Contract Review Checklist for India: 12 Things to Check Before You Sign

What should I check before signing a contract in India?

Start with a simple question: what am I promising, and what happens if either side fails? Everything in a contract answers one of those two questions. The checklist below follows the order in which most Indian contracts are drafted, so you can read alongside it.

Do not sign with blanks. Ask for the final, complete version, initial every page, and keep a signed copy. If the other side says a clause is "standard" or "never enforced", ask for it to be deleted. A clause that is never enforced costs them nothing to remove.

The 12-point contract review checklist

• 1. Parties: full legal names, addresses, registration numbers for companies or LLPs, and the correct entity, not a group brand name.
• 2. Authority and capacity: section 11 of the Indian Contract Act, 1872 requires parties to be adults of sound mind; companies sign through authorised persons.
• 3. Scope: a clear description of what is being supplied, done or let, with deliverables and timelines.
• 4. Price and payment: amount, taxes, invoice dates, payment deadline, late payment interest, and what triggers payment.
• 5. Term and renewal: start date, end date, and whether it renews automatically.
• 6. Termination: who can exit, on what notice, with or without cause, and what is payable on exit.
• 7. Liability and indemnity: any cap, any exclusions, and whether your indemnity is unlimited.
• 8. Penalties and forfeiture: fixed amounts payable on breach or early exit.
• 9. Intellectual property and confidentiality: who owns what is created, and how long secrecy lasts.
• 10. Restrictive clauses: non-compete, non-solicit, exclusivity and lock-in.
• 11. Disputes: governing law, courts with jurisdiction, and arbitration seat and appointment.
• 12. Formalities: stamp duty, registration where required, signatures, witnesses and the date of execution.

Which clauses carry the most risk?

Indemnity clauses are the most underestimated. An indemnity is a promise to make good the other side's losses, and if it has no cap, your exposure can exceed the value of the contract many times over. Ask for a mutual indemnity limited to your own breach, negligence or misconduct, with a cap linked to fees paid.

Penalty clauses come next. Section 74 of the Indian Contract Act, 1872 limits recovery on breach to reasonable compensation not exceeding the amount named. Proof of loss is generally required, though courts may award a genuine pre-estimate where loss is difficult to prove. So a large fixed figure is not automatically recoverable, but it gives the other side a starting point, and you may have to litigate to bring it down.

Termination clauses deserve a careful second read. Check whether the other side can end the contract "for convenience" on short notice while you are locked in, and what is payable on exit. A fair clause gives both sides the same notice period, pays you for work done up to termination, and says what happens to advances, deposits and work in progress.

Auto-renewal clauses cost money quietly. Note the cancellation window in your calendar on the day you sign.

Clauses Indian law treats differently

How to check the dispute resolution clause

Three things matter: governing law, forum and process. For a contract between Indian parties, Indian law should govern. The forum clause decides where you will have to litigate or arbitrate. A Delhi tenant or freelancer forced to arbitrate in Chennai faces real cost, so negotiate for a neutral or local seat.

If there is an arbitration clause, check who appoints the arbitrator. The Supreme Court has held that a party with an interest in the dispute cannot unilaterally appoint a sole arbitrator, and section 12(5) of the Arbitration and Conciliation Act, 1996 makes certain persons ineligible, such as the other side's employees. A clause giving one side's managing director the right to name the arbitrator is a red flag. Ask for appointment by mutual consent or by an arbitral institution.

Stamping, registration and signatures

Stamp duty is a State subject. An unstamped or under-stamped document faces admissibility problems under section 35 of the Indian Stamp Act, 1899 or the equivalent section of your State's stamp law, until duty and penalty are paid. Pay duty before or at the time of signing, ideally through your State's e-stamping system, and use the correct article for the document type.

Registration is required for certain documents under section 17 of the Registration Act, 1908, including leases from year to year or for more than one year, and documents transferring interests in immovable property. Maharashtra requires registration of all leave and licence agreements regardless of term.

Electronic signatures are valid for most commercial contracts under the Information Technology Act, 2000, but the Act excludes powers of attorney, trusts, wills, negotiable instruments other than cheques, and contracts for sale or conveyance of immovable property. Sign those on paper with the required formalities.

Rent agreement checklist: what should a rent agreement contain?

Rent agreements are the contracts most Indians sign most often, and they follow a familiar template that hides real differences. Read these points in every draft, even one the broker says is standard.

• Names of all owners as on the title or tax records, and all adult occupants if the landlord requires it.
• Exact address, with furniture, fixtures and appliances listed in an annexure with their condition.
• Monthly rent, due date, mode of payment and late fee, if any.
• Security deposit amount, refund timeline after handover, and the grounds for deduction.
• Lock-in period, and whether it binds both sides or only you.
• Notice period for ending the agreement, and how notice is to be given.
• Escalation on renewal, with the exact percentage.
• Who pays maintenance, society charges, utility bills and property tax.
• Who repairs what: structural and major repairs versus day-to-day upkeep.
• Stamp duty and registration, and who pays for them, plus police verification of the tenant where your city requires it.

Agreement checklist for freelancers and small businesses

For service contracts, the clauses that hurt small suppliers most are payment on vague approval, unlimited revisions, and broad IP assignment. Ask for payment within a fixed number of days of invoice, a defined number of revision rounds, and an IP clause that transfers rights only on full payment and leaves your pre-existing tools with you. Under section 19 of the Copyright Act, 1957, an assignment must be in writing and should identify the work, rights, duration and territory.

If you are registered under the Udyam scheme as a micro or small enterprise, the MSMED Act, 2006 caps the payment period your buyer can agree to at 45 days from acceptance, and where no date is agreed, payment falls due within 15 days of acceptance. Late payment attracts compound interest at three times the bank rate notified by the Reserve Bank. Put your Udyam number on your invoices and in the contract.

Red flags that mean you should stop and ask

• The other side refuses to give you a copy to read before signing day.
• Blank spaces, handwritten changes without initials, or pages that do not match the version you reviewed.
• Obligations on you with no matching obligation on them, such as a lock-in or notice period that binds only one side.
• An arbitration or jurisdiction clause pointing to a city where neither party operates.
• A demand for original certificates, blank cheques or signed undated resignation letters as security.

When to get an advocate involved

Use this checklist for routine contracts. For property purchases, business acquisitions, investment documents, large vendor contracts and anything involving personal guarantees, have an advocate read the full document. The fee is small compared to the cost of a dispute. An automated review is a useful first pass to surface missing and one-sided clauses before that conversation, so the time you pay for goes on the points that matter.