[FAQs] Drafting and Conveyancing relating to various Deeds and Documents

A non-performance of a contract due to the circumstances or events beyond the control of the party, which could not have been avoided with due diligence would fall under force majeure.

• • Upon occurrence of such events neither party shall be entitled to terminate this contract nor shall either party have any claim for damages against the other in respect of such non-performance or delay in performance.
  • It would entitle a party to delay or refuse the performance of the contract, without incurring liability for damage.

It is usual to list the exact circumstances or events, in which genuinely a delay or impossibility of the performance of the obligations by either party may be caused. Such a clause is known as a force majeure clause.

Performance of the contract upon force majeure:

• • Performance of the contract shall be resumed as soon as practicable after such event has come to an end.

Following are the events covered under force majeure: War, hostility, acts of the public enemy, civil commotion, sabotage, fires, floods, explosions, epidemics, quarantine restrictions, strikes, lockouts, power failure or acts of God etc.

Clause of force majeure is drafted as follows:

“If at any time during the continuance of this contract, the performance in whole or in part by either party or any obligation under this contract is prevented or delayed by reason of any war, hostility, acts of the public enemy, civil commotion, sabotage, fires, floods, explosions, epidemics, quarantine restrictions, strikes, lockouts, power failure or acts of God (hereinafter referred to as events), provided notice of the happenings of any such event is given by either party to the other within 21 days from the date of occurrence thereof, neither party shall by reason of such events, be entitled to terminate this contract nor shall either party have any claim for damages against the other in respect of such non-performance or delay in performance, and performance of the contract shall be resumed as soon as practicable after such event has come to an end.”

Following are the important terms and conditions to be incorporated in an agreement to sell and purchase:

• • The vendor has a marketable title in the property agreed to be sold/and has produced the title deeds relating to the property to the purchaser for his inspection.
  • If the property agreed to be sold is a part of a larger property, an agreement as to retention of a particular or all the title deeds to the property by a party should be incorporated in the agreement to sell/purchase.
  • If the property is subject to any prior charge or encumbrance, the parties must agree that the sale is to be subject to such encumbrance or price payable under the agreement included the sum due under the encumbrance.
  • The mode of payment of the price or the balance thereof, if some earnest money or deposit has been paid, should also be stipulated in the agreement.
  • Whether the vendor or the purchaser shall be liable to pay rates, rents, taxes etc. for the period commencing from the date of execution of the agreement to sell/purchase till the execution of the conveyance deed.
  • Interest at a particular rate shall be payable by the vendor on the earnest money paid in the event of his delaying the execution of the conveyance deed.
  • Purchaser shall pay interest at a particular rate, to the vendor, if he fails to pay the balance amount of consideration at the agreed date and the execution of the conveyance deed is delayed on that account.
  • The point of time when possession of the property should be handed over by the vendor to the purchaser.
  • Who shall bear the cost and expense of execution and registration of the sale deed; and if both the parties have to bear the same, in what precise proportions they shall bear.
  • If any brokerage is payable and by whom and at what rate, and at what point of time.

An agreement between the parties is an instrument whereby the parties freely agree to perform certain acts or refrain from doing something, unilaterally or bilaterally. Nothing should be introduced or left out, which would make the agreement void.

Following should be kept in mind while preparing an agreement:-

• • While preparing agreements it is necessary and important that the intention of the parties should be set forth explicitly so as not to leave any room for doubt or future controversy.
  • The language should be simple and the words used should be definite and precise.
  • The use of loose expressions such as “proper”, “reasonable”, should, as far as possible, be avoided.

Omission of minor or basic details

A deed is perfectly valid if it is undated or the date given is an impossible one, e.g. 30th day of February. If no date is given, oral evidence will always be admissible to prove the date of execution. However, it is of great importance to know the date from which a particular deed operates.

In the case of Ramchandra v. Chinnubhai AIR 1945 Mad. 10, it was held that:

“If the material terms of an agreement are clear and specific, omission of certain details, which can be worked out by consent of the parties or in its absence be settled by court will not invalidate the agreement.”

Therefore, the purpose of the instrument is to bind the parties to the terms and conditions agreed upon. The agreement should, therefore, be drafted as deed and nothing material should be left out. However, if the material terms of the agreement are clear and specific, omission of minor or basic details will not invalidate the agreement.

THIS AGREEMENT OF SALE executed on the 3rd day of July, 2018, at New Delhi between Aviksh, S/o……… R/o…… (hereinafter called the “vendor”) of the one part.

AND

Sudharshini, D/o….. R/o…… (hereinafter called the “purchaser”) of the other part.

(The expressions “vendor” and “purchaser” wherever they occur shall unless the context otherwise admits, also mean and include their respective heirs, executors, administrators, legal representatives and assigns).

WHEREAS the vendor is the sole and absolute owner of the property more fully set out in the Schedule I hereunder.

AND WHEREAS the vendor wishes to sell the property as he is shifting his base from India.

AND WHEREAS it is agreed that the vendor shall sell and the purchaser shall purchase the said property for a sum of ` 4500000/- (Rupees Forty five lacs) free from all encumbrances.

NOW THIS AGREEMENT OF SALE WITNESSETH AS UNDER:

1. 1. The vendor states that the vendor holds a marketable title of the property and that the property is free from all encumbrances.
   2. The purchaser has paid to the vendor this day, a sum of `15,00,000 (Rupees Fifteen lacs) by way of earnest money for the due performance of the agreement and the receipt whereof, the vendor do hereby admit and acknowledge.
   3. The time for performance of the agreement shall be three months from the date hereof and it is agreed that the time shall be the essence of this agreement.
   4. The purchaser shall pay to the vendor the balance sale price of `30,00,000 (Rupees Thirty lacs) at the time of registration of the conveyance deed.
   5. The vendor agrees that he will deliver vacant possession of the property to the purchaser on…..
   6. The vendor shall execute the conveyance deed in favour of the purchaser on……
   7. The cost of execution and registration of the sale deed shall be borne by the purchaser.
   8. The brokerage of `50000 (Rupees Fifty thousand) shall be paid equally by both the parties.
   9. The vendor shall hand over all the title deeds of the property to the purchaser/his advocate within fifteen days from the date of this agreement for scrutiny of title deeds. The purchaser shall duly intimate the vendor about the approval of title within ten days of delivery.
   10. If the vendor’s title to the property is not approved by the purchaser, the vendor shall refund the purchaser the earnest money received and on failure to do so within ten days, he shall be liable to repay the same with interest at the rate of 9 per cent per annum.
   11. The vendor shall not sell, dispose of or alienate the property on and from this date of execution of this agreement.
   12. If the purchaser commits a breach of the agreement, he shall forfeit the earnest amount of `1500000 (Rupees Fifteen Lakhs) paid by her to the vendor.
   13. If the vendor commits a breach of the agreement, the vendor shall refund the earnest money of `1500000 (Rupees Fifteen lakhs) paid to him by the purchaser but shall also pay to the purchaser an equal sum by way of liquidated damages.
   14. If at any time during the continuance of this contract, the performance in whole or in part by either party or any obligation under this contract is prevented or delayed by reason of any war, hostility, acts of the public enemy, civil commotion, sabotage, fires, floods, explosions, epidemics, quarantine restrictions, strikes, lockouts, power failure or acts of God (hereinafter referred to as events), provided notice of the happenings of any such event is given by either party to the other within 21 days from the date of occurrence thereof, neither party shall by reason of such events, be entitled to terminate this contract nor shall either party have any claim for damages against the other in respect of such non-performance or delay in performance, and performance of the contract shall be resumed as soon as practicable after such event has come to an end.
   15. If any party commits a breach of the agreement, the other shall be entitled to file a suit for specific performance of the contract.
   16. Any notice may be sent through the post to the last known place of abode or business of the party to whom it is given, and if so sent under a certificate of posting shall be taken to be sufficient service thereof.

SCHEDULE OF PROPERTY

Flat No. 304, admeasuring 1500 sq.ft. in Poornaprajna Co-operatives Housing Society Limited, the ownership is evidenced by Share Certificate No. PP 37. Bound on its:-

North is……….

South is……….

East is…………

West is………

IN WITNESS WHEREOF, the parties aforementioned have signed this deed on the date above mentioned in token of acceptance of the terms thereof in the presence of the following witnesses:-

Witness I

Name:

Father’s Name:

Address:

Witness II

Name:

Father’s Name:

Address:

Building contracts are contracts executed between owners of land and developers/builders of land wherein the owner of the land agrees to get construction done at his land and the builder agrees to carry out such construction for the owner for a consideration.

Building contracts must be drawn in accordance with the provisions of the Indian Contract Act, 1872. Such contracts must contain the following:-

• • These contracts must contain the essential ingredients of a contract, such as, a proposal, acceptance, lawful consideration, lawful object, competence of parties to the contract, free consent etc.
  • Building contract should clearly state the full names, addresses to which all communications, including notices and judicial processes can be sent.
  • The capacity of each of the contracting parties and, in the case of firm, partnership or company, the name or complete style of the firm, partnership or company, its legal status, the date and place of its incorporation, registered office must be stated.
  • It must contain construction details, time lines for completion, clauses for default, payment schedules, responsibility for obtaining municipal permits etc.
  • In such contracts time is the essence of the contract.

• • Commercial agency contract
    Various businesses are conducted by the traders through the agency of independent agents appointed for the purpose. Therefore contracts executed between traders also known as principals and such agents are known as commercial agency contracts. Such agents locate customers for the principal’s goods, have implied authority to deal with the goods of the principal. They may allow credit terms to customers and receive payment from the customers on behalf of the principal.

• • Del credere agency
    This type of agency combines agency with guarantee. A del credere agent is one who, for an extra remuneration undertakes the liability to guarantee the due performance of the contract by the buyer.

By reason of his charging a del credere commission, he assumes responsibility for the solvency and performance of the contract by the vendee and thus indemnifies his principal against loss. He, therefore, gives an additional security to the seller.

Therefore, del credere commission is the premium or price given by the principal to the agent, which presupposes a guarantee. A del credere agent like any other agent, is to sell according to the instructions of his principal. He is distinguished from other agents simply in this that he guarantees that those persons to whom he sells, perform the contracts which he makes with them.

Various businesses are conducted by the traders through the agency of independent agents appointed for the purpose. Contracts executed between traders/principals and agents are known as commercial agency contracts.

Ingredients that must be incorporated in a contract of agency are as follows:

1. 1. Authority should be given either expressly or impliedly to bind his principal.
   2. While the principal should not be a minor, an agent could be a minor.
   3. Consideration is not necessary for an agency contract.
   4. For the acts of the agent, the principal is liable unless the principal has exceeded his authority.
   5. The authority of an agent extends to the doing of all that is necessary and collateral to the doing of the main act.
   6. The obligations under the contract of agency is not assignable unless:

a. The nature of the business necessitates such assignment.
b. Customs of usage of trade in the locality with regard to the business permit such assignment.
c. Such assignment is expressly permitted by the contract of agency.

• • Collaboration agreements

Agreements where two parties join hands for exchange of technical know-how, technical designs and drawings, training of technical personnel of one of the parties in the manufacturing or research and development divisions of the other party are said to enter into “collaboration agreements”.

• • Foreign collaboration agreement

Collaboration between a party within India and a party abroad is known as foreign collaboration agreement.

Foreign collaboration in Indian Economy

A large number of Indian industrialists have already entered into long and short-term collaboration arrangements with foreign companies, firms etc. for seeking all possible avenues for obtaining technical know-how in the fields of industry, agriculture, mining, oil exploration, power generation, etc. for the development of the nation.

Collaboration agreement between a party within India and a party abroad is known as foreign collaboration agreement.

Important guidelines required to be followed while entering into a foreign collaboration agreement are as follows:-

1. Investment: Where in a foreign collaboration agreement, equity participation is involved, the value of the shares to be acquired about be brought in cash.

2. Lump sum payment: The amount agreed to be paid by an Indian party to a foreign collaborator for technology transfer should be paid in three instalments as follows:

a. One-third to be paid after the agreement has been approved by the Central Government.
b. One-third on transfer of the technical documents.
c. One-third on the commencement of commercial production.

3. Royalty: Royalty is a form of consideration payable to a foreign collaborator ranging from 3-5%.

4. Duration of agreement: These types of agreements are made for eight years subject to maximum of ten years. The period is approved by the Government usually for five years from the date of the agreement in the first instance or five years from the date of commencement of commercial production; the total period, however, not exceeding eight years from the date of the agreement.

5. Renewal or extension of agreement: The Central Government may consider an application for renewal of a foreign collaboration agreement or for extension of its period on merit.

6. Remittances: Remittances to foreign collaborators are allowed only on the basis of the prevailing exchange rates.

7. Sub-licensing: The terms of such sub-licensing will be as mutually agreed between all the concerned parties including the foreign collaborator. Sub-licensing is, however, subject to the Central Government’s approval.

8. Exports: No foreign collaboration agreement shall be allowed to contain any restriction on the free export to all countries, except in a case where the foreign collaborator has licensing arrangements in which case the countries concerned shall be specified.

9. Technicians: The terms of service, remuneration etc. of technicians to be deputed must be agreed. They are subject to approval of the Reserve Bank of India.

10. Training: Provision shall be made in the agreement for adequate faci­lities for training of Indian technicians for research and development.

THIS AGREEMNET is made on 3rd day of July 2015 between DINSON INC., incorporated under the appropriate laws of the Malaysia having its office at 5 Seventh Street, Malaysia (hereinafter referred to as DINSON) of the ONE PART.

AND

HIMALAYA AGRO PVT LTD a Company registered under the Companies Act, 2013 having its registered office at 99 Chowringhee Road Calcutta, West Bengal-700071 (hereinafter referred to as HIMALAYA AGRO) of the OTHER PART.

WHEREAS DINSON carries on business of food processing and intends to extend its market here in India and elsewhere.

AND WHEREAS HIMALAYA AGRO carries on business of processing and marketing of food products and intends to extend its market here in India and outside India.

AND WHEREAS DINSON and HIMALAYA AGRO intend to co-operate in manufacturing/dealing in and exporting food products in India and abroad for mutual benefit by setting up a new joint venture company.

NOW THIS DEED WITNESSES AS FOLLOWS:

1. 1. A Joint-stock company would be formed under the name and style of Indo Malaysian Company Pvt. Ltd. under the Companies Act, 2013 having its Registered Office at 99 Chowringhee Road, Calcutta – 700071.
   2. DINSON and three of its nominees and HIMALAYA AGROand three of its nominees would be the subscribers to the Memorandum and Articles of Association of the said company to be incorporated.
   3. The shareholding in the Share Capital of the said company to be incorporated would be in equal proportions between DINSONand HIMALAYA AGRO.
   4. The Memorandum and Articles of Association of the company proposed to be incorporated would be settled in mutual consultation and the same would govern the rights and obligations of DINSONand HIMALAYA AGROin relation to the said proposed company.
   5. DINSONwill be allotted shares in the said new company partly in cash and partly towards the cost of plant, machinery and equipment to be supplied by DINSONto the new company.
   6. DINSONwill furnish necessary technical assistance and expertise to the new company for assembling, installation, start-up and for smooth running of the manufacturing and selling processes as might be required by the new company from time to time.
   7. DINSONwill furnish to the new company all other technical assistance and advice in relation to the operation of the plant and machinery, repairs thereof, testing facilities, training facilities and Research & Development facilities for successful running of the business of the new company.
   8. The shares that would be allotted by the new company should not be transferred by either DINSONor HIMALAYA AGROwithin a period of five years from the date of allotment and thereafter if any of the parties intends to transfer any share then the same shall be offered first to the other party at a price to be determined by a valuer to be appointed by mutual agreement and in absence by application to the Indian Chamber of Commerce.
   9. The new company will manufacture food products and the same would be marketed in India and exported to other countries under the name and style of………………
   10. DINSONwill buy 75% of the products of new company for exporting; to other countries through its own organisations or outlets at a remunerative price not below the price at which the products are sold in India.
   11. Neither party shall carry on their own business in a manner which will directly adversely affect the business and profitability of the new company.
   12. The expenses for the setting up and promotion of the new company would be shared equally by DINSONand HIMALAYA AGRO.
   13. The consideration for allotment of shares of the new company to DINSONshall be paid in cash and in kind such as by transfer of immovable properties for the new company. The valuation of such immovable properties including office accommodation would be decided by mutual agreement between DINSONand HIMALAYA AGRO.
   14. Any disputes or differences arising in relation to this agreement, its construction, validity, performance, breach or any other question shall be referred to the Indian Chamber of Commerce for settlement by Arbitration or Conciliation in Calcutta and the decision of the said Arbitrator shall be final and binding on both the parties.
   15. This agreement is made subject to obtaining approvals of the Indian Government and other concerned authorities.
   16. In the event certain additions or alterations are required under this agreement due to imposition of certain terms and conditions by Government of India or appropriate authority granting the approval shall be incorporated in this agreement by way of a supplemental agreement and if required the Memorandum and Articles of Association of the new company would also be in conformity with such directions or approvals of the appropriate authorities.

IN WITNESS WHERE OF the parties hereto have signed, sealed and delivered these presents on the day, month and year first above-written.

THIS AGREEMNET is made on this 3rd day of July 2010 between OMEGA LTD INC. incorporated under the appropriate laws of the United States of America having its office at 5 Seventh Street, New York (hereinafter referred to as OMEGA LTD) of the ONE PART

AND

ULTRA VISION LTD. a company registered under the Companies Act, 2013 having its office at 99 Chowringhee Road Calcutta 700071 (hereinafter referred to as “ULTRA VISION”) of the OTHER PART.

WHEREAS OMEGA LTD carries on business of technical know – how and assistance for the proposed textile machinery manufacturing and has worldwide market and intends to extend its market here in India and elsewhere.

AND WHEREAS ULTRA VISION LTD. carries on business in India and intends to collaborate with OMEGA LTD.

NOW THIS DEED WITNESSES AS FOLLOWS:

1. 1. A Joint-stock company would be formed under the name and style of Indo-American Company Pvt. Ltd. under the Companies Act, 2013 having its Registered Office at 99 Chowringhee Road, Calcutta 700 071.
   2. OMEGA LTDand three of its nominees and ULTRA VISIONand three of its nominees would be the subscribers to the Memorandum and Articles of Association of the said company to be Ultra incorporated.
   3. The shareholding in the Share Capital of the said company be in equal proportions between OMEGA LTDand ULTRA VISION.
   4. The Memorandum and Articles of Association of the company proposed to be, would be settled in mutual consultation and the same would govern the rights and obligations of OMEGA LTDand ULTRA VISION in relation to the said proposed company.
   5. OMEGA LTDwill be allotted shares in the said new company partly in cash and partly towards the know-how to be supplied by OMEGA LTD to the new company and in consideration for assignments by OMEGA LTDof its Patent Rights, Trade marks, Trade Names and Licences in favour of the new company.
   6. OMEGA LTD.will furnish necessary technical assistance and expertise to the new company for assembling, installation, start-up and for smooth running of the manufacturing and selling processes as might be required by the new company from time to time.
   7. The shares that would be allotted by the new company should not be transferred by either OMEGA LTD or ULTRA VISIONwithin a period of five years from the date of allotment and thereafter if any of the parties intends to transfer any share then the same shall be offered first to the other party at a price to be determined by a Valuer to be appointed by mutual agreement and in absence by application to the Indian Chamber of Commerce.
   8. ULTRA VISION LTDwill buy 75% of the products of new company for exporting; to other countries through its own organisations or outlets at a remunerative price not below the price at which the products are sold in India.
   9. Neither party shall carry on their own business in a manner which will directly adversely affect the business and profitability of the new company.
   10. The expenses for the setting up and promotion of the new company would be shared equally by OMEGA LTDand ULTRA VISION.
   11. The consideration for allotment of shares of the new company to ULTRA VISIONshall be paid in cash and in kind such as by transfer of immovable properties for the setting up of factory and making arrangement for the office accommodation of the new company. The valuation of such immovable properties including office accommodation would be decided by mutual agreement between OMEGA LTDand ULTRA VISION.
   12. Any disputes or differences arising in relation to this agreement, its construction, validity, performance, breach or any other question shall be referred to the Indian Chamber of Commerce for settlement by Arbitration or Conciliation in Calcutta and the decision of the said Arbitrator shall be final and binding on both the parties.
   13. This agreement is made subject to obtaining approvals of the Indian Government and other concerned authorities.

IN WITNESS WHEREOF the parties hereto have signed, sealed and delivered these presents on the day, month and year first above-written in the presence of:

Aim of Arbitration: Civil litigation takes years and years to settle simple disputes. Arbitration is a means devised to quick and economical settlement of a dispute between two contracting parties. It saves time, energy and money of the parties and leads to a speedy settlement of disputes.

Pre-requisites of Arbitration

Every arbitration must have the following three pre-requisites:

a) A dispute between parties to an agreement, requiring a settlement.
b) Its submission for a settlement to a third person in writing: A submission is an agreement between two contracting parties to take decision from a third mutually-agreed party, to whom they refer the dispute. The arbitration pre-supposes that the arbitrator must accept the office of arbitrator to perfect his appointment.
c) A decision by such third person according to his own judgment based on the facts and circumstances of the dispute, which is binding on both the parties.

Arbitration is an alternate dispute resolution mechanism. Following are the benefits of arbitration:-

• • Is a means devised to quick and economical settlement of a dispute between two contracting parties, who also agree as part of the main agreement to refer dispute or difference arising out of the terms and conditions of the agreement to a third person, known as an arbitrator to give his award, which shall be binding on both the parties.
  • Civil litigation takes years and years to settle simple disputes. Rigorous procedures of civil Courts given under Code of Civil Procedure, 1908 are not applicable on Arbitration proceedings. The parties can agree upon the procedures to be followed in arbitration. Thus, arbitration is a method to ensure settlement of disputes and helps in saving time and money.

Decision of an arbitrator is called an award. Awards can be final or interim.

• • Prequisites of an award
    The general requisites of an award are:-

a. It must be consistent with the submission.
b. It must be certain.
c. It must be fair to the parties.
d. It must be final.
e. Its implementation must be possible.

• • According to Section 31 of Arbitration and Conciliation Act, 1996, following are the contents of an award:-

a. Must be in writing
b. Must state reasons for award unless otherwise agreed by the parties.
c. Must be dated and signed by the arbitrator
d. Must state the place of arbitration
e. Signed copy of the award must be delivered to all the parties.

• • Structure of award
    A structure of award contains the recitals, operative part, costs if any, date and place of award.

• • Section 35 of Arbitration and Conciliation Act, 1996
    An award shall be final and binding on the parties and persons claiming under it.

Arbitration is a means devised to quick and economical settlement of a dispute between two contracting parties, who also agree as part of the main agreement to refer dispute or difference arising out of or touching upon the terms and conditions of the agreement to a third person to give his judgment, which shall be binding on both the parties.

Finality of award

According to Section 35 of Arbitration and Conciliation Act, 1996, an award shall be final and binding on the parties and persons claiming under it. However, if the same is not acceptable to either of the parties, then objections can be made under section 34 of the Arbitration and Conciliation Act, 1996.

Decision of an arbitrator is called an award. Awards can be final or interim. Arbitration award is a determination on the merits by an arbitration tribunal in arbitration, and is analogous to the judgment in the Court of Law.