Essentials of a Valid Contract | Basic Clauses To Draft a Contract | Key Commercial Clauses | Key Legal Clauses |

2. What is a contract ?
 Proposal/Offer – Intent/willingness to do or abstain from doing something
and to obtain assent from the other party.
 Proposal in words, written or spoken are considered as implied
proposals/offer.
IBP Co. Vs. Ramashish Prasad Singh (2006)
 Offer vs. Invitation to Treat [McPherson vs. Appana, SC 1951]
 Promise – When the other party accepts the proposal it becomes a promise.
Bharat Petroleum Corpn. Ltd. Vs. Great Eastern Shipping Co. Ltd. (2008)
 Consideration – Monetary / Non-Monetary.
Keshab Chandra Nayak vs. Laxmidhar Nayak , AIR 1993
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Offer
Legal
Capacity
Acceptance Consideration Agreement
Agreement Enforceable by Law Contract
Some important concepts:

3. Essentials of a valid Contract
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Free consent
Competencies of parties
to contract – [Signatories
in the contract
have the authority/competency
to sign on behalf of the
company.]
Consideration must be lawful
Object must be lawful object
Not expressly declared to be void
– [Contract to provide 20 child
labours in a factory for 3 months]

4. Basic clauses to draft a contract
 Identifies the parties to the agreement.
 The date of the agreement
 The place of formation and the addresses of place of business of the
contracting parties.
 All parties intended to be bound, their legal status, place of business, and
third party beneficiary.
 Title of the contract.
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Recitals are declarative statements but not binding provisions
of the contract.
Provide the basic text, structure, and context of the transaction.

5. Basic clauses to draft a contract
Provides structure of the
transaction broadly
defining the scope and
the method of payment,
time of completion, the
main matter of the
contract.
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It defines terms that
appears in different parts
of the agreement.

6. Key commercial clauses
Confidentiality terms
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Termination –
For Cause – Cure Period, Notice
Period
For Convenience – To be avoided
by a vendor/supplier
Mutual
Intellectual Property
Rights
Limitation of Liability
Indemnity and risk
allocation
[State of Orissa vs. United
India Insurance Co. Ltd,
SC 2002]

7. Key legal clauses
Governing Law and Jurisdiction
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Conciliation
Arbitration
 An Arbitration clause in a contract is very
crucial for dispute resolution.
Litigation
Dispute Resolution Mechanism –

8. Restrictive Covenants
Non-Hire
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Non- Compete
Non-Solicit

9. Commercial terms of a contract
Service Level Agreements
(SLA) and SLA credits
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Price and Payment
terms –
Invoice requirements,
Billing schedule,
Payment schedule,
Currency
Tax terms
Productivity terms

10. Technical clauses
Data protection
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Delivery of goods or services
Disaster Recovery Plan
Technology Updation
Business Continuity Plan (BCP)

11. Other significant terms
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Developing contract
exit strategy
Insurance related
terms
Audit terms Negotiation

12. Conclusion
• Critical to have a consensus ad idem to avoid future
confusion and potential disputes.
• Identify your organizations risks and the appetite.
• List down the areas which are non-negotiable.
• Educate the key stakeholders about organizations
strategy on contracts.
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13. 13A simple, fast and inexpensive compliance management tool designed for small and medium business