Your SlideShare is downloading. ×
Mitigating Risks Through Contracts - Poorvi Chothani
Mitigating Risks Through Contracts - Poorvi Chothani
Mitigating Risks Through Contracts - Poorvi Chothani
Mitigating Risks Through Contracts - Poorvi Chothani
Mitigating Risks Through Contracts - Poorvi Chothani
Mitigating Risks Through Contracts - Poorvi Chothani
Mitigating Risks Through Contracts - Poorvi Chothani
Mitigating Risks Through Contracts - Poorvi Chothani
Mitigating Risks Through Contracts - Poorvi Chothani
Mitigating Risks Through Contracts - Poorvi Chothani
Mitigating Risks Through Contracts - Poorvi Chothani
Mitigating Risks Through Contracts - Poorvi Chothani
Mitigating Risks Through Contracts - Poorvi Chothani
Mitigating Risks Through Contracts - Poorvi Chothani
Mitigating Risks Through Contracts - Poorvi Chothani
Mitigating Risks Through Contracts - Poorvi Chothani
Mitigating Risks Through Contracts - Poorvi Chothani
Mitigating Risks Through Contracts - Poorvi Chothani
Mitigating Risks Through Contracts - Poorvi Chothani
Mitigating Risks Through Contracts - Poorvi Chothani
Mitigating Risks Through Contracts - Poorvi Chothani
Mitigating Risks Through Contracts - Poorvi Chothani
Mitigating Risks Through Contracts - Poorvi Chothani
Mitigating Risks Through Contracts - Poorvi Chothani
Mitigating Risks Through Contracts - Poorvi Chothani
Mitigating Risks Through Contracts - Poorvi Chothani
Mitigating Risks Through Contracts - Poorvi Chothani
Mitigating Risks Through Contracts - Poorvi Chothani
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Mitigating Risks Through Contracts - Poorvi Chothani

5,735

Published on

This slide deck was presented by Poorvi Chothani at the TiE Business Builder Breakfast in Mumbai.

This slide deck was presented by Poorvi Chothani at the TiE Business Builder Breakfast in Mumbai.

Published in: Business
0 Comments
2 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
5,735
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
0
Comments
0
Likes
2
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Mitigating Legal Risks Through Contracts Poorvi Chothani, Esq. LawQuest, Mumbai, India
  • 2. What is a Contract?
  • 3.
    • A contract is an agreement between two or more individuals, businesses, organizations or government agencies to do, or to refrain from doing, a particular thing in exchange of something in value.
    • In law, a contract is a binding legal agreement that is enforceable in a court of law.
    • A contract is an exchange of promises for the breach of which the law will provide a remedy.
    • As long as the goods or services provided are legal, any oral agreement between two parties can constitute a binding legal contract.
  • 4. Traditionally We:
    • Are “contract averse”
    • Perceive lawyers as black-coat-sporting litigators
    • Do not perceive any harm in having contracts drawn up by a Chartered Accountant or a Company Secretary
    • Do not perceive any harm in using templates or old agreements for new deals
  • 5. What are the Risks Associated With Contracts?
  • 6. What is Risk? a chance of encountering a situation in which one has to suffer loss or injury Common Usage peril, hazard or chance of loss Legal Parlance as a chance or probability of danger, loss, injury or other adverse consequence Oxford Dictionary
    • Financial
    • Political
    • Fidelity
    • Legal
    Types of Business Risk hazard: a source of danger; a possibility of incurring loss or misfortune Definition
  • 7. Types of Contracts
    • Marketing Contracts (With Dealers, Agents)
    • Distribution Agreements (Consumer Goods, Electrical, Electronics)
    • Agency Agreements (Sole Selling Agents)
    • Procurement Agreements
    • Sale and Purchase Contracts
    • Job Work, Production or Manufacturing Contracts
    • Warranty Agreements
    • Employment Contracts
    • Web portal Terms and Conditions
    • Share Holder Agreements
  • 8. Need to Identify, Predict, Mitigate and Manage Risk
      • Remember – the law affects all – every entity, whether natural or artificial, is governed by law right from birth to death.
    • Lack of these might cause:
      • Business losses
      • Loss of clients
      • Penalties
      • Imprisonment
  • 9. Legal Risks Associated With Contracts
    • A agrees to sell 10 mtrs of cloth
    • No description of the cloth
    Obligations of the Parties ambiguous Liabilities of parties not documented Contractual Provisions inadequately drafted Example Reasons
    • Contract for Prostitution
    • Unenforceable in India / Middle East Countries
    • Enforceable in Australia
    Contractual provisions unenforceable
  • 10. Contract Management
    • Civil i.e. compliance defaults, breach of contract etc. or
    • Criminal i.e. cheating, breach of trust, fraud etc.
    Offence
    • Company
    • Officers In Charge – conduct of the affairs of the company
    Responsibility
  • 11. Advantages of Contracts
    • Contracts help define the scope of services and the deliverables of a product
    • They help define expectations and obligations
    • Well defined expectations and obligations are imperative to manage client or customer relationships
    • Written contracts mitigate ambiguities and misunderstandings
    • Reduce risks
  • 12. Contracts Help Manage Product Liability Risks
    • Inserting clauses clearing defining liability and limiting it
    • Limiting liability of the manufacturer and fixing the liability on the sub-contractors wherever appropriate
    Minimized by
    • Final product
    • Arising from the performance of the product and spare parts or components
    Association
  • 13. Intellectual Property Rights Protection Risk
    • Inserting confidentiality and non-disclosure clauses in the contract
    • Representation on ownership of IPR
    Minimized by Know-how and trade secrets Unregistered IPRs Patents, Copyrights, Trademarks and Designs registration. Registered IPRs
  • 14. Mitigation of Risk
    • Limiting the liability of parties to the contract
    • Quantifying Damages
    • Insurance
    • Specific representations and warranty clauses
    • Due Diligence
    • Indemnity
    Ways
    • Reduction of the loss or injury arising out of legal risk
    Definition
  • 15. Contract and Risk Management
    • Contract Review
    • Contract Drafting
    • Contract Management
    Ways
    • Role in management
    • Operations
    • Business activities of enterprises
    • Decides the legitimate rights and interests of enterprises
    Impact of Contract
  • 16. Key Elements of a Contract
    • Developing key contractual elements
    • conditions and warranty clauses
    Analyze
    • clear communication
    • record of all contracts
    • tabulate time lines to ensure compliance
    • tabulate deliverables to ensure compliance
    Maintain
    • concepts of consideration
    Examine
    • key elements of the contract
    Negotiate
  • 17. Key Elements of a Contract… contd .
    • Ensuring the foundations of the contract are secure at the bargaining table
    • risk of offers and acceptance
    • will your client be inadvertently contracted
    Analyze
    • techniques to obtain the desired outcome when commercial leverage is absent
    Utilize
    • requirements to ensure the contract protects their business interests
    • technical and legal expectations
    • special inclusions / exclusions required
    Understand
  • 18. Key Elements of a Contract… contd.
    • Effective dispute resolution clauses
    • This is important in cross border or international contracts
    Identify Applicable Law
    • Which will be the city and court where you will bring a dispute?
    Identify Forum Enforceability of arbitration award Ensure For feasible method of identifying the arbitrator Provide
    • Courtroom Litigation v Arbitration
    • Forum
    • Applicable Law
    Determine Dispute resolution options Examine
  • 19. Key Elements of a Contract… contd. Dispute Resolution Costly affair Less costly than arbitration Arbitrators can modify the contractual rights of the parties May substitute their discretion as rights expressly given by agreement Judges powers limited determine and enforce the contractual rights of parties Less time Consuming Very Lengthy Process Confidentiality Public Domain Practical experience of technicalities in question No experience in the subject matter of the dispute Informal Arbitrators appointed by parties Formal No control over Judges Arbitration Litigation
  • 20. Key Elements of a Contract… Contd.
    • Drafting effective Indemnity Clauses
    consequential loss Define probability of loss may arise as a consequence of breach of contract Understand utilize clauses to protect against ambiguity Be sure to safeguard against established risk Indemnity consequential loss and exclusion clauses Consider critical issues Identify
  • 21. Contract Enforceability
    • impact of recent case law on contractual indemnities
    Review
    • scope of recoverable loss or damages
    Understand
    • ambiguity
    Remove
    • legal enforceability - clause
    • example - Contract of wagering - void in India but enforceable in Australia
    Examine
  • 22. Contract Review
    • Operational Review - Pertaining to the financial viability and internal regulations
    • Legal Review - Two types: Formal Review and Substantive Review
    • Prior Drafting Review - A review of the Contract from legal perspective with special attention emphasis on potential contingencies
    • Post Drafting Review - Review of the Contract taking into account the Divisions’ requirement and anticipating practical issues
    • A rational analysis of Contract includes:
      • feasibility of contract
      • forecast of contract risks
  • 23. Contract Review….. Contd Governments and other statutory authority/ies Example: Labour Laws Procedural Compliance relating to Securities laws i.e. Stock Exchange/ SEBI requirements Ask for proof of requisite registrations or licenses Domestic/Foreign FDI – Direct/Indirect RBI Approvals Ensure Compliance with Current Policies Insist on Board Resolution Granting Authority Authorized Signatory
  • 24. Contract Review….. Contd Proper stamp duty been paid on the agreements Immovable property valuing Rs.100 or more Registration, admitted execution and registered by the registrar. Execution of Agreements
  • 25. Substantive Review Rights and Obligations of parties to the Contract Scope and Deliverables Examine Capacity and Authority of Contracting Party Capacity to Contract Private Limited- 2 Public Limited – 7 Shareholder Preferably odd number of directors Decisions taken by majority Directors Private Limited- Rs 1,00,000 Public Limited – Rs 5,00,000 Capital Structure Manufacturing and Supply Agreements Purchase Orders/Tenders Example Review every clause of the Agreement/Contract Substantive Review
  • 26. Any Queries???
  • 27. LawQuest
    • Areas of Practice
    • Corporate Law
    • Intellectual Property Law
    • Real Estate Law
    • Employment Law
    • Global Work Permits and Business Visas
      • The U.S. The U.K.
      • Canada India
      • Poland Mauritius
      • Australia New Zealand
    • About LawQuest
    • Provides Client Centric Legal Solutions
    • Member of the NY State Bar Association, the ABA, IBA
    • Member of the American Immigration Lawyers Association
    • Founder Member of the Global Migration Action Group in AILA
    • Former Member of the Alliance of Business Immigration Lawyers (ABIL)
    • Member of the European Association of Attorneys – A Worldwide Network of Lawyers
  • 28. Thank You 522 Maker Chambers V 221 Nariman Point Mumbai 400021 Tel: +91 22 6615 6555 Fax: +91 22 2287 2080 Email: [email_address]

×