An Introduction to Contracting

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A preliminary introduction to contracting solely for informational purposes with reference to Indian law.

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  • An Introduction to Contracting

    1. 1. An Introduction to Contracting By Nandita Saikia
    2. 2. Why People Contract <ul><li>Parties are bound by the promises they make </li></ul><ul><ul><li>To agree on how to share something </li></ul></ul><ul><ul><li>To avoid disputes in future </li></ul></ul><ul><ul><li>To transfer rights </li></ul></ul><ul><ul><li>To decide on what each party’s responsibilities in a venture are </li></ul></ul><ul><li>The promises can be enforced </li></ul>
    3. 3. The Construction of Contracts
    4. 4. Preparing to Contract <ul><li>Understand the issues </li></ul><ul><ul><li>Get the facts </li></ul></ul><ul><li>Be objective </li></ul><ul><li>Understand the other party’s needs </li></ul><ul><li>Plan your Strategy </li></ul><ul><ul><li>Decide what you want </li></ul></ul><ul><ul><li>Decide how you want to get it </li></ul></ul>
    5. 5. The Architect of a Relationship <ul><li>Realizing goals </li></ul><ul><ul><li>e.g. Client Confidentiality </li></ul></ul><ul><ul><ul><li>Internal non-legal structures such as restricted eMail access, the absence of CD writers, USB ports </li></ul></ul></ul><ul><ul><ul><li>Legal restraints such as a non-disclosure agreement </li></ul></ul></ul>
    6. 6. Drafting a Contract <ul><li>Where one starts </li></ul><ul><ul><li>Precedents / forms </li></ul></ul><ul><li>Substantive Laws </li></ul><ul><ul><li>What makes a valid contract </li></ul></ul><ul><ul><li>What can and cannot form the subject of a contract </li></ul></ul><ul><li>Procedural Laws </li></ul><ul><ul><li>Registration </li></ul></ul><ul><ul><li>Stamp Duty </li></ul></ul>
    7. 7. Precedents <ul><li>Not just copying </li></ul><ul><ul><li>e.g. in a Leave and Licence Agreement between Mr XYZ called the licensee “which term shall include his heirs” and… </li></ul></ul><ul><ul><ul><ul><li>the phrase “which term shall include his heirs” cannot be pasted from another contract though it is common because a licence is not heritable </li></ul></ul></ul></ul>
    8. 8. The Role Substantive Law <ul><li>Know the law </li></ul><ul><ul><li>Apply it </li></ul></ul><ul><ul><ul><ul><li>In the previous example, the draft was incorrect because the law was not applied. </li></ul></ul></ul></ul><ul><li>Copy the process others use, not the product </li></ul>
    9. 9. The Elements of Substantive Law <ul><li>The Contract Act </li></ul><ul><ul><li>Comprises the general principles of contracts </li></ul></ul><ul><ul><li>Grants freedom to the parties to negotiate terms </li></ul></ul><ul><ul><li>Defines remedies </li></ul></ul><ul><li>Specific Statutes for Special Contracts </li></ul><ul><ul><li>e.g. The Sale of Goods Act, The Partnership Act </li></ul></ul><ul><li>Case Law </li></ul><ul><ul><li>Defines specific principles e.g. the type of damages in commercial contracts (Ghaziabad Development Authority) </li></ul></ul>
    10. 10. Immense Freedom to Parties <ul><li>Formation </li></ul><ul><li>Performance </li></ul><ul><li>Termination </li></ul><ul><li>Liability </li></ul><ul><li>Discharge </li></ul><ul><li>Time being of the essence </li></ul><ul><li>Statutory provisions are often subject to contract </li></ul>
    11. 11. Inflexible Tenets of the Contract Act <ul><li>The Validity of Contracts </li></ul><ul><ul><li>Consent </li></ul></ul><ul><ul><li>Competence </li></ul></ul><ul><ul><li>Consideration </li></ul></ul><ul><ul><li>Object </li></ul></ul><ul><li>Terms </li></ul><ul><ul><li>An intention to be bound by the contract </li></ul></ul><ul><ul><li>Expressed / Implied </li></ul></ul><ul><li>Remedies </li></ul><ul><ul><li>In case of a breach for non-performance for whatever reason </li></ul></ul><ul><ul><li>Damages </li></ul></ul>
    12. 12. The Formation of Contracts <ul><li>An offer is made </li></ul><ul><li>It is accepted </li></ul><ul><li>Negotiations </li></ul><ul><ul><li>Confidentiality possibly through an NDA </li></ul></ul><ul><ul><li>Parties may change positions </li></ul></ul><ul><li>Counter-offers are refusals of the initial offer </li></ul><ul><li>The terms may be reduced to writing </li></ul>
    13. 13. The Value of a Written Contract <ul><li>Promises can be enforced </li></ul><ul><li>There need not be any implied terms </li></ul><ul><ul><li>Merger Clauses </li></ul></ul><ul><li>Evidentiary value </li></ul><ul><li>The written word is final </li></ul><ul><li>… subject to the intention of the parties </li></ul>
    14. 14. — Peter Siviglia <ul><li>“ A contract is as good as the parties that sign it.&quot; </li></ul>
    15. 15. Nandita Saikia [email_address]

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