Most contract disputes in India arise from provisions that were in the contract at the time of signing - not from something that changed later. A payment clause that was ambiguous, an IP ownership clause that was silent on pre-existing work, an indemnity clause that had no cap, or a termination clause with no cure period. These problems are visible on a careful read before signing. They are expensive and sometimes impossible to fix after. Related internal resource: "indemnity clause in India" (/resources/indemnity-clause-india)
Section 2: Scope Of Work And Deliverables
Is the scope of work described precisely, or does it use vague language ("as required", "as needed", "reasonably requested")? Are deliverables specifically defined - what is being delivered, in what format, to what standard? Are milestones clearly identified with specific dates and completion criteria? Is there a change management process - what happens when either party wants to change the scope? Does the contract distinguish between what is included and what is excluded from scope?
Section 3: Payment Terms
Is the payment amount clearly stated in figures (and ideally words)? Are the payment trigger events precisely defined - is payment on invoice date, on delivery, on acceptance, or on a fixed date? What is the payment due date? Is there a specific number of days from the trigger event? Is there an interest clause for late payment? At what rate? For MSME suppliers: does the payment timeline comply with the 45-day default under the MSMED Act 2006? Any provision purporting to waive statutory interest is void. Related internal resource: payment terms in MSME service agreements Who bears applicable taxes - GST, TDS? Is GST stated as inclusive or exclusive of the contract price? Are there any set-off rights or deduction rights that the paying party is reserving?
Section 4: Intellectual Property
Who owns IP created under the contract? Is there a clear assignment clause (IP transfers to the client on payment) or a licence clause (contractor retains ownership but grants a licence)? How is pre-existing IP handled - IP owned by each party before the contract, or developed outside the contract? Is there a specific carve-out protecting pre-existing IP? For software development contracts: who owns the source code? Is source code deliverable? Are there any third-party components (open-source software, licensed content) that the contractor is using? Are the licence terms compatible with the client's intended use? Does the IP clause distinguish between assignment of IP and assignment of the right to use IP?
Section 5: Confidentiality
What information is defined as confidential? Is the definition appropriate - not too broad (catches everything) and not too narrow (misses key business information)? What are the obligations on the receiving party - use only for the permitted purpose, not to disclose to third parties? Are there standard exceptions - information already in the public domain, information already known to the recipient, information required to be disclosed by law? Is there a duration on the confidentiality obligation? Perpetual confidentiality is unusual and may not be enforceable for all types of information. For contracts where a standalone NDA has already been signed: does this contract's confidentiality clause conflict with the NDA? Which governs?
Section 6: Representations And Warranties
What representations and warranties is each party making? For the service provider: warranties of skill, quality of work, non-infringement of third-party IP, compliance with applicable laws. For the client: warranties about the accuracy of information provided, authority to grant any licences, non-infringement. What is the remedy if a warranty is breached - indemnification, re-performance, refund? Are the warranties time-limited? What is the warranty period?
Section 7: Indemnity
What events trigger the indemnity obligation? Is the indemnity mutual (both parties indemnify each other for their respective failures) or one-sided? Does the indemnity cover third-party claims (most important - client is sued by a third party because of the service provider's work) or only direct losses between the contracting parties? Is there a procedure for managing indemnity claims - notice requirement, control of defence, right to settle? Does the indemnity have a cap, or is it unlimited? An unlimited indemnity on a small-value contract is commercially disproportionate.
Section 8: Liability Cap
Is there a cap on each party's total liability under the contract? What is the cap amount? Common formulations: fees paid in the last 3 months, total contract value, a fixed amount. What categories of loss are excluded from the cap - typically personal injury, death, fraud, IP infringement, and confidentiality breaches are excluded from liability caps. Are consequential losses excluded? A consequential loss exclusion clause means loss of profit, loss of business, and indirect losses are not recoverable even if caused by breach. Is the liability cap and consequential loss exclusion mutual - does it protect both parties equally?
When to obtain a review
A review is especially useful when…
- — You are about to sign, send, rely on or respond to this document.
- — The draft was copied from an old template or another state.
- — There is money, property, business control, statutory deadline or reputation risk involved.
- — You need Surat/Gujarat-specific drafting, review or negotiation support.
Legal information notice
This article is general legal information for India and Gujarat. It is not a substitute for advice on your specific facts, documents, limitation period, stamp duty position or court strategy.