5 mistakes to avoid while drafting an agreement for your business

5 mistakes to avoid while drafting an agreement for your business


Agreements are the pivots of any relationship in a business house. Be it a start-up or an established business concern, regardless of the business size. An agreement defines the ethics, the modus operandi and achievement of goals of a business.

Here are certain extremely critical areas where not just businesses but also professionals make mistakes which have a negative cascading effect to any business.

1. Using a template from the internet

This by far is the mother of all sins while drafting your agreements, be it your employee’s agreement or an agreement with your vendors. It is definitely convenient to simply Google your required template, download or copy it to your same old Microsoft Office and then tweak it with the data you have.

But what about the specifics of your business?

Deep down we all know such templates are just outright lazy and an extremely inefficient way of conducting your business the professional way. So, do take your help from Google to run your business and up your learning curve, but never ever draft another critical agreement simply off a free template. There aren’t freebies when you want your business model to be perfect.


2. Lack of precision on the terms

Drafting a perfect business letter or creating an out-of-box blog for your business could be possible if your command over the written language is good. But, not all business documents are made just by the impeccable virtue of an excellent command over English.


Yes, they require precision. Often a well drafted and well phrased agreement lacks the precision of the underlying idea of the agreement itself. The objective of any agreement is to have crystal clear, unambiguous and precise tenets to let it achieve its purpose. So the take away here is to be keen, alert and extremely cautious while framing the several tenets of any agreement and never lose its precision of ideas.


3. Not paying appropriate stamp duty

With the advent of on screen and email based agreements we often forget to revere to the old “The Indian Stamps Act”, which for some reason is often ignored just to be either lazy, or to avoid the hassle to get your agreement over an appropriate Stamp Paper. For starters, an inadequately stamped document does not even compound to be a legitimate evidence to courts of law. Please consult your legal professional / consultant to know about the stamp duties to be paid on several types of documents and yes, pay the good old stamp duty as advised.


4. Not defining the right jurisdiction in the contract


Let’s say you have your offices in Bengaluru and entering into a service agreement with a customer in Agartala, Tripura and as it happens there was a conflict within the parties. Now, imagine if your customer institutes a civil suit against you at the competent courts in Agartala jurisdiction. Imagine arranging a local lawyer there and visiting there every few months to appear before the court. That is where a competent legal professional is always helpful to ensure and include a jurisdiction clause in case of conflicts. So that you don’t have to run around the country to attend courts, while your business suffers immensely. A proper analysis of your service type and your operational areas lets you decide and define proper jurisdiction which suits you.

 5. Inappropriate arbitration clause or not using them at all

Out of court settlements are highly appreciated and encouraged these days. Arbitration being one of such out of court settlement mechanisms which is constantly reviving itself and evolving with a lot of judiciary and government support. Creating an Arbitrator within your agreement not only is the cool thing to do, but also lets you sort your conflicts conveniently and yes, much faster. Trust into Arbitration and it delivers.



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