Article VIII - Legal Awareness Series

 Formal Documentation – Minimum requirements/ parameters- areas to be covered.


As seen in previous Article VI, when the entrepreneur moves from individual to society-based customers, the documents to be exchanged between the parties for any deal should have, in addition to commercial terms and conditions, legal terms and conditions as well to protect the interests of both the parties.

The nature and type of these legal terms and conditions, form a part of legal documentation, depending upon the nature of the business for which they are to be prepared. The Indian Contract Act 1872 per se does not enlist or prescribe any “minimum legal terms and conditions” to be part of such documentation.  

Nowadays the majority of small-scale and upcoming entrepreneurs are in the “service sector industry” or are involved in “trading activities ” ( buying goods in bulk and selling them in retail units)  where the operational and commercial terms and conditions in their documentation are related to the services/ trading activities  provided by them and they normally cover the following areas:

  • Nature of services to be provided.
  • The place where they are to be provided.
  • Technical/ operational terms and conditions applicable to the services to be provided.
  • Post sales obligations -if any.
  • Any special provisions related to services to be provided -in general to all prospective customers.
  • Any other specific terms and conditions related to a particular deal /customer.

Further, when the entrepreneur deals in either manufacturing or development activities the above areas of operation change accordingly resulting in the requirement of a different set of legal terms and conditions to cater to those activities. To summarize, the nature of the deal itself determines the legal terms and conditions to be added to any type of “formal documentation” to be executed for any deal.

Furthermore, when the business entrepreneur expands his business the expansion not only results in moving from individual-based to society based -customers but more importantly a movement from “Individual customers to Corporate Customers” -which in fact is a movement in the right direction for business expansion. At this moment from “Individual Customers to Corporate Customers” legal documentation plays a very vital role.

Cont...

For any query feel free to contact me.


Mahesh Vaidya
M.Com, LLM, ACS, DFM, CAIIB  
Legal Adviser
Cell Number 9769949701 / 9223173695
Email ID maheshvaidya2706@gmail.com

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