

·         Termination provisions: Sets out the circumstances under which the parties can terminate the contract.

·         Change of Control: The procedures for change of ownership/controlling interest etc. For example if the first party transfers a controlling interest to a competitor of the other party.

·         Dispute Resolution: Sets out the procedures in the event of the parties having a dispute.

·         Confidentiality: There should be confidentiality clauses drafted in the contract which identify the information being protected and the circumstances in which it can be used or disclosed.

·         Intellectual Property Rights: States who owns such rights to products provided under the contract.

·         Warranties: It is common for the party providing goods or services under a contract to provide certain warranties in relation to the delivery of the goods or services.

·         Indemnity: Indemnity clauses are an express obligation to compensate the indemnified party by making a money payment for some defined loss or damage.

·         Force Majeure: This clause should cover situations where performance of the contract is impossible through no fault of either party. For example, if there is a natural disaster or civil unrest.

·         Applicable law: There should be a clause indicating which law governs the contract. For example, 'This Agreement shall be governed by and construed in accordance with the laws of India'.

Running a business involves entering into many different relationships and dealing with many different people and organizations. The terms of each different relationship and arrangement need to be documented so that each party is aware of his/her rights and obligations and duties in respect of it. As well as ensuring that both parties understand the agreement being made, they also ensure that there is a signed record of the agreement in case disputes srise. Each type of agreement must satisfy certain legal requirements and these will differ according to the nature of the relationship and the form of business.

For example, terms and conditions of sale are essential in setting out the legal agreement between the business and the customer. The content of the terms and conditions must comply with the law and this is different depending on whether the customer is a business or a consumer. 

In all commercial contracts the agreement is designed to set out the terms by which all parties within the contract will be legally bound. If any party breaks the contract they have signed, this is called a ‘breach of contract’. If you do break the terms of a contract you have signed, there could be far-reaching consequences.

Our specialist team of commercial solicitors and barristers act for a broad spectrum of clients and have expert knowledge and experience in the drafting of all types, species and sub-species, of commercial contracts , including:

• agency agreements
• application service provider agreements
• confidentiality agreements
• consultancy agreement
• data processor agreements
• distribution agreements
• franchise agreements,
• hire and hire purchase agreements
• intellectual property licences and assignments
• manufacturing agreements
• media agreements
• novation agreements
• product supply agreements
• publishing agreements
• reseller agreements
• services agreements
• software development agreements
• software licences
• sponsorship agreements
• terms of business
• web development, hosting and maintenance agreements

Reasons to Use Net Lawman’s Commercial Contracts

We advise commercial entities of all sizes - from start-up businesses, small and medium sized business and to the large corporate enterprises throughout India and internationally. We support businesses in a variety of ways. Our expert team of solicitors and barristers draft terms and conditions of business, prepare contract documentation, advise on contractual risk, regulatory compliance, give legal advice in contract structuring, post-contract management and administration and identification of claims and resolving disputes.

There are lots of reasons to use the templates available on our site:

• Our contract templates are written in (relatively) clear English.
• The templates are designed to be tailored by you to suit your particular requirements. They come with detailed explanatory notes to help your tailoring.
• The contract templates have been drafted by expert team of Solicitors and Barristers with many years' experience advising on issues of commercial law.
• The contract templates are regularly updated to keep pace with changes in the law.
• They are very cheap.
• The templates come with a money-back guarantee.
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• Commercial Contract, Commercial Contracts, Commercial Agreement, Power of Attorney, General Power of Attorney, Power of Attorney Property, Power of Attorney Special, Memorandum of Articles, Partnership Deed, Agreement of Partnership, Non Disclosure Agreements, Confidentiality Agreement, Last Will, Children Adoption

Purpose of Employee Handbook

Employee handbook is an important tool to bind employees according to company’s policies, and to increase the efficiency of company.

Employee Handbooks are also often called Employee Manual. The Handbook/Manual is a statement of the policies of the business and how the business is to be conducted. The company employee handbook is one of the most important communication tools between your company and your employees. Not only does it set forth your expectations for your employees, but it also describes what they can expect from the company. It is essential that your company has one and that it be clear and as unambiguous as possible. Misunderstandings or misstatements can create legal liabilities for your business. In legal disputes courts have considered an employee handbook to be a contractual obligation, so word it carefully.

Purpose of Employee Handbook

It can help to welcome new staff, provides employees and managers with a handy source of reference and, by providing clear guidelines and policies in one document, you spend less time answering questions and explaining your rules and procedures.

Handbook must be clear and concise

The handbook should be written in a clear, simple, and easy to read style. Avoid ambiguity; draft the policies carefully in order that they will be interpreted the way you mean them to be. Avoid words like, will, must employee rights and other words or phrases that commit an employer to act in a certain way in all instances. Instead, use words such as, may, can, and, generally

The tone of the handbook should be positive throughout. Address the message to the majority of employees that desire to understand and abide by the organization's standards and procedures; do not adopt a “punitive” tone. If possible, explain the reasoning behind certain policies, especially those that are likely to be seen as controversial.

What to include in Handbook

Your employee handbook should clearly state your company's policies. Among the areas it should cover:

• general working hours
• Company rules and regulations (dress code; how people interact with customers; safety regulations; etc.)
• how vacation time is earned
• paid holidays and personal days
• sick leave
• salary and performance reviews
• overtime/comp time policy
• health and medical benefits
• pension plan and other fringe benefits
• maternity policy
• any other rules or regulations

Handbook must Comply with State Laws

When developing an employee handbook, some simple rules should be observed.
It is illegal to violate or misstate laws in your handbook, so make sure you have done the research.

Consider Translations
If you have workers with varying native languages, consider having different translations made so that all of your employees can have a thorough understanding of your policies and procedures.

Legal Protection for Employers

The employee handbook is a source of legal protection for employers. Should an employee fail to adhere to policies outlined in the handbook, the employer can legally take action against the employee with the handbook as a guide.

Net Lawman’s Employee Handbook

Our employee handbook sets out in full the policies that employers should typically have in place. It has been drafted in such a way to allow additional information to be included to suit your organization where required. Our employee handbook is written in plain English with explanatory notes whereby you can customize it according to your requirements. Our employee handbook is drafted by expert team of Solicitors and Barristers who are expert in employment law, and regularly update them to make it congruent with state laws.

Partnership Agreement

Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states the

(1) Nature of the business,

(2) Capital contributed by each partner, and

(3) Their rights and responsibilities.

Indian Partnership Act, 1932

A partnership is the relationship between persons who have agreed to share the profits of a business carried on by all or any of them acting or all. In India it is governed by the Indian Partnership Act, 1932, which extends to the whole of India except the State of Jammu and Kashmir. It came into force on 1st October 1932.

A partnership firm is not a legal entity apart from the partners constituting it. It has limited identity for the purpose of tax law as per section 4 of the Partnership Act of 1932.

Types of Partnerships

There are 4 general types of partnership arrangements:

• General Partnerships assume that profits, liability, and management duties are divided equally among partners. If you opt for an unequal distribution, the percentages assigned to each partner must be documented in the partnership agreement.
• Limited Partnerships (also known as a partnership with limited liability) are more complex than general partnerships. Limited partnerships allow partners to have limited liability as well as limited input with management decisions. These limits depend on the extent of each partner’s investment percentage. Limited partnerships are seen as attractive to investors of short-term projects.
• Joint Ventures act as general partnership, but for only a limited period of time or for a single project. Partners in a joint venture can be recognized as an ongoing partnership if they continue the venture, but they must file as such.
• Silent partner is one who still shares in the profits and losses of the business, but who is uninvolved in its management, and/or whose association with the business is not publicly known; these partners usually provide capital.

As you can see it is folly to operate a business under any partnership basis without an agreement in place. Net Lawman provides you expertly drafted partnership agreements.

India introduces new Limited Liability Partnership Law

The Indian Parliament has passed the Limited Liability Partnership (LLP) Bill, 2008.  LLP, as a corporate entity is similar in concept to the Limited Liability Company (LLC), available in the United States.  The LLP format provides the benefits of limited liability of a corporation but allows its members the flexibility of organizing their internal management on the basis of a mutually arrived agreement, as in a partnership firm.

Pros of a Partnership

• The workload can be shared between partners
• Each partner may specialize in their own area of the business
• More finance can be raised then, say sole-traders, due to more owners investing in the business
• Due to the business being generally larger than a sole-trader, it has a better chance at generating other sources of finance e.g. bank loans, etc
• There are no legal formalities to complete prior to starting the business
• Partners can cover each other during times of absence, e.g. holidays or illnes

Cons of a Partnership

• Profits are shared between partners
• Decisions may take time to reach due to other partners disagreeing
• Partners are equally responsible for liability
• Any actions and decisions based on the business are legally binding to ALL partners
• A partnership is terminated when a partner dies and therefore the process of forming a new partnership has to be taken

Introduction of new Partners

At some point you may decide to introduce another partner into your business. In such case, you should specify the terms and conditions of doing so which may initially be the agreement of all partners to acknowledge that a new partner is welcome. You may then suggest the amount of capital that the new partner needs to invest into the business and the rights and benefits that they will receive from doing so.

Retirement of a Partner

In the event of a partner retiring, you should agree to a retirement package and how the business will continue to be run. You may decide that the share of the business from the retiring partner will be distributed evenly between the remaining partners. Net Lawman has got an up-dated deed of retirement from partnership business.

Dissolution of Partnership

If your partnership ceases to trade, then you need to determine how the business will be split between all partners. This will be a split of the money after all remaining stock, assets and equipment have been sold. You can download a very good template of partnership dissolution agreement from Net Lawman site.

Unfair competition

Should a partner decide to leave the partnership, you should agree terms that determine what type of employment the partner can go into. This may state that the leaving partner cannot go into employment that is in direct competition with the partnership

The Dismissal or Death of a Partner

Should the unfortunate event of the death of a partner occur, it is important that you agree what will happen with the business.

Disputes

If disputes arise between partners in a partnership you need resolution swiftly to avoid matters turning acrimonious and leading to difficulties in the continued running of the partnership business and reputation.

Some Provisions of Partnership Agreement in a nut-shell

A business partnership agreement includes provisions relating to the following:

• Nature and purpose of the partnership
• Capital contributions of each partner
• Profit and loss allocation
• Authority of each partner
• How to admit new partners
• A course of action in case a partner dies
• How to buy out a partner's share
• Signature authority on partnership bank accounts. You may allow each partner to sign on behalf of the whole partnership, or you may require all partners to sign all checks
• Conflict resolution

Net Lawman’s Partnership Agreement Templates for India

Whether you are making a new partnership or admitting a new partner in an already existing partnership or want to refer a partnership dispute to arbitration, Net Lawman has a largest selection of partnership agreements suitable to your requirement.

Our templates have been drafted by a team of Solicitor and Barristers who are expert in Partnership Law of India. All our partnership agreement forms are up-to-date according to Indian legislation, and are drafted in plain English with explanatory notes.