Whenever we buy any electronic gadget, order a pizza from Zomato, buy a new refrigerator, we see that both parties make a contract. It includes an offer and an acceptance. However, the legal language is not that simple to define the terms and conditions in layman terms. This blog would be trying to address the nuances of what would be the intricate details related to the differences of 'contract' and 'agreement', 'offer' and 'invitation to offer', 'what are the clauses related to the drafting of a contract, with special emphasis on shipping contracts.
Preamble
It consists of a basic introduction. It talks about the reason for entering into the contract. In addition, it also includes the reasons why the parties signed the contract.
Terms of Contract
These consist of the terms related to the contract. The scope of novation includes areas such as definitions. The terms and conditions are well tailored in this section. In this case, definitions, pertinent sections of the Act relevant to the contract are defined.
Names of parties
This clause tailors the name of the parties in simple and lucid language. The parties are demarcated as 'offeror' and 'offeree', 'transferor' and 'transferee', 'buyer' and 'seller' as the case may be. This has to be done in a bonafide way i.e. it should be free from coercion, misrepresentation or the intention to defraud.
Conditions of performance
The conditions which one have to go through before entering into the contract should be demarcated. There should be clear terms regarding who would be liable for the damages to the goods in case of transit, from the buyer's place to the seller. What would be the scope of redemption of the contract? Can there be any altercation possible in case of a contract?
All this should be mentioned in the contract.
Furthermore, there should be terms and conditions regarding the areas of parties entering into a contract in good faith and with a bonafide intention. Nothing was holding them back. These were no instances of coercion, undue influence,
Nature of goods and the related sections of Sales of Goods Act
It should be mentioned in the contract that about which goods would be termed as 'perishable' or 'non-perishable'. The specific period for the period or the termination of the contract and the related terms should be demarcated. Proper Compliance with the 'conditions' and 'warranties' as defined in the Sales of Goods Act should be there. There should be compliance with the terms and conditions of the contract. The terms should be clearly explained in the 'definitions' clause of the Act.
Caveat Emptor
In case the purpose of the goods are told to the seller, the skills and the experience of the seller would be liable to give the correct goods according to the specific needs of the seller.
Liabilities
The 'limited liability in case the contract is related to the making of a portrait etc can be observed. In case the actual person died, the liability of the heirs should be demarcated.
Jurisdiction
In case of a dispute, the specific jurisdiction of the cases should be demarcated in a clear format. In case there would be a dispute, there should be a clause describing the jurisdiction. This can be the court based in the 'sellers' place or the 'buyers place' as the case may be. Additionally, it is always better to have an arbitration clause.
Remedies for Breach
In the case of a breach, which is of two types i.e. actual breach and anticipatory breach. In case the breach is on the actual date of the fulfilment of the contract, it is termed as an actual breach. In case the breach is before the actual completion of the contract, it will be defined as an anticipatory breach.
Limitation Clause
The limitation, in case of the liability due to some unnatural event such as earthquakes, tsunami, flood etc. there should be the terms which should be mentioned. In case of force majeure clause, which limits the liability in case of Act of God or some unnatural circumstances should be demarcated.
Force Majeure Clause
One should limit the liability related to unnatural events. This includes tsunami, earthquakes, cyclones etc. or any unnatural event. However, if we look at the provisions of the Indian Contract Act, 1872 we see that the person in the lien of the goods or is handling the goods would be liable to the same degree of care and caution to the goods as if he would be the real owner of the goods. This is true in the case of a bailee as well.
Definite time
The period for the performance of the contract should be demarcated. One should be very articulate in crafting the right time and deadlines for the performance of the task.
Let us take a hypothetical case here. Consider that there was a marriage on the 21st of the month. One cannot claim that one would readily accept the receipt of the wedding clothes on the 21st of the following month. It is because the wedding has already taken place.
Dispute resolution clause
In case there is a dispute, there should be a clause describing the jurisdiction. It shall be the court based in the 'sellers' place or the 'buyers place' as the case may be. Additionally, it is always better to have an arbitration clause.
Details of payment
The complete knowledge about the payment, related taxes and GST etc. should be written in the contract. This would create transparency. In the case of the breach, there should be a clear demarcation of the compensation provided to both parties.
Termination
In case of the repudiation of the contract, there should be terms that should be demarcated. There should be terms related to the terms such as whether the legal heirs would be liable or not. What would be the scope of recovery of the costs incurred in case of partial performance etc?
Scope for reformation
In case there would be a change in conditions, there should be enough scope for arbitration, novation, altercation and revising the whole contract. There should be changes demarcated in case there would be some changes between the parties to the contract. In the case where one of the parties would die, would the performance of the contract be laid upon the legal heirs, such conditions should be demarcated.
Representations and Warranties Clause
In this case, the conditions and warranties should be demarcated. Here the 'conditions' and 'warranties' are defined in a well-crafted format. Conditions stand for the condition precedent without the presence of which, the whole contract would be void. In the case of warranties, they would be the conditions subsidiary to the main contract. These do not hold the same weightage as the conditions, however, at the same time, their importance cannot be avoided. These are related to the warrantees. In case the conditions are not fulfilled, the contract can be rejected altogether.
End
The termination of a contract is a smooth ending. Here there would be an acknowledgement that the reader has understood the terms and conditions. Here at the end of the contractual terms', both the parties whether it is the relation of a buyer-seller, transferor-transferee would rectify the terms with their signatures.
Drafting is an art. However, these are some of the basic ideas of how to structure a basic draft. Nevertheless, it is crucial that the drafted terms should comply with equity, natural justice and rule of law. It should not be in violation of the law.
However, when it comes to perfection, and the definition of 'perfect drafting', the sky is the limit.
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