COMMERCIAL AGREEMENTS:

IMPORTANT ISSUES & IMPLICATIONS

PRESENTED BY

RUPENDRA PORWALADVOCATE

FCS, LL.M.( UNIVERSITY OF MANCHESTER, UK)rupendraporwal@rallymarklegal.comM-+91 9838597775www.rallymarklegal.com

RallyMark Legal

2

Relevance and importance of documents/records

RallyMark Legal

NC REV PET. No 2605/2012

Dr. NJ Karnawat Vs Patel Ishwar Lal Mangalal

1. DATE OF EXECUTION OF AN AGREEMENT:

 This Software Development and Licensing Agreement (Herein after referred to as “Agreement”) has been entered into on -----------(Date)of...................(Month) 20.......... (year) at-----------------------. An Agreement is perfectly valid even if it is undated

or the date given is an impossible one, e.g. the 30th day of February.

But the execution date is a matter of great importance to know the date from which a particular Agreement is operative.

RallyMark Legal

Date of an Agreement is essential not only for its operative part but also for registration of documents under Registration Act, 1908.

Similarly date of execution is essential for mutation purposes.

Date of execution is vital for counting the period of limitation.

RallyMark Legal

Ex. If several parties to an Agreement sign it on different dates, then which date should be considered as the date of execution of the Agreement.?

Ans: In general, the last of such dates shall be considered as the date of execution of the Agreement.

Addition of clause in Agreement:

“If the Agreement has been signed on different dates by the Parties, the date on which the last party is signing the Agreement shall be deemed to be date of execution of the Agreement.”

RallyMark Legal

2. PARTIES TO AN AGREEMENT:

it is necessary and expedient that full description of the parties are stated in the Agreement so as to prevent difficulty of identification at later stage.

(For A Corporate Party)

M/s ABC Limited, an Indian Company ( Reg. No.------------------) , having its registered and

corporate office address at ----------------------------------------------------------------------------------

…………………………………….. and represented by Mr. ……………………………………………

(Email- xyz@yahoo.com ) the Director/Authorised Signatory of the Company (hereinafter

referred to as the “First Party” which expression shall mean and include, unless repugnant

to the context, its assigns, affiliates, nominees representatives and successors in the

interest) of First Part.

RallyMark Legal

(For an Individual)

Mr. Chandran, a US Citizen, holding Passport No.( AKY 1234567890)

and having address at 297/33 Besent Nagar, opp. RBI Colony,

Chennai- 605004, Tamil Nadu (hereinafter referred to as the “Second

Party” which expression shall mean and include his assigns,

nominees representatives and heirs in the interest) of Second Part.

OR

Mr. Chandran, son of shri---------------------------------------------, aged

about……………years and presently residing at……………………….

RallyMark Legal

3. Recitals/Preambles:

Preamble is summarized presentation of intent of parties for executing the Agreement.

Preamble usually Covers:•Past history/background of transaction;•Present business structure of the parties;•Object of the transaction;•Terms of engagements etc.

RallyMark Legal

Example:

A. WHEREAS First Party booked, a flat No. 1003 (10th floor) in Block- T of Rohtas Plumeria

Homes, located at TGC- 3/3, Vibhuti Khand, Gomti Nagar, Lucknow-226010, having super

area of 1667 sq. ft. ( Approximately 155.9 sq. meter) along with underground car parking

(Hereinafter referred to as “Flat”), for the total consideration of Rs. 36,65,557/- (Rupees

thirty six lakh sixty five thousand and five hundred fifty seven only) inclusive of all

charges and levies except as stated in clause 4.4 of this Agreement (Hereinafter referred

to as “Purchase Consideration”), with Andes Town Planners (P) Limited, a subsidiary of

Rohtas Projects Limited, a real estate developers, having its registered office at 55T,

Sector 8, Jasola Vihar, New Delhi-110055 ( Hereinafter referred to as “Andes Town

Planners”).

B. WHEREAS Andes Town Planners allotted the Flat to First Party and First Party paid the

entire Purchase Consideration of Flat to Andes Town Planners as per agreed terms and

conditions..

RallyMark Legal

A. WHEREAS First Party has sole and absolute rights, interest and title in the Flat.

B. WHEREAS Second Party has inspected the Flat and they are, aware of the current status of

Flat including its scheduled handing over of possession and, satisfied with the same.

C. WHEREAS First Party desire to transfer any/all rights, interest and title in the Flat in favour

of Second Party on the terms and conditions more fully described in this Agreement.

D. AND WHEREAS in consideration of the mutual covenants and obligations herein, it is

hereby agreed to and between the Parties as under.

CAUTION:Recitals/Preambles should be inserted with great caution because it may control the operative

part of the agreement if the same is ambiguous, and may operate as estoppels by the

parties showing the existence of a different state of things from that stated in the recitals.

RallyMark Legal

4. OPERATIVE PART OF AGREEMENT

NOW THIS AGREEMENT WITNESSETH AS FOLLOWS:

1. Preamble and Annexure:

The Preamble and Annexure(s), if any, shall form integral

part of this Agreement and shall always be read and

construed in conjunction with this Agreement.

RallyMark Legal

5. DEFINITIONS:“Affiliate” means any entity, institution or other business structures

controlled and /or managed and/ or operated by the Second Party.

  “Computer Software” means customized software solutions, more

fully described in Schedule-I, in any and all stages of development and/or final form, and includes, without limitation, the literal elements of programs (source codes, object codes or otherwise), its audio-visual components (menus, screens, structure and organisation), any human or machine readable form of the program, and any writing or medium in which the program or the information therein is stored, written or described, including, without limitation, diagrams, flow charts, designs, drawings, specifications, models, data and bug reports.

RallyMark Legal

“Confidential Information” means information shared by the Parties and designated as Confidential Information about each other’s business that of which is not available to the general public and which may be learned, and/or generated, made, conceived, or contributed by the Parties towards performance of this Agreement. This includes, without limitation, information relating to organization, intellectual property, business and customer information, trade secrets, customer lists, employment policies, personnel, and information about products, processes, including ideas, concepts, projections, Know-how, technology, manuals, drawings, designs, specifications, all data, documents, applications, statements, programs, plans, papers, resumes, records and other documents containing and/or relating to such confidential information, and any and all information of value to Parties, or which gives them an edge in/over competition in the respective market.

RallyMark Legal

6. REPRESENTATION AND UNDERTAKINGS:

The Broker represents that he/it is competent to enter in to this Agreement, solicit, and counsel the Prospective Customers for booking/reservation of the Units in Dubai, United Arab Emirates.

The Broker represents that he / it is duly licensed by the competent authority (ies) and registered under the regulations applicable to the Real Estate Brokers in the Emirates of Dubai, UAE. The Broker confirms that annexed registration certificate is true copy of certificate issued by RERA.

The Broker undertakes that it/he shall keep its/his license operative and valid at all times during the period of this Agreement including licenses of its/his employees and representatives involved in solicitation of the Prospective Customers.

RallyMark Legal

7. SCOPE OF WORK AND ACTIVITIES:

Scope of works provides details of commitment/obligations/actions of parties.

Also provides limitation of the transaction.

  Ex:

Second Party hereby engages the First Party to provide Software Services and deliver Computer Software according to the specifications stated in Schedule-I.

 The First Party shall deliver the Computer Software and grant

license to the Second Party FOR A PERIOD OF 1 YEAR FROM THE INSTALLATION AND SUCCESSFUL TRIAL OF SOFTWARE.

RallyMark Legal

8. COMMENCEMENT OF ACTIVITIES :

This clause shall specify the mode of execution of the transaction.

Ex.The First Party shall commence design and development of

Computer Software within a period not exceeding seven (7) working days from the date of receipt of advance amount at the time of execution of this Agreement. The design and development of Computer Software shall be carried out in the stages.

RallyMark Legal

9. Cost of Computer Software and manner of payment:

  Total cost of Computer Software shall be----------------------------

(-------------------Only)( Herein after referred to as “ Total Cost”) and to be paid by the Second Party to the First Party in the manner as stated herein.

Second Party will pay 25% of Total Cost of Computer Software amounting to ------------------------- (---------------------------------Only) to First Party at the time of execution of this Agreement.

On completion of stage-I development, the First Party shall, within 7 days, raise invoice for 20% of Total Cost of Computer Software amounting to ------------------------- (---------------------------------Only) against the Second Party.

RallyMark Legal

On completion of stage-II development, the First Party shall, within 7 days, raise invoice for 20% of Total cost of Computer Software amounting to ------------------------- (---------------------------------Only) against the Second Party. The Second Party shall, within 7 days from the date of dispatch of invoice, pay the amount to the First Party.

On completion of stage-III development, the First Party shall, within 7 days, raise invoice for 20% of Total cost of Computer Software amounting to ------------------------- (---------------------------------Only) against the Second Party. The Second Party shall, within 7 days from the date of dispatch of invoice, pay the amount to the First Party.

The balance amount of 15% of Total Cost of Computer Software amounting to ------------------------- (---------------------------------Only) shall be paid within 3 days of installation of Computer Software at the Designated Location of the Second Party.

Second Party shall pay all above amounts by way of crossed cheque drawn in favour of “ABC Software Systems Pvt. Ltd” or remit the amount in the designated bank account of the First Party as intimated from time to time. Date of Handing over of Cheque or credit of amount to bank account shall be deemed to the date of payment.

RallyMark Legal

10 .  Intellectual Property Rights:

Second Party is hereby granted a revocable, nonexclusive and indivisible single license for a period 3 years to use/apply the Computer Software exclusively, for its business activities at the Designated Location. For removal of doubts, the Affiliates of the Second Party shall not be allowed to use/apply Computer Software for their business activities even if germane or otherwise to the business activities of the Second Party.

License period of Computer Software shall commence from the date of its installation at the Designated Location.

Computer Software shall be treated as the exclusive intellectual property of First Party and Second Party shall:

RallyMark Legal

(1) utilize such Computer Software or any portions or aspects thereof

(including any methods or concepts utilized therein)solely for

performance business activities under this Agreement;

(2) not modify, disassemble, or decompile such Software, or reverse engineer

any portion of the Computer Software, or permit others to do so, without

First Party’s written consent;

(3) return such Computer Software and any copies, in whole or in part, to

First Party upon its request; and

(4) not reproduce or copy such Computer Software in whole or in part without

written consent of First Party except as provided in Article below. 

Second Party may make copies of Computer Software for testing, installation, backup or archival purposes

RallyMark Legal

11. Non Competition: During the term of this Agreement, the Parties shall not compete

with each with respect to subject matter of this Agreement.

12. Warranties and Indemnity:

Parties agree that in case of breach of any of the provision of this Agreement, a Party shall have right to claim actual losses/damages/costs caused/incurred, in relation to such breach, from the other Party, however maximum liability of a Party under such claim or claims shall not exceed Rs. 100,000/- ( Rupees One Hundred Thousand Only). In no event shall Parties be liable for any indirect or consequential losses/damages as may arise with reference to breach of terms and conditions of this Agreement.

RallyMark Legal

13.  Insurance:

The Parties will be responsible for obtaining all

insurance covers with reference to their roles and

responsibilities as defined in this Agreement.

Respective Parties shall be responsible to bear

insurance costs as may arise therein.

RallyMark Legal

 14. Expiry and Termination of Agreement:

This Agreement shall be valid for a period of 3 years.

In the event of any material breach of, or material default under this Agreement, the non-defaulting party shall give the other party written notice of such breach or default. The other party shall have a period of fifteen (15) days from the date of receipt of such written notice within which the breach or default may be rectified. In the event of failure to cure such breach or default, this Agreement may be terminated immediately by written notice of the non-breaching or non-defaulting party’s election to terminate to the other party.

This Agreement may also be terminated mutually by the Parties thorough a written instrument.

The termination of this Agreement shall be subject to the rights and obligations of the Parties.

RallyMark Legal

15. Independent Party ( Relationship between Parties):

The Agreement has been executed on principal to principal basis and in no event be deemed as to create a relationship of agency or partnership between the Parties.

16. Force Majeure:

Any failure by either Party to carry out any of its obligations shall not be deemed to be a breach of this Agreement, if such failure is caused by a force majeure event. For the purposes of this Agreement force majeure event shall include, inter alia, strikes, lockouts, boycotts, embargoes, governmental restrictions, wars, war-like actions, civil commotion, riots, uprising, revolutions, epidemics, fires, floods, storms, earthquakes, other natural occurrence or any other event beyond the control of such Party.

The performance of the Parties’ obligations shall be suspended for as long as the force majeure event continues to exist.

RallyMark Legal

17. Applicable Laws and dispute settlement:

The terms and conditions of this Agreement and performance hereunder shall be construed in accordance with the laws of India.

In the event of breach of this Agreement, both Parties shall make reasonable efforts to reach an amicable settlement thereof. If the Parties cannot reach an amicable settlement, all disputes arising in connection with this Agreement shall be settled, without recourse to any court of law, under the laws of Arbitration and Conciliation Act, 1996 by a single arbitrator appointed by First Party. Arbitration proceedings shall be held at Lucknow, India. The language of the Arbitration proceedings shall be English.

RallyMark Legal

Ex-2

This Agreement shall be governed in all respects by the laws of the State of Israel.

All disputes arising in connection with this Agreement shall, to the extent possible, be settled under the Rules of International Chamber of Commerce (“ICC”) by a single arbitrator selected by the parties. If the parties are unable to agree upon a single arbitrator within twenty (20) days of written demand there for made by a party, then the single arbitrator will be appointed by the ICC in accordance with the said Rules. The decision of the arbitrator shall be final and binding upon the parties without any right of appeal or review on grounds of law or equity before any judicial or government body. The arbitration proceedings shall be carried out in English language only.

The venue of arbitration proceedings shall be at London, UK.

RallyMark Legal

Ex-3

This Agreement shall be governed in all respects by the laws of India.

All disputes arising in connection with this Agreement shall be settled thorough court proceedings.

The Courts at Lucknow, Uttar Pradesh shall have exclusive jurisdiction.

RallyMark Legal

18. Assignment:

This Agreement can not be assigned by a Party without the written consent of other Party.

19. Modification:

This Agreement and any attachment hereto shall be modified only by an instrument in writing and signed by the Parties.

RallyMark Legal

20. Entire of Agreement:

This Agreement between the Parties supersedes all previous communications, representations, understandings, either oral or written, between the Parties or any official or representative thereof.

21. Form of Notices:

Any notice given by a Party under this Agreement must be in writing and in English language only unless the other Party otherwise notifies in advance. The Notice served on the address or sent by facsimile or electronic mail and marked to the attention of the person mentioned below will be deemed to have been given or served properly:

Where sent by post: three (3) working days after the date of posting by registered post or courier;

RallyMark Legal

Where sent by facsimile: On the day it is faxed as evidenced by a successful transmission report provided that received by the recipient during business hours;

Where sent by electronic mail: On the day electronic mail sent as evidenced by the sent report provided that received by the recipient during business hours;

Where delivered personally: On the date of actual delivery.

RallyMark Legal

21: INTERPRETATION:

Headings are inserted for ease of reference only and have no legal effect. References to articles, clauses, sub clauses are references to articles, clauses, sub clauses of this Agreement.

The singular shall include the plural and vice versa. Words like “it”, “he” “she” “her”, “his”, “their” shall be understood and construed with reference to the subject matter referred therein.

RallyMark Legal

20. SIGNATURE:

IN WITNESS WHEREOF:

Both parties hereto cause this Agreement to be executed as on the day, month and year first above written.

First Party Second Party

Director/ Auth. Signatory Director/ Auth. Signatory 

Witness-1 Witness-2.

RallyMark Legal

Signature: Company : By a person authorized under the articles of

association or by a resolution of board/shareholders.

Co-operative society : By a person authorized in this behalf by or under rules or regulations or bye laws, of the such society or by a resolution of management committee of society.

Firm: by any partner or partners of the firm, authorized (impliedly under sec. 19, Partnership Act, or expressly by power of attorney), on behalf of the firm.

Individual: Self or by a representative duly authorized by Power of Attorney.

RallyMark Legal

1. Minor or mentally ill person : it must be signed by his natural guardian or where a guardian has been appointed by a competent court, then by such guardian.

2. Illiterate persons: Illiterate person who is not able to sign may put thumb mark (as per usage, left thumb mark in the case of males and right thumb mark in the case of females), and if that hand or thumb is defective or injured, then other hand or thumb shall be used, and other person should make an endorsement above or under the mark to show whose mark and of which hand’s thumb it is.

RallyMark Legal

Stamp Duty:Section 29 of the Stamp Act, 1899 provides that Stamp Duty:

1. Instrument listed in Schedule-I, stamp duty shall be paid on the by the person drawing, making or executing such instrument.

2. On Lease Agreement- To be paid by Lessee.

3. On Sale deed: To be paid by Purchaser.

Registration:Section 17 of Registration Act, 1908 requires compulsory registration of documents. Ensure that Agreement is not falling within the list of documents prescribed in referred section.

RallyMark Legal

Validity of Agreement in following situations:

Q.1 If an Agreement is signed by parties on scanned copy.

Q2. If Agreement has been signed at different places.

Q3. Parties agree to jurisdiction of the court at a particular place.

RallyMark Legal

37

RALLYMARK LEGALADVOCATES & LEGAL

CONSULTANTS4th Floor, Premier Car Sales Building (Opp. St. Francis College) Shahnajaf

Road, Lucknow- 226001-India

A corporate legal firmVisit for further details:

www.rallymarklegal.com

© 2016- RallyMark Legal (“RallyMark Legal”). All rights reserved

This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. RallyMark Legal shall not be liable for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, advice should be sought from appropriate consultant.

Thank you

RallyMark Legal