Contract Review Checklist

Clauses that are void or unenforceable in India, or that stop the contract being used as evidence. “OK” means the problem is not there.

1. Red flag No restraint on working or trading after the contract ends Indian Contract Act s.27

   Look for non-compete clauses that bind a party after the contract or employment ends (“shall not engage in a competing business for two years after termination”). A restraint during the term — exclusivity, or not working for a competitor while employed — is generally upheld.

   Why it matters: An agreement restraining anyone from a lawful profession, trade or business is void to that extent; the only statutory exception is the seller of a business’s goodwill agreeing not to compete within reasonable local limits (s.27 and Exception 1).

   OK Negotiate Problem N/A
   Note optional
2. Red flag No clause cutting the time to sue, or ending rights after a period Indian Contract Act s.28; Limitation Act Sch. art. 55

   Look for clauses such as “any claim must be brought within six months” or “all rights are extinguished if not claimed within 90 days of delivery”. The Limitation Act sets the time (three years for most contract claims).

   Why it matters: An agreement that limits the time within which a party may enforce its rights, or extinguishes rights on the expiry of a period, is void to that extent (s.28). Bank guarantees may set a period of not less than one year (Exception 3).

   OK Negotiate Problem N/A
   Note optional
3. Red flag Penalties and liquidated damages are a genuine estimate of loss Indian Contract Act s.74

   Check every fixed sum payable on breach — liquidated damages, forfeiture of deposits, default interest, bond amounts. Keep them close to the loss you can show.

   Why it matters: Whatever the clause says, a court awards only reasonable compensation up to the amount named; a stipulation for increased interest from the date of default may itself be a penalty (s.74 and its Explanation).

   OK Negotiate Problem N/A
   Note optional
4. Red flag The agreement is stamped in full, in the right State Indian Stamp Act s.35 (and State Stamp Acts)

   Pay the stamp duty set by the State Stamp Act for this kind of instrument before or at signing — on stamp paper, by e-stamping or by franking — in the State where it is signed (and check the State where it will be used).

   Why it matters: An instrument that is not duly stamped cannot be admitted in evidence or acted upon until the duty and a penalty are paid — ten times the shortfall under the Indian Stamp Act s.35; State Acts set their own penalties. The Supreme Court’s seven-judge bench held such an agreement is not void and the defect is curable — but you cannot rely on it in court until it is cured.

   OK Negotiate Problem N/A
   Note optional
5. Red flag No unfair terms against a consumer Consumer Protection Act 2019 s.2(46)

   Where the other party is a consumer, look for excessive security deposits, wholly disproportionate penalties, termination without reasonable cause, assignment to the consumer’s detriment without consent, and other unreasonable charges or conditions.

   Why it matters: Such terms make an “unfair contract” that a State or the National Consumer Commission can declare null and void (Consumer Protection Act 2019 s.2(46)).

   OK Negotiate Problem N/A
   Note optional

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1. Correct legal names, addresses and identifiers Indian Contract Act s.10

   Each party’s registered name (as on the PAN, CIN, LLPIN or GSTIN), registered address and type of entity, consistent across the contract, the signature blocks and the invoices.

   OK Negotiate Problem N/A
   Note optional
2. Capacity and authority to sign Indian Contract Act ss.10, 11

   Individuals must be adults of sound mind; a signatory for a company or firm needs authority — a board resolution, partners’ consent or a power of attorney.

   Why it matters: Only a person of the age of majority, of sound mind and not disqualified by law can contract (s.11); an agreement signed without authority may not bind the organisation.

   OK Negotiate Problem N/A
   Note optional
3. A lawful object and consideration Indian Contract Act ss.10, 23

   Check that what each side gives and gets is clear and lawful, and that the contract does not require anything forbidden by law, fraudulent or against public policy.

   Why it matters: An agreement whose consideration or object is unlawful is void (s.23).

   OK Negotiate Problem N/A
   Note optional

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1. Scope, deliverables and specifications are precise Indian Contract Act s.29

   What exactly is to be delivered or done, by when, to what standard; annexures and statements of work attached and referred to; what is excluded.

   Why it matters: An agreement whose meaning is not certain, or capable of being made certain, is void (s.29) — and vague scope is the most common source of disputes.

   OK Negotiate Problem N/A
   Note optional
2. Changes need a written amendment signed by both Indian Contract Act s.62

   A change-control process for scope, price and timelines, and a clause that amendments are valid only in writing and signed by both parties.

   OK Negotiate Problem N/A
   Note optional

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1. NDA: a clear definition of confidential information, with the usual exclusions Contract terms

   What is covered (and whether it must be marked), and the exclusions: information already public, already known, independently developed, or lawfully received from someone else; disclosure required by law or a court.

   OK Negotiate Problem N/A
   Note optional
2. NDA: one-way or mutual, how long it lasts, and return or destruction Contract terms

   Who discloses to whom, the permitted purpose, how long the duty lasts after the NDA ends (trade secrets may need longer), and the return or destruction of materials on request.

   OK Negotiate Problem N/A
   Note optional
3. NDA: injunctions available, no licence granted Specific Relief Act 1963 ss.37–41

   A right to seek an injunction for a threatened breach, and a statement that no licence or right to the information is given.

   OK Negotiate Problem N/A
   Note optional
4. Services: statement of work, milestones and acceptance Contract terms

   Milestones with dates, how deliverables are accepted or rejected (and in how many days), what happens on delay, and who may be subcontracted.

   OK Negotiate Problem N/A
   Note optional
5. Services: personnel, non-solicitation and independent contractor status Indian Contract Act s.27

   Key people and their replacement, a non-solicitation clause limited to the term, and a clear statement that the provider is an independent contractor responsible for its staff’s pay and statutory dues.

   OK Negotiate Problem N/A
   Note optional
6. SaaS: uptime, support and service credits Contract terms

   The availability commitment (for example 99.9% a month), how it is measured, support hours and response times, and service credits — and whether credits are the only remedy.

   OK Negotiate Problem N/A
   Note optional
7. SaaS: your data — location, security, sub-processors, export and deletion DPDP Act ss.8(2), (5)–(7)

   Where data is stored, the security standard, the list of sub-processors and notice of changes, breach notification, and your right to export your data and have it deleted when the contract ends.

   OK Negotiate Problem N/A
   Note optional
8. SaaS: price increases, suspension and changes to the service Contract terms

   Notice before price increases at renewal, limits on suspending the service (for example only after notice for non-payment), and no right to remove core features without notice and an exit.

   OK Negotiate Problem N/A
   Note optional
9. Employment: pay, benefits and statutory dues spelt out Labour laws as applicable

   Salary and the break-up of the cost to company, variable pay rules, leave, and the statutory benefits that apply (provident fund, ESI, gratuity, bonus), with the place of work and working hours.

   OK Negotiate Problem N/A
   Note optional
10. Employment: probation, notice period and termination Contract terms; Indian Contract Act s.27

    The probation period, the notice period on each side (or pay in lieu), grounds for termination for misconduct, and garden leave during notice if used.

    OK Negotiate Problem N/A
    Note optional
11. Employment: work product, confidentiality and training bonds Copyright Act 1957 s.17(c); Indian Contract Act ss.27, 74

    Ownership of what the employee creates in the course of employment, confidentiality during and after employment, and any training bond or recovery of costs — kept to a reasonable, provable amount.

    Why it matters: A bond amount is recoverable only as reasonable compensation (s.74); a ban on working for competitors after leaving is void (s.27).

    OK Negotiate Problem N/A
    Note optional
12. Lease: rent, increases, deposit and lock-in TPA s.108; State rent law

    Monthly rent and due date, the yearly increase, the security deposit and when it is refunded, any lock-in period and what happens if it is broken, and who pays maintenance, taxes and utilities.

    OK Negotiate Problem N/A
    Note optional
13. Lease: use, repairs, subletting and the landlord’s entry TPA s.108

    Permitted use, who does which repairs, whether subletting or assignment is allowed, and notice before the landlord enters.

    OK Negotiate Problem N/A
    Note optional
14. Supply: specifications, inspection and rejection Sale of Goods Act 1930 ss.15–17, 41, 42

    Quality standards and specifications, the time and place for inspection, how defective goods are rejected and replaced, and the warranty period.

    OK Negotiate Problem N/A
    Note optional
15. Supply: delivery terms, and when risk and ownership pass Sale of Goods Act 1930 ss.18–26

    Delivery point and terms (Incoterms for imports and exports), who arranges transport and insurance, and when risk and ownership of the goods pass to the buyer.

    OK Negotiate Problem N/A
    Note optional
16. MoU: which clauses bind, and which do not Indian Contract Act s.10

    State clearly whether the MoU is binding. Commonly only confidentiality, exclusivity, costs, governing law and disputes bind, while the commercial terms are subject to a definitive agreement.

    Why it matters: Calling a document an MoU does not decide its effect: if it meets the conditions of s.10 — consent, consideration, a lawful object, certainty — it can be an enforceable contract.

    OK Negotiate Problem N/A
    Note optional
17. MoU: a timetable to the definitive agreement, and an end date Contract terms

    Who prepares the definitive agreement, by when, and what happens if it is not signed — the MoU should lapse on a set date.

    OK Negotiate Problem N/A
    Note optional

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1. Price, taxes and expenses Contract terms

   The price or fee, whether GST is extra, which expenses are reimbursed, and who deducts TDS.

   OK Negotiate Problem N/A
   Note optional
2. Payment terms, invoices and late-payment interest MSMED Act 2006 ss.15, 16; Indian Contract Act s.74

   Invoice dates, payment within a set number of days, the bank details process (to avoid fraud), and interest on late payment. A buyer from a registered micro or small enterprise must pay within the agreed period, not exceeding 45 days (15 days if none is agreed), or owes compound interest at three times the RBI bank rate.

   OK Negotiate Problem N/A
   Note optional

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1. Start date, term and renewal Contract terms

   When the contract starts and ends, whether it renews automatically, the notice needed to stop renewal, and any price change on renewal.

   OK Negotiate Problem N/A
   Note optional
2. Termination rights for both sides Indian Contract Act s.39

   Termination for convenience (with notice) and for breach (with a cure period), insolvency, and change of control — balanced between the parties.

   OK Negotiate Problem N/A
   Note optional
3. What happens on exit Contract terms

   Payment for work done, return or deletion of data and property, handover and transition help, and the clauses that survive (confidentiality, IP, liability, disputes).

   OK Negotiate Problem N/A
   Note optional

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1. A sensible liability cap, with the right exceptions Indian Contract Act s.73

   A cap (for example the fees paid in the last 12 months), exclusion of indirect loss, and carve-outs from the cap for fraud, wilful misconduct, confidentiality and data breaches, IP infringement and indemnities as agreed.

   Why it matters: Without a clause, compensation covers losses that naturally arise from the breach or that the parties knew were likely, never remote or indirect loss (s.73).

   OK Negotiate Problem N/A
   Note optional
2. Indemnities limited and with a process Indian Contract Act ss.124, 125

   What each party indemnifies against (third-party IP claims, breach of law, data breaches), whether it is capped, and the process: prompt notice, control of the defence, no settlement without consent.

   Why it matters: A contract of indemnity is a promise to save the other party from loss (s.124); the indemnity holder can recover damages, costs and settlements paid within the authority given (s.125).

   OK Negotiate Problem N/A
   Note optional
3. Warranties and representations you can actually give Contract terms

   What each party promises about itself and the work, the warranty period and remedy, and any “as is” disclaimer.

   OK Negotiate Problem N/A
   Note optional
4. Force majeure that fits the deal Indian Contract Act ss.32, 56

   Which events count, notice and mitigation duties, what happens to payment obligations, and a right to terminate if the event lasts too long.

   Why it matters: Without a clause, a contract is discharged only if performance becomes impossible or unlawful (s.56).

   OK Negotiate Problem N/A
   Note optional

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1. Ownership of the IP in the work Copyright Act 1957 ss.18, 19

   Who owns what is created, assignment in writing of copyright and other rights with the territory and period stated, a licence back of pre-existing materials, and moral-rights waivers where needed.

   Why it matters: An assignment of copyright must be in writing; if it does not state the period it is deemed to be five years, and if it does not state the territory it is presumed to be India (Copyright Act s.19(5), (6)).

   OK Negotiate Problem N/A
   Note optional
2. Confidentiality during and after the contract Contract terms

   A confidentiality clause covering both sides, with exclusions and permitted disclosures (advisers, legal requirements), and how long it lasts.

   OK Negotiate Problem N/A
   Note optional
3. Personal data clauses where data is shared DPDP Act s.8(2), (5)–(7); DPDP Rules rr.6, 7; GDPR art. 28

   If one party processes personal data for the other: process only on instructions, security safeguards, breach notice in time for the 72-hour report to the Data Protection Board, deletion at the end — and GDPR Article 28 terms if EU data is involved.

   OK Negotiate Problem N/A
   Note optional

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1. Governing law and the courts that will decide Code of Civil Procedure 1908 ss.16–20

   Indian law (or another law) stated, and the courts with jurisdiction — the parties can choose among courts that have jurisdiction, but cannot give jurisdiction to a court that has none.

   OK Negotiate Problem N/A
   Note optional
2. An arbitration clause that works — if you want arbitration Arbitration and Conciliation Act 1996 s.7

   In writing, naming the seat (which decides the courts that supervise it), the rules or institution, the number of arbitrators, the language and how arbitrators are appointed. A consumer can still go to the Consumer Commission despite an arbitration clause.

   Why it matters: An arbitration agreement must be in writing — in a signed document, an exchange of letters or electronic communications, or pleadings not denying it (s.7).

   OK Negotiate Problem N/A
   Note optional

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1. Registered, if it is a lease of more than a year Registration Act ss.17(1)(d), 49

   Register leases from year to year, for more than a year, or reserving a yearly rent. Some States require every leave and licence agreement to be registered (for example Maharashtra), whatever its length.

   Why it matters: An unregistered document that must be registered does not affect the property and cannot be used as evidence of the lease (Registration Act ss.17(1)(d), 49).

   OK Negotiate Problem N/A
   Note optional
2. Signed by the right people — on paper or electronically Information Technology Act 2000 ss.1(4), 3A, 5, 10A and First Schedule

   Every party signs (and initials each page if on paper) with name, designation and date; annexures signed too; witnesses where required. Electronic signatures and Aadhaar e-sign are valid for most contracts, but not for powers of attorney, trusts, wills and most negotiable instruments other than cheques (IT Act First Schedule).

   OK Negotiate Problem N/A
   Note optional
3. Each party keeps a signed and stamped original Indian Stamp Act s.35

   The number of originals or counterparts, who keeps which, and the stamped original kept safely — copies may not be accepted as evidence.

   OK Negotiate Problem N/A
   Note optional

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