24.2. 6.8.3 Convening of the General Meeting The written notice for any General Meeting shall be given to the Parties at least 21 (twenty one) days prior to the date of the meeting (with agenda and other necessary information). 492 Practical Guide to Drafting Commercial Contracts 10. 2.4 As the CEO, Mr. Chopra shall perform such duties and exercise such powers in connection with the employment generally as may from time to time be assigned or entrusted to him by the Board, 2.5 Mr. Chopra shall perform his duties and exercise his powers subject to the overall supervision, direction and control of the Board. No Authorisation of, or registration, qualification, declaration or filing with, any Person is required in connection with the execution, delivery and performance by the Company and the Promoter, of this Agreement and any other documents executed in the course of or pursuant hereto, other than as specifically stated in this Agreement. (b) Course of Dealing. 8.2. Bhumesh has captured the essential requirements for drafting a commercial agreement in a lucid and reader-friendly style. Written in a lucid language, the author explains the factors that a draftsman must consider while drafting an agreement that clearly reflects the intent of the parties. 18. No Party may aggregate claims with others and/or bring or participate in a collective, class, or other representative action. 9.2 The site of the arbitration proceeding shall be at Chennai. Assistance: The Seller shall do whatever is reasonably necessary to introduce the Purchaser to customers and suppliers connected with the Business and give the Purchaser reasonable assistance and advice about running the Business during the assistance period. These clauses are more common in agreements related to employment, agency, distributorship, franchise, joint venture or technical collaborations in particular. Commercial Contracts: A Practical Guide to Standard Terms Expenses: 18.1 Each Party shall pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement. 13.3 After the payment of such initial preferential amounts, the balance of the proceeds shall be shared pro rata among the Investor and the shareholders of the Company. 506 Practical Guide to Drafting Commercial Contracts The New Investor hereby undertakes and covenants to the Company and the Promoters to become a party to the Agreement from the date hereof and adhere to and be bound by all the terms of the Agreement, including the duties, burdens and obligations of the Old Investor imposed pursuant to the provisions of the Agreement, and all documents expressed in writing to be supplemental or ancillary thereto as if the New Investor had been an original party to the Agreement. All management reports to be provided by the Company under Clause 0 shall include a comparison of the financial results with the corresponding quarterly and Annual Budgets. All disputes shall be settled in accordance with the provisions of this Agreement in accordance with the laws in force in India. 13.9.2 The Parties shall submit to the exclusive jurisdiction of courts at Mumbai. Contractual obligations are those duties which a party is accountable for and responsible to perform under an agreement. However, any such action isnt likely to succeed if the purpose of the agreement violates any applicable statue. Waiver: No failure to enforce any of its right by a Party shall not constitute waiver of such right. 4.6 Either Party may submit, or the arbitrator may order either or both Parties to submit, a brief prior to the arbitration hearing. 6. Invariably, the non-obligated party wants all conditions precedent to be met by the obligated party. It should describe the activities supposed to be performed by a party towards fulfilment of its obligations, timeframes for fulfilment of the obligations, etc. The introductory recitals explain the reason for the present agreement. In India, till about mid - 1990s, before the telecom and internet revolutions, there were not many computers in Indian law offices. Do not write Board of Directors, Board of Directors of the Company or Board of Directors of XYZ India Private Limited. Chapter 19] Part 6Operative Clauses 123 8. No services shall be rendered by the Service Provider in the absence of advance payment. In the common law, when contract disputes throw up ambiguities and rival interpretations, the court seeks to determine the objective meaning of the language that the parties have used to express their agreement. The online education courses not only enhance your knowledge, but certificates and accreditations awarded thereunder also help you in demonstrating your skills before existing and prospective employers. 31.2 This Agreement represents the entire agreement between the Partners. 7.2 The Licensee shall pay the Royalty in arrears on a quarterly basis within 15 (fifteen) days from the beginning of the following quarter. Some valid considerations for choosing a specific governing law could be: (i) (ii) (iii) (iii) the place where the agreement is executed; place of performance; place of domicile, residence or business of the parties; national character of companies / corporations involved in the transaction; (iv) subject matter of agreement; and (v) other facts that help to localize the agreement. Capitalized terms used but not defined herein shall have the same meanings as set forth in the Agreement. Arbitration procedures: 4.1 Any request for arbitration by either Party shall be served and filed within the statute of limitations applicable to the claim(s) upon which arbitration is sought or required. They operated on the Baltic Exchanges principle that my word is my bond. However, students who are first generation lawyers or those who do not get such internship opportunity, have to learn it on the job only. Example: (On execution page) ________________ Signature Name: Designation: Place: CHAPTER 6 EXECUTION DATE Chapter 6 As mentioned previously, the preamble of an agreement typically reads as under: This Agreement is executed on this ___ day of _______ (month and year) at ________ (place) by and between: It is very important to mention the date of execution of any agreement and the date from which is becomes operative (we shall cover the latter part in the Effective Date section). For example, you go to buy a new TV set. Therefore, if a reference is to be made to an article, clause, annexure, etc. (vii) The Development Services shall be performed in a professional and workmanlike manner and in conformance with any Specifications. 5.9. | Durham, NC : Carolina Academic Press, 2016. No Party shall issue any public release or public announcement or otherwise make any disclosure concerning the Information without the prior approval of the Investor; provided however, that nothing in this Agreement shall restrict any of the Parties from disclosing any information as may be required under applicable Law subject to providing a prior written notice of 7 (seven) days to the other Parties. A slip of the pen, or even a missing or misplaced comma, can cost a party very dearly indeed. 3. CHAPTER 25 READ, READ AGAIN Chapter 25 Many times, a lawyer drafting the agreement does not take time to read the document carefully. These two kind of recitals are so entwined at times that you may not be able to separate the two. Order means any judgment, injunction, writ, award, decree or order of any nature of any Competent Authority. 9.2.4 If the Investor exercises its option to subscribe for the Investor Pre-emption Shares, the Investor shall pay for and subscribe for such Investor Pre-emption Shares at the Issuance Price on the terms and conditions set out in the Issuance Notice, it being clarified that the Investor shall be provided with a further period of at least fifteen (15) days for making the payment for the subscription of Investor Pre-emption Shares, and the Company shall issue and allot the Investor Pre-emption Shares to the Investor on the Business Day immediately following the receipt of the consideration from the Investor, as set out herein. Practical Guide to Drafting Commercial Contracts PART 8 SIGNING AND SEALING IT CHAPTER 1 SIGNATURE PAGE Part 8Signing and Sealing it Chapter 1 In India, it is a practice for each party to initial each page of an agreement and sign with full official signature on the last page. The Advisor shall submit a monthly invoice by 7th day of each month for his services rendered during the preceding month to the Company. 2.6 Acceptance of Development Services. Master Service Agreement 359 11.7 Governing Law: 11.7.1 This Agreement shall be governed by and construed in accordance with the laws of India. For example: 1. A termination notice follows in case of the breach not being remedied. The jurisdiction clause mostly stipulates that the parties submit to the exclusive jurisdiction of competent courts of a particular State or country. The respective rights and obligations of the Parties, particularly those relating to recovery of their outstanding dues, shall survive any termination or expiry of this Agreement to the extent necessary to the intended preservation of such rights and obligations. There is no particular recommendation nor a set rule on such different terms used interchangeably. Prepare it once your agreement is in final shape. The Company shall deliver to the Investor certified true copies of the forms set out in Clause 0 above along with the receipt in respect of each such form filed with the RoC. In addition to declared holidays, you shall be entitled to: Sick leave / casual leaves of Twelve (12) days per year, calculated on a prorata basis. 19.3. 14.2 Notwithstanding anything contained elsewhere in this Agreement, the Licensor may, at its option, immediately terminate this Agreement by notice in writing to the Licensee upon the occurrence of any of the following events: 14.2.1 if the Licensee commences voluntary winding up proceedings under any applicable bankruptcy, insolvency, liquidation, winding up, dissolution or other similar law now or hereafter in effect; 14.2.2 if the Licensee becomes the subject of any involuntary proceedings for winding up under any such law, which are not dismissed within a period of 60 (sixty) days from the date of such involuntary proceedings are initiated or is ordered to be wound up or ceases to do the business or otherwise terminates its business operations, makes a general assignment for the benefit of its creditors; 14.2.3 if a liquidator, trustee, receiver or any other officer with similar powers is appointed for the Licensee; 14.2.4 if the Licensee proposes an arrangement or compromise with its creditors; 562 Practical Guide to Drafting Commercial Contracts 14.2.5 if the Licensee takes any action seeking reorganization, readjustment or arrangement of its business under any law; 14.2.6 if the Licensee sells all or substantially all of its assets, other than to the Licensor; 14.2.7 if the Licensee breaches any other provision of this Agreement and fails to cure such breach within 45 (forty-five) days after notice thereof from the Licensor, provided such breach is capable of being remedied. Subscription for the Subscription Shares 3.1 On the Closing Date, subject to applicable Law and the terms and conditions of this Agreement and fulfilment of the Conditions Precedent set out in Clause 0 and relying upon the Representations and Warranties and undertakings and indemnities made by the Company and the Promoters under this Agreement, the Investor hereby agrees to subscribe for, and the Company hereby agrees to issue and allot, the Subscription Shares Tranche 1, free and clear from all Encumbrances, to the Investor upon payment of the Subscription Amount Tranche 1 by the Investor to the Company. Imagine a vendor obtaining a long-term arrangement with Pepsi or Sony. 14. It is like a narrator giving you the background before the actual movie starts. Court or arbitrators (in case of any dispute between the parties) Which of the above (other than the Court or arbitrators) would have the time, intellect or inclination to decipher a complicated agreement, full of jargon and difficult words and phrases? One actually needs to read the whole document to detect these errors and correct them. 2.3 The Agreement shall be effective from the date of joining by Mr. Chopra for a term of 5 (five) years subject to the employment being previously determined in pursuance of any of the provisions of this Agreement. They may be used as admissions under the Indian Evidence Act, 1872. This is the basic premise behind every agreement, written or otherwise. Do not start negotiations by revealing your BATNA. 3.16. The reasons for such non-fulfilment could be tight timelines, process, bureaucracy and others. Practical Guide to Drafting Commercial Contracts, 2e by Bhumesh Verma Goodreads helps you keep track of books you want to read. (iii) Third Review: In case the above Milestone are still not achieved after then the same shall again be reviewed finally after 6 months based on the audited numbers for the last 12 months of period ending _______. 8.9 Headings: The headings contained herein are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement. 11.5 Severability: If any provision of this Agreement is or becomes illegal, invalid or unenforceable in any jurisdiction, the illegality, invalidity or unenforceability of that provision will not affect the validity of any other provision of this Agreement. There are no charges of employment or age discrimination, sexual harassment or unfair labour practices, claims by employees against the Company or strikes, slowdowns, stoppages of work or any other concerted interference with normal operations existing, pending, or threatened against or involving the Company. 3. Counterparts: This Agreement may be executed in any number of counterparts, and by the Parties on separate counterparts, but shall not be effective until each of the Parties has executed at least one counterpart. 4.2. 1.2 Interpretation In this Agreement, except to the extent that the context otherwise requires: (a) Headings are for convenience only and shall not affect interpretation; (b) The use of words in the singular or plural, or with a particular gender, shall not limit the scope or exclude the application of any provision of this Agreement to any Person or Persons or circumstances except as the context otherwise permits; (c) The terms hereof, herein, hereto, hereunder or similar expressions used in this Agreement mean and refer to this Agreement and not to any particular Clause of this Agreement; (d) The schedules and annexures annexed to this Agreement, form an integral part of this Agreement; (e) References to the words own(s) or ownership with respect to Shares shall be construed as ownership, directly or indirectly, as the legal and/or beneficial ownership of such Shares; (f) Reference to any statute or statutory provision shall include: (i) All subordinate legislation made from time to time under that provision (whether or not amended, modified, re-enacted or consolidated); (ii) such provision as from time to time amended, modified, re-enacted or consolidated (whether before or after the date of this Agreement) to the extent such amendment, modification, re-enactment or consolidation applies or is capable of applying to any transactions entered into under this Agreement and shall include any past statutory provision (as from time to time amended, modified, re-enacted or consolidated) which the provision referred to has directly or indirectly replaced; Joint Venture Agreement 327 (g) The recitals and schedules shall form a part of this Agreement and shall have the same force and effect as if expressly set out in the body of this Agreement; (h) Any reference to this Agreement shall include any recitals and schedules to it; (i) Any references to Clauses and schedules in this Agreement are to clauses of and schedules to this Agreement; (j) References to this Agreement or any other document shall be construed as references to this Agreement or that other document as amended, varied, novated, supplemented or replaced from time to time; (k) Each representation, warranty and covenant made by the Parties under this Agreement is independent of the other; (l) The words include, including and in particular shall be construed as being by way of illustration or emphasis only and shall not be construed as, nor shall they take effect as, limiting the generality of any preceding words; and (m) Any time limits specified in this Agreement for performance of any obligations or complete any activity, shall be extended by such period as may be required to comply with requirements of Applicable Laws. New Partners 21.1 No new Partner shall be inducted without the consent of all the existing Partners. 9.10 No Designated partner shall carry any of the following acts, except without the written consent of the other Designated Partners: (i) Release or compound any debt or claim owing to the LLP. 6.2 No Party is entitled to offset against amounts due to it by the other Party. (b) Partners meetings shall be held at the Registered Office. 6. Costs and Expenses 17.1. (ii) The Investor shall be entitled to accept the offer by written notice to the Promoter (Investor Acceptance Notice) within a period of 30 (thirty) days from the date of receipt of the Investor Offer Notice (Investor Acceptance Period). Having started his career at Ajay Bahl & Co. (now part of AZB & Partners), Bhumesh went on to become partner at some of the leading Indian law firms in India. Divide the same subject into sub-paragraph, if need be. 23.3 Each Party shall bear its own costs and expenses of conducting the arbitration. The Company has adequately insured its material Assets and the Business in accordance with prudent business practices against comprehensive liability, fire, earthquake and other appropriate insurance coverage. This Agreement constitutes the entire agreement between the Parties with respect to the subject matter of this Agreement and cancels and supersedes any prior understandings and agreements between the Parties with respect to such subject matter. 14. A contract will come into being only when the offer and acceptance process is complete. Excellent Book on drafting of Commercial Contracts. Even the stand-alone typists outside every court premises used to have fair amount of court pleadings and agreements. Excluded Liability: Each Party hereby acknowledges and agrees that, other than Assumed Liability no Party shall not be responsible to assume, or agree to or be obligated to perform, discharge or satisfy obligations and liabilities not incurred by it under this Agreement (Excluded Liability). Thus, came about the invention of an electronic contract or simply an e-contract. From its birth, throughout its life and up to its death. 11.2 ABC's Contributions 11.2.1 Licensing (a) ABC shall provide to the JVC, the right and license to assemble ABCs proprietary _________ designs and models, including the use of copyrights and trademarks. All patents, patent applications, copyrighted works, copyright applications, and registrations, trade names, trademarks and service marks, registered trademarks, and trademark applications, registered service marks and service mark applications which are used by, owned by or licensed to the Company (collectively, the Intellectual Property) are listed in Schedule __ . 5. 25,000 (Rupees twenty five thousand only), whichever is greater. If there are 50 fundamental issues that need to be discussed and taken care of in respect of a deal, the promoters may not have the knowledge or time to discuss, let alone finalise even 10% of them. This is primarily resorted to protect the confidential information qualifying as intellectual property. I would have drafted few thousand agreements and reviewed number many times that. License shall have the meaning set forth at Clause 2.1; Loss shall have the meaning set forth at Clause 13.1; Products shall mean ____________; Rights shall mean all intellectual property rights of any form or description whatsoever, including without restriction, copyright, design right, registered designs, trademarks, patents, confidential information, know how, and ideas and moral rights and all other rights whatsoever of a like nature world-wide whether such rights are registered or not; Royalty shall mean ___________; Sale Price shall mean __________________. 9. Conditions precedent are private arrangements of the parties and their contractual rights. 5. 23. (b) Therefore, the Company and the CEO hereby agree that a sum of Rs 50,000,000 (Rupees fifty million only) shall represent a fair compensation to the CEO for loss of his office and this payment shall be received by CEO as liquidated damages and full and final settlement of all his claims against the Company for the termination of employment and otherwise. Sale: 1.1 The Seller hereby sells to the Purchaser who hereby purchases the Business as a going concern. For example, a company may hire an artist to create certain artwork. Therefore, it is important to obtain true and verified identity and address details about the parties as far as possible and incorporate the same in the description of the parties under the agreement. 16. 15.1.4 The Defaulting Party shall be liable for all costs and expenses (e.g., costs for determination of Fair Value, stamp duty, etc.) While executing any contract which pertains to IPR, the owner must try to optimize and derive value from its IPR rather than diluting the brand equity. (b) All of the major assets, moveable and immovable (including leased premises), of the Company has at all times been and are at the Execution Date insured as aforesaid to their full replacement value and all premiums due and payable thereunder have been paid, and all such policies are in full force and effect in accordance with their respective terms. 296 Practical Guide to Drafting Commercial Contracts 7.3. 12.3.2 Every month, and within the first three months of each financial year, the CFO of the JVC shall compile a balance sheet and a profit and loss statement for the preceding year. Waiver: No failure to enforce any of its right by a Party shall not constitute waiver of such right. Withholding: All payments required to be made by the Company to the Employee under this Agreement will be subject to the withholding of such amounts, if any, relating to tax and other payroll deductions as may be required by the law. _________ per share representing __% of the Equity Share Capital immediately upon Closing. 3. The world has changed and written agreements are part of everybodys life. 20. The purpose or objective of the agreement or the essence of the transaction, by whatever name it may be called, must be mentioned at the first instance. 6.3.1 Any Development Services authorized by Zebra under this Agreement may be terminated by Zebra at any time for any reason, with or without cause, upon 10 (ten) days prior written notice to the Developer. If there are more than two parties to an agreement, you may have to put a number before their respective names, to give an idea to the reader as to how many parties are there in total and how many in different capacities. The Parties irrevocably submit to jurisdiction of the Indian courtswhether having original or appellate jurisdiction in any suits, actions or other proceedings. 5.3 It shall be responsibility of the Agency to promote the Company brands across all social media platforms using the technology and strategies decided by the Parties. Sub-Articles or Clauses as 1.1, 1.2 , 2.1, 2.2.. The obligations and process should be stipulated so that there is no ambiguity on these aspects and the parties can part ways in an amicable manner. 14. 13.4 Nothing in this Agreement shall restrict the right of the Recipient to independently design, develop, acquire, market, service or otherwise deal in, products or services competitive with those of the Discloser as long as Recipient is not in breach of this Agreement. 13. Promoter Status (i) The Company and the Promoter undertake that the Investor and/ or its Affiliates shall not be named or deemed as Founders, Promoter or Sponsors of the Company nor shall any declaration or statement be made to this effect, either directly or indirectly, in filings with regulatory or Governmental Authorities, offer documents or otherwise without the prior written consent of the Investor in writing. The Franchisor appoints the Franchisee as its exclusive worldwide Master Franchisee. 5. A Board Meeting may be held at shorter notice with the written consent of a majority of the Directors, including the Investor Director. 17.2.5 The provisions of this Clause 17.2 shall apply throughout the term of this Agreement and for the period of 3 (three) years following its termination. Contracts and Commitments (a) No party with which the Company has entered into any material contract has given notice of intention to terminate or repudiate the contract. The ESOP may, if so decided by the Board, be managed by an ESOP trust or by an ESOP advisory committee to be formed by the Board on the Shareholders Agreement 413 terms of reference determined by the Board and the first of such terms of reference framed and adopted being acceptable to the Investor. You have to appreciate that the client may have other considerable business as well to take care of and may feel irritated with frequent messages in this regard. No goal is achievable without family support. 570 Practical Guide to Drafting Commercial Contracts 10. 2. The Licensor shall have the sole right to renew the technical license for a further term of 10 (ten) years on a request made by the Licensee in this regard at least 6 (six) months before the expiry. 6. If the notice period is to be calculated in terms of months, a month should mean a period of time commencing on the day when notice is given, and ending at the end of the day before the corresponding date in the following month (e.g. In the absence of an agreement on the price, it shall be determined in accordance to procedure established in Clause (ii)(B). In addition to the grant of License to the Licensee to manufacture the Products, the Licensor shall, if so required by the Licensee, provide the Licensee with Quality control support for manufacturing of the Products. Mr. ABC, son of Mr. XYZ, residing at No. The Purchaser failure to pay the consideration as agreed will draw an interest of 15% percent. The Company shall not be responsible or liable for any failure or delay in the performance of its obligations under this Agreement which arises out of or caused by, directly or indirectly, forces beyond its reasonable control, including, without limitation, strikes, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services. Alternative dispute resolution process: The Parties understand that they are agreeing to substitute one legitimate dispute resolution forum (arbitration) for another (litigation) because of the mutual advantages this forum offers. 7.4 It is properly qualified where qualification is necessary for the conduct of its business under the Agreement (e.g., necessary approvals and licenses to operate the advertising business). Subject to the terms of this Agreement, all outstanding stock options granted and restricted stock issued by the Company to the Employee prior to the Change of Control shall become fully vested and exercisable immediately prior to the effective date of the termination upon a Change of Control. All such insurance policies are, and will be on the closing, in full force and effect. 20 Practical Guide to Drafting Commercial Contracts [Chapter 1 However, experience of most professionals clients is to the contrary. (I have actually seen this happen in some of the drafts) This must be avoided. If such transfer is possible, conditions attached to such transfer should be specified. It is also customary to define a material breach under an agreement to set benchmark for an affected party to terminate the agreement. The Company has complied with all the material requirements as specified under the respective Tax Laws as applicable to it in relation to returns, computations, notices, deductions, withholdings and information which are or are required to be made or given by the Company to any Tax authority for Taxation and for any other Tax or duty purposes, have been made on a proper and timely basis and are correct and none of them is the subject of any dispute with the Indian taxation authorities and all Taxes have been deducted, collected, withheld, deposited and paid and filings with respect to the same have been done and completed in accordance with Law and no Tax Demand has been received or, threatened in respect thereof. Share Subscription and Shareholders Agreement 483 19.13 Authorisation The persons signing this Agreement on behalf of the Parties represent and covenant that they have the authority to so sign and execute this document on behalf of the Parties for whom they are signing. 412 Practical Guide to Drafting Commercial Contracts (iii) If any other provision of this Agreement conflicts with the provisions of this Clause 0, the provisions of this Clause 0 shall prevail and be given effect.