Escolar Documentos
Profissional Documentos
Cultura Documentos
By
J.MICHAEL SAMMANASU
JIM
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Preparing an Effective Contract
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Sale of Goods Act
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Sale of Goods Act
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Contract Act
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Contract Act
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“Payment Terms”
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“Price Variation” Terms
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How can you secure your
payments within the contract?
Bank Guarantees
• Bank guarantees must be negotiated/written in the
original contract. The actual guarantee, however, is
a separate document issued from the bank to the
Payee (creditor).
• Bank guarantees should be negotiated as
unconditional guarantees given by the Payor
(Debtor) bank to the Payee (Creditor) undertaking to
pay the sum specified in the guarantee on demand
and without demur, if the Payor fails to make the
payment or breaches the terms of the Contract.
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How can you secure your
payments within the contract?
• These are given to the Payee (Creditor) by the
Payor (Debtor’s) bank on behalf of the Payee to
secure:
• An earnest money deposit.
• As a security against performance of the contract or
initial and stage payments made by the buyer.
• Towards liquidated damages or meeting warranty
claims in respect to equipment/goods/services.
• Towards guaranteeing specified operational
parameters of equipment sold pursuant to a contract.
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Bank Guarantees
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Expiring of Bank Guarantees
and Law of Limitation
The Bank will give a guarantee for a specific time period
and not an open-ended guarantee.
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How can you provide for
payments within contracts?
Liquidated Damages (“LD”)
• These are predetermined awards/amounts of damages
written into the contract in case of breach or default of
one of the parties.
• These clauses mitigate the risk associated with long
cumbersome civil litigation and issues relating to
estimating actual loss suffered, by providing for a fixed
amount of compensation in case of a breach of the
contract.
• Courts/Arbitrators do not normally interfere with LD
clause so long as not unduly harsh, and the damages
specified are considered reasonable.
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How can you provide for
payments within contracts?
Penalties
• Section 74 of the Indian Contract Act says that if the
contract contains any stipulation by way of penalty, the
party complaining of breach is entitled whether or not actual
damage or loss is proved to have been caused to receive
from the party who has breached the contract reasonable
compensation not exceeding the amount so named or as
the case may be, the penalty stipulated for.
• Examples of penalties that can be written in the contract:
Forfeiture of earnest money deposit; security deposit;
installment of hire; stipulation for increased interest from
date of default; or forfeiture of a right to money or other
property already delivered.
• Note: Be careful - Penalty Clauses in other countries might
not be enforceable.
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Beware of Drafting Errors
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Dispute Resolution
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Enforcement of a foreign
judgment in India to recover
money
Judgment from a "non-reciprocal territory" (such as the U.S.A.) can be
enforced only by filing a law suit in an Indian Court for a judgment based on
the Foreign Judgment.
• The foreign judgment Is considered only as evidence
• Such a law suit is to be brought within 3 years of the foreign judgment
• A foreign judgment can be considered conclusive by an Indian court if
such judgment
• Has been pronounced by a court of competent jurisdiction.
• Has been given on the merits of the case.
• Is founded on correct view of international law.
• Is contained in proceedings that followed principles of natural justice
• Has not been obtained by fraud.
• The claim or judgment is not contrary to any law in force in India.
Likely a long and slow procedure, as the Indian courts are overburdened.
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Arbitration- Enforcement of a
foreign arbitral award in India
India and U.S. are parties to the New York Convention, 1958.
U.S. arbitral awards on commercial disputes are directly
enforceable in India through foreign award being made a
decree of the court.
Indian courts may grant preliminary injunctions and other
protective orders pending international commercial arbitration.
Grounds for refusing enforcement of foreign arbitral awards.
• Disputed subject matter not capable of settlement by
arbitration under Indian law; or
• Enforcement of award would be contrary to the public policy
of India/fundamental principle of Indian law, interest of
India, justice or morality.
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Arbitration clauses in contracts
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Tips For Contract Management
Quote:
• “A good personal rapport and building a
trustful relationship is absolutely necessary
and critical for successful business
relationships, but it is critical to back that up
with good formal legal documentation that
supports a claim in Court.”
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Thank You
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