Drafting Legal Documents and Contracts – FAQs and Process

Though, contracts, deeds etc. can be written, oral, or implied also. However, it is always preferable to enter into written contracts as it is always difficult to prove the terms of an oral or implied contract than those of a written one.

Some of the benefits of having a written contract are –

• The process of writing down the contract’s terms and signing the contract forces both parties to think about and be precise about the obligations they are undertaking. With an oral contract, it is too easy for both parties to say “yes” and then have second thoughts.
• With an oral contract, the parties may have different recollections of what they agreed on (just as two witnesses to a car accident will disagree over what happened).
• A written agreement eliminates disputes over who promised what.
• Some types of contracts must be in writing to be enforced. The Copyright Act, 1957 requires a copyright assignment or exclusive license to be in writing.
• If you have to go to court to enforce a contract or get damages, a written contract will mean less dispute about the contract’s terms as the burden of proof lies with you.

Section 3 of the Indian Evidence Act, 1872 states that a “Document” means any matter expressed or described upon any substance by means of letters, figures or marks or by more than one of those means, intended to be used or which may be used, for the purpose of recording that matter.

• A writing is a document;
• Words printed, lithographed or photographed are document;
• A map or plan is a document;
• An inscription on a metal plate or stone is a document;
• A caricature is a document.

Documents for the formation of an Entity –

• Memorandum of Association & Articles of Association
• Partnership Deed
• LLP Incorporation document and LLP Agreement
• Trust Deed Conversion of Partnership into Limited Company
• Association of Persons agreement
• Section 8 company – Memorandum and Articles of Association
• Memorandum of Association and Rules and Regulations of Society

Documents relating to Cyber Law –

• Software Services Agreement
• Internet services agreement
• Privacy Policy and User Agreement
• Software Escrow Agreement
• Website Development Agreement
• Internet Gateway Merchant Legal Agreement
• Technology-related contracts

The process by which disputes between the parties are settled or brought to an amicable result without the intervention of Judicial Institutions and without any trail is known as Alternative Dispute Resolution (ADR). ADR offers to resolve all type of matters including civil, commercial, industrial and family etc., where people are not being able to start any type of negotiation and reach the settlement.

Types of ADR –

• Arbitration – The dispute is submitted to an arbitral tribunal which makes a decision (an “award”) on the dispute that is mostly binding on the parties. It is less formal than a trial, and the rules of evidence are often relaxed. Generally, there is no right to appeal an arbitrator’s decision. Except for some interim measures, there is very little scope for judicial intervention in the arbitration process.
• Conciliation – A non-binding procedure in which an impartial third party, the conciliator, assists the parties to a dispute in reaching a mutually satisfactory agreed settlement of the dispute. Conciliation is a less formal form of arbitration. The parties are free to accept or reject the recommendations of the conciliator. However, if both parties accept the settlement document drawn by the conciliator, it shall be final and binding on both.
• Mediation – In mediation, an impartial person called a “Mediator” helps the parties try to reach a mutually acceptable resolution of the dispute. The mediator does not decide the dispute but helps the parties communicate so they can try to settle the dispute themselves. Mediation leaves control of the outcome with the parties.

Agreement of Reference to Common Arbitrator

THIS AGREEMENT is made at                        on this              day of                   

BETWEEN

Mr. A                                      s/o                                           residing at                                      hereinafter referred to as the Party of the First Part.

AND

Mr. B s/o                                        residing at                                                     hereinafter referred to as the Party of the Second Part.

WHEREAS by an Agreement (Building contract) dated the   day of               , 20  entered into between the parties hereto the Party of the First Part entrusted the work of constructing a building on his plot of land situated at… to the Party of the Second Part on the terms and conditions therein mentioned.

AND WHEREAS the Party of the Second Part has commenced the construction of the building according to the plans sanctioned by the Municipal Corporation and has completed the construction to the extent of the 1st floor level.

AND WHEREAS the Party of First Part has made certain payments to the Party of the Second Part on account but the Party of the Second Part is pressing for more payments which according to the Party of the First Part he is not bound to pay and, therefore the work has come to a standstill.

AND WHEREAS disputes have therefore arisen between the parties hereto regarding the interpretation of certain provisions of the said agreement and also regarding the quality of construction and delay in the work.

AND WHEREAS the said agreement provides that in the event of any dispute or difference arising between the parties the same shall be referred to arbitration of a common arbitrator if agreed upon or otherwise to two Arbitrators and the Arbitration shall be governed by the provisions of the Arbitration & Conciliation Act, 1996.

AND WHEREAS the parties have agreed to refer all the disputes regarding the said contract to Mr.                                             Architect, as common Arbitrator and have proposed to enter into this Agreement for reference of the disputes to the sole arbitration of the said Mr.  .

Now It Is Agreed Between the Parties Hereto as Follows –

• That the following points of dispute arising out of the said agreement dated                               are hereby referred to the sole arbitration of the said    for his decision and award.
• The points of dispute are –

1. 1. Whether the Party of the Second Part has carried out the work according to the sanctioned plans and specifications.
   2. Whether the Party of the Second Part has delayed the construction.
   3. Whether the Party of the Second Part is overpaid for the work done up to now.
   4. Whether Party of the First Part is bound to make any further payment over and above the payments made up to now for the work actually done.
   5. All other claims of one party against the other party arising out of the said contract up to now.

• The said Arbitrator shall allow the parties to file their respective claims and contentions and to file documents relied upon by them within such reasonable time as the Arbitrator may direct.
• The said Arbitrator shall give hearing to the parties either personally or through their respective Advocates but the Arbitrator will not be bound to take any oral evidence including cross examination of any party or person.
• The said Arbitrator shall make his Award within a period of four months from the date of service of a copy of this agreement on him by any of the parties hereto provided that, the Arbitrator will have power to extend the said period from time to time with the consent of both the parties.
• The Arbitrator will not make any interim award.
• The Arbitrator will have full power to award or not to award payment of such costs of and incidental to this arbitration by one party to the other as he may think fit.
• Subject to the provisions of the Arbitration & Conciliation Act, 1996 the award will be binding on the parties hereto.
• The Arbitration shall subject to what is herein provided be governed by the provisions of the Arbitration and Conciliation Act, 1996.

IN WITNESS WHEREOF the parties have put their respective hands the day and year first hereinabove written. SIGNED by the within named

Mr. A                            Signed by the within named Mr. B      

In the presence of –

Model Arbitration clauses in an agreement

1. Every dispute, difference, or question which may at any time arise between the parties hereto or any person claiming under them, touching or arising out of or in respect of this agreement (deed) or the subject matter thereof shall be referred to the arbitration of XY, or if he shall be unable or unwilling to act, to another arbitrator to be agreed upon between the parties or failing agreement to be nominated by  or, failing agreement to two arbitrators one to be appointed by each party to the difference (whether consisting of one or more than one person) and in case of difference of opinion between them to an umpire appointed by the said two arbitrators before entering on the reference and the decision of the arbitrator (or such arbitrators, or umpire as the case may be) shall be final and binding on the parties.
2. In the event of any dispute, difference or question arising out of or in respect of this agreement or the commission of any breach of any terms thereof or of compensation payable thereof or in any manner whatsoever in connection with it, the same shall be referred to the Chamber of Commerce  (or the Association of                            ) for arbitration as provided in Rules framed by the said Chamber (or Association) for the purpose. The decision or award so given shall be binding on the parties hereto.
3. All disputes arising between the partners as to the interpretation, operation, or effect of any clause in this deed or any other difference arising between the partners, which cannot be mutually resolved, shall be referred to the arbitration of failing him to any other arbitrator chosen by the partners in writing. The decision of such an arbitrator shall be binding on the partners.

Employment agreement is an agreement that is entered into between two parties, i.e., the employer and employee. It is a document that describes the responsibilities and duties expected of an employee. It also describes the profile of the job and the title. The document ensures that the employee knows his place in the organisation and what is expected of him.

Employment agreements should be created in a way that is just and fair for all the employees. If this is followed, employees will do their tasks and responsibilities well and without any negative emotions toward their employers.

Usually, employment contracts contain only vague references to the “policies and procedures to which the employee will be bound”. The employer should provide the employee with all of the company policies and other documents that relate to the contract or are referred to in the contract.

• Identify the long-term requirement of employees.
• Identify the workmen and employees not covered under definition of workmen, respectively.
• Local laws of the State should be borne in mind while drawing up the contracts.
• Issue appointment letters which clearly define the employment terms and conditions.
• Employment contracts, where necessary, should be put in place with clauses for wages, benefits, non-compete, confidentiality, term, termination etc.
• Depending on the requirement, use fixed term contracts for workmen.
• The terms and conditions of the employment should be clearly explained to employees before execution and should be drafted without any ambiguity.

An AGREEMENT made on this          day of                 , 20                       

BETWEEN

                                                                    (Name of Company) represented by its Managing Director                                                         (hereinafter called the “Employer” of the One Part.

AND

                                                       (Name of the Employee & his details) (hereinafter called the “Employee” of the Other Part.

WHEREAS

The Employer is engaged in the business of                                              and maintains business premises at                                                                          .

• The employer wants to appoint a suitable person to work as for his business concern;
• The Employee,  the  party  of  the  other  Part,  has  agreed  to  serve  as

                                            for the business concern on the terms and conditions hereinafter set forth.

Now This Agreement Witnessed and the Parties Hereto and Hereby Agree as Follows –

• Agreement to Employ and Be Employed – The Employer hereby employs the Employee as                        at                                         and the Employee hereby accepts and agrees to such employment.
• Description of Employee’s Duties – Subject to the supervision and pursuant to the orders, advice, and direction of the Employer, the Employee shall perform such duties as are customarily performed by one holding such position in business concern. The Employee shall additionally render such other and unrelated services and duties as may be assigned to him from time to time by employer.
• Manner of Performance of Employee’s Duties – The Employee shall at all times faithfully, industriously, and to the best of his/her ability, experience, and talent, perform all duties that may be required of and from him/her pursuant to the express and implicit terms hereof, to the reasonable satisfaction of employer. Such duties shall be rendered at the abovementioned premises and at such other place or places as employer shall in good faith require or as the interests, needs, business, and opportunities of employer shall require or make advisable.
• Duration of Employment – The term of employment shall commence on                       and continue till such date the Employee works in the business concern subject, however, to prior termination as provided in Clause 9 hereof or by resignation by the Employee. In case of resignation, the Employee shall give one month prior notice to the Employer and on failure to do so, shall forego his salary for the notice period.
• Remuneration – The Employer shall pay a salary of                                  to the Employee for the services rendered to the business concern. The details of the salary are mentioned in Annexure A of the document. In addition to the foregoing, the employer shall also reimburse the expenses incurred by the Employee while travelling for and on behalf of the Employer pursuant to the employer’s direction.
• Employee’s Loyalty to Employer’s Interest – The Employee shall devote all his time, attention, knowledge, and skill solely and exclusively to the business and interests of the Employer, and the Employer shall be entitled to all benefits, emoluments, profits, or other issues arising from or incident to any and all work, services, and advice of the Employee. The Employee expressly agrees that during the term hereof he will not be interested, directly or indirectly, in any form, or manner, as partner, officer, director, stockholder, advisor, employee, or in any other form or capacity, in any other business similar to the employer’s business or any allied trade, except that nothing herein contained shall be deemed to prevent or limit the right of employee to invest any of his surplus funds in the capital stock or other securities of any corporation whose stock or securities are publicly owned or are regularly traded on any public exchange.
• Non-Disclosure of Business Information – The Employee will not at any time, in any form or manner, either directly or indirectly divulge, disclose, or communicate to any person, firm, or corporation in any manner whatsoever any information of any kind, nature, or description concerning any matters affecting or relating to the business of employer, including, without limitation, the names of any its customers, the prices it obtains or has obtained, or at which it sells or has sold its products, or any other information concerning the business of employer, its manner of operation, or its plans, processes, or other date of any kind, nature, or description without regard to whether any or all of the foregoing matters would be deemed confidential, material, or important.
  The parties hereby stipulate that, as between them, the foregoing matters are important, material, and confidential, and gravely affect the effective and successful conduct of the business of employer, and its good will, and that any breach of the terms of this section is a material breach of this agreement.
• Leave – The Employee will be entitled for one day leave for a completed month of service. Apart from this the employee will also be entitled to medical leave of 15 days in a year subject to submission of medical certificate in case the medical leave period exceeds three days.
• Termination of Service

1. 1. The Employer shall terminate the services of the Employee without any previous notice, if the employer is satisfied based on medical evidence that the employee is unfit and is likely for considerable period to continue to be unfit by reason of ill health for discharge of his/her duties.
   2. The Employer shall terminate the services of the Employee without any previous notice, if the Employee is found guilty of any insubordination, intemperance, moral turpitude or other misconduct or of any breach or non-performance of any of the provisions of these conditions, or if otherwise found unsuitable for the efficient performance of his/her duties.

• Settlement of Dispute – Any claim or controversy that arises out of or relates to this agreement, or the breach of it, shall be settled by arbitration in accordance with the provisions of the Arbitration and Conciliation Act, 1996 and relevant labour legislations.
• Waiver or Modification Effective Only in Writing – No waiver or modification of this agreement or of any covenant, condition, or limitation herein contained shall be valid unless in writing and duly executed by the party to be charged therewith. Furthermore, no evidence of any waiver or modification shall be offered or received in evidence in any proceeding, arbitration, or litigation between the parties arising out of or affecting this agreement, or the rights or obligations of any party hereunder, unless such waiver or modification is in writing, duly executed as aforesaid.
• Governing Law – This agreement and performance hereunder and all suits and special proceedings hereunder shall be construed in accordance with the laws of the State of                              , India.
• Binding Effect of Agreement – This agreement shall be binding on and inure to the benefit of the respective parties and their respective heirs, legal representatives, successors, and assigns.

In Witness Whereof

On behalf of the party of the ONE PART and by the party of the OTHER PART have hereto and hereby set their hands the day, month and year above mentioned –

1. Signature of the Party of the ONE PART (Employer)
2. Signature of the Party of the OTHER PART (Employee)