In short. When a business deal lands in court, seven clauses settle most of what follows. Jurisdiction. Arbitration. Payment and acceptance. Interest. Liquidated damages and liability caps. Termination and notices. And whichever clause says which document wins. We've written this for owners, finance heads and founders who put their names to purchase orders, service agreements and distribution contracts. An hour or two is enough to go through a contract you've already signed. Do it now, while things are calm. After a suit is filed, these clauses decide the venue, the pace and how much money comes back.
Is this your situation?
- A customer stopped paying three months ago. Today is the first time anyone in your office has properly read the contract.
- Your purchase order says Delhi courts. The supplier's invoice says Noida courts. Which one counts?
- There's an arbitration clause buried on page 11, and you want to know if you can still go to court.
- The buyer paid the bills, minus a chunk it kept back as 'LD' for delay.
- Your contract says 'interest as per law', and you're trying to work out what that's actually worth.
- Half the terms changed over email last year. The signed agreement doesn't look anything like what both sides really did.
- Renewal is coming up and you'd like to fix the clauses that will bite if things go wrong.
The short answer
Judges in commercial courts open the contract before they open anything else. Seven kinds of clause do the heavy lifting. One says where you can file. Another, whether an arbitrator decides instead. Then when the money fell due, and what interest it carries. How much compensation a breach can bring. How and when either side could end the deal. And which paper governs when there are several. Price and scope still count. Yet these seven are what usually decide whether you get to argue the merits at all, and for how many years.
Most business owners read these clauses for the first time after the dispute has started. Too late. By then a clause can only be interpreted, not improved. We've written this from the point of view of what happens later in a commercial court, so you can check the contracts you have now and fix the next ones. If a clause has already gone wrong and the contract is broken, our page on claims for breach of contract sets out the remedies.
Which business contract clauses decide a dispute?
Every contract really has two layers. There's the commercial layer: what's being sold or done, for how much, by when. Then the dispute layer, which says what happens if someone doesn't perform. Most people treat the dispute layer as boilerplate. It gets copied from an old template, or accepted as part of the bigger party's standard form. But it's what the court applies first.
When trouble starts, you'll usually meet them in this sequence. Arbitration comes first, because it decides whether any court hears the case. Jurisdiction picks the city. The payment clause sets the due date, and limitation starts ticking from there. Interest can make the claim much bigger or much smaller. LD and liability clauses control what's recoverable for delay or non-performance. Termination and notices settle whether the contract ended properly and whether the other side was properly told. And when the purchase order, the master agreement and the invoice all disagree, the precedence clause picks the winner.
You don't need a 60-page contract for any of this. Frankly, a three-page supply agreement that handles these seven points cleanly does better in court than a long one that handles them badly.
The law behind these clauses
Section 20, Code of Civil Procedure, 1908
You can sue where the defendant lives or does business, or where the cause of action arose, wholly or in part. A jurisdiction clause lets parties choose among courts that already have jurisdiction under this section. It can't hand jurisdiction to a court that has none (ABC Laminart v. A.P. Agencies, 1989; Swastik Gases v. Indian Oil Corporation, 2013).
Sections 7, 8 and 11, Arbitration and Conciliation Act, 1996
Section 7 defines an arbitration agreement. It has to be in writing. Under Section 8, a court must send the parties to arbitration if the other side applies before its first statement on the substance of the dispute. Section 11 covers appointing arbitrators when the parties can't agree.
Sections 73 and 74, Indian Contract Act, 1872
Section 73 compensates loss that arises naturally from the breach, or that both parties had in mind. Section 74 caps compensation at the sum named in the contract, and allows only reasonable compensation up to that figure. It makes no difference whether the contract calls the sum liquidated damages or a penalty.
Section 28, Indian Contract Act, 1872
A clause is void if it absolutely stops a party from enforcing its rights in the ordinary courts, limits the time for doing so, or wipes out rights once a fixed period ends. Arbitration agreements are a recognised exception.
Section 34, CPC and the Interest Act, 1978
The court decides interest from the date of suit to decree, and after decree. In commercial transactions it can go above 6 percent a year, though ordinarily not beyond the contract rate or, if there isn't one, the rate at which nationalised banks lend. For the period before the suit, a rate written in the contract is the firmest footing you'll get.
Sections 15 to 18, MSMED Act, 2006
A buyer has to pay a registered micro or small supplier within the agreed period, and that period can't be longer than 45 days. Pay late and compound interest at three times the RBI bank rate is due, whatever the contract says. The supplier can also take the dispute to the MSE Facilitation Council.
Clause 1: the jurisdiction clause (which city's courts)
Which court gets the case? That's all this clause answers. Section 20 of the CPC usually gives a trade deal two or three possible homes: the buyer's town, the seller's town, and wherever delivery happened or payment was owed. Parties are free to narrow that down to one. They aren't free to invent a city that has nothing to do with the deal. And you don't always need the word 'only'. In Swastik Gases (2013), the Supreme Court read a clause naming a single court as excluding the rest, because that was clearly what the parties meant, even though 'exclusively' appeared nowhere.
Why does it decide cases? Because a suit in the wrong place never gets decided on its merits. The defendant applies for return of the plaint under Order VII Rule 10, everyone argues the point, and months go by. Section 14 of the Limitation Act, 1963 does exclude time spent in good faith before a court without jurisdiction. You still lose those months. The court fee is gone. Any interim order you got may fall away.
The jurisdiction fight we see most is the battle of forms. The buyer's purchase order says Delhi courts only. The seller's invoice, printed in Ghaziabad, says Ghaziabad courts only. Which governs depends on which document actually formed the contract and how both sides behaved afterwards. The court decides that from the papers. Sellers, take note. Put your clause in the quotation or proforma the buyer accepts, not just on an invoice raised after delivery.
Choose a court where you can litigate without too much trouble, one with a real link to the deal, and keep value in mind. A Delhi clause in a contract worth more than Rs 2 crore takes you to the Delhi High Court's Commercial Division, not to Saket or Tis Hazari. Our guide on filing when the debtor sits in another city goes through the territorial rules with examples.
Clause 2: the arbitration clause (court or arbitrator)
A valid arbitration clause pulls the dispute out of the commercial court. File a suit, and if the defendant applies under Section 8 before its first statement on the substance of the dispute, the court must refer you to arbitration, unless it finds prima facie that there's no valid arbitration agreement. A lot of businesses learn this after they've paid the court fee. So ask the first question about any contract early. Is there an arbitration clause, and does it actually work?
Four things make a clause usable. First, a seat. That's the arbitration's legal home, and it fixes which court keeps an eye on the process. Be careful with the word 'venue', because BGS SGS Soma JV v. NHPC (2019) says a named venue will normally be read as the seat unless something in the contract points the other way. Second, a clear method for appointing the arbitrator. Third, a choice between an institution, such as the Delhi International Arbitration Centre, and ad hoc arbitration. Fourth, nothing elsewhere in the contract that contradicts it.
Where old templates break down is the appointment mechanism. The classic version let one side's managing director be the sole arbitrator, or nominate one. Perkins Eastman Architects v. HSCC (2019) killed that. In November 2024, a Constitution Bench went a step beyond in Central Organisation for Railway Electrification v. ECI SPIC SMO MCML (JV), holding that clauses giving one party the power to appoint unilaterally break the rule of equal treatment. Arbitration still goes ahead. You'll just need a Section 11 petition in the High Court to get someone neutral appointed. Add months. On a separate point, seven judges ruled in 2023 that a missing stamp doesn't make an arbitration agreement void. You sort out the duty. You don't lose the clause.
Arbitration isn't automatically faster or cheaper. You pay the arbitrator. And the summary suit route under Order XXXVII isn't open to you. For a plain unpaid invoice of Rs 15 lakh, a commercial suit or summary suit is often cheaper, and some contracts carve out recovery claims for exactly that reason. For wording, see our guide on how to word a DIAC arbitration clause. For the choice itself, read how to pick between a commercial suit, arbitration and the MSME Council. Arbitration petitions are dealt with on arbitrationlawyer.in.
Clause 3: payment terms and acceptance (when the money fell due)
The payment clause fixes the day the money became payable. In court, that date does two jobs. It starts limitation. Under the Limitation Act, a claim for the price of goods sold on a fixed credit period runs three years from when that period ends, and where there's no fixed credit period, from delivery. It also decides whether you have a clean, liquidated debt. That's what opens the door to a summary suit.
Payment usually hangs on acceptance. In a supply contract, the price kicks in once the buyer accepts the goods. Section 42 of the Sale of Goods Act, 1930 treats goods as accepted if the buyer keeps them beyond a reasonable time without telling the seller it's rejecting them. 'Reasonable time' is vague. A clause saying 'quality complaints within 7 days of receipt, failing which goods are deemed accepted' turns it into a fixed date. That helps the seller enormously when the buyer's written statement suddenly discovers quality problems nobody mentioned before.
Service and IT contracts need the same thing in another shape. Acceptance tests, a sign-off process, and deemed acceptance if nobody reports defects within so many days of delivery. Leave that out and the client's standard defence is that the software was never accepted. Then the case becomes a long quarrel about quality. Our page on disputes over IT, software and service contracts deals with those.
Subcontractors, read 'pay when paid' clauses closely. If your payment depends on the main contractor being paid by the owner, your due date can drift years away, and your limitation and interest drift with it. If you have to accept one, add an outer date after which payment falls due anyway. How limitation is counted, including what a written acknowledgment does, is explained in our guide on the time limit for recovering unpaid dues.
Clause 4: the interest clause (the part of the claim people forget)
Interest is how delay turns into money. Over three years of litigation, 18 percent a year adds more than half the principal. Without a clause, the court still has discretion under Section 34 of the CPC from the suit onwards. For the period before the suit, though, you're relying on a written demand under the Interest Act, 1978, on trade usage, or on the court's sense of what's fair. A signed clause giving the rate, the date it starts and whether it compounds puts you on much firmer ground.
Interest printed only on the invoice is weaker. Courts have gone both ways on whether a line like 'interest at 24 percent if not paid within 30 days', printed on a bill the buyer never signed, binds the buyer. If the buyer accepted dozens of such invoices without a murmur, your argument improves. If the disputed invoice is the first one carrying that line, it's poor. Put the rate in the agreement, or in purchase order terms both sides sign.
Don't get greedy. A very high penal rate, 36 percent compounded monthly for instance, invites the argument that it's a penalty. Section 74 of the Contract Act lets the court cut a penalty down to reasonable compensation. A rate near commercial borrowing costs, simple or compounded annually, has a far better chance of being awarded as written.
For micro and small suppliers registered under the MSMED Act, the statute beats the contract. The buyer has to pay within the agreed period, which can't exceed 45 days. Late payment carries compound interest with monthly rests at three times the RBI bank rate. A clause saying 'no interest shall be payable' doesn't take that away. Our guide on the interest you can claim on unpaid dues shows how these different bases fit together.
Clause 5: liquidated damages and limitation of liability
An LD clause fixes, in advance, what one side pays for a specific breach. Nine times out of ten that breach is delay. A common version: 0.5 percent of the order value for every week late, up to 5 or 10 percent in all. Don't read that figure as money you're owed automatically. Under Indian law it's the most you can get. Section 74 of the Contract Act lets the court award reasonable compensation, but no more than the stated amount. The Supreme Court tightened this in Kailash Nath Associates v. Delhi Development Authority (2015). If the loss is capable of proof, you must prove it. If the breach caused no loss whatsoever, writing a number into the contract doesn't entitle you to a rupee.
This matters because buyers often deduct LD from the supplier's bills on their own. In supply disputes that come to Advocate B.K. Singh, the deduction is often the real fight. The buyer paid 92 percent and kept the rest as delay damages. His first question: did the buyer tell the supplier in writing, at the time, that the delay had cost it something? And did it take later deliveries without protest? A buyer with no record of loss from the time has a much weaker case for holding on to the money.
Liability caps are a different animal. Commercial parties of roughly equal strength who agree that 'total liability shall not exceed the fees paid in the preceding 12 months', or who rule out indirect and consequential loss, will generally be held to it. A software company facing a crore-sized claim for a client's lost sales reaches for this clause first. Always read it beside the termination clause. Caps commonly exclude wilful default and confidentiality breaches. Expect the real fight to be over whether those exceptions apply.
The law fixes one limit itself. A clause trying to shorten the time for suing below the statutory limitation period, or to extinguish rights after a set time, is void under Section 28 of the Contract Act. Don't count on a 'claims must be brought within six months' clause to protect you. It won't.
Clause 6: termination and notices
Termination clauses decide who broke the contract. The usual clause allows termination for cause after a written notice with a cure period, and sometimes termination for convenience on longer notice. The trap is skipping steps. Terminate for breach without the cure notice the contract demands, and your own termination may turn out to be the wrongful act. Suddenly the other side's damages claim is the stronger one.
Check what the clause says happens afterwards. Payment for work done up to termination, return of materials and data, and whether the confidentiality and dispute resolution clauses survive. In a termination for convenience, the terminating party usually has to pay for work already done. A contract that says nothing about it invites a quarrel. Force majeure clauses sit close by. In Energy Watchdog v. CERC (2017), the Supreme Court held that a rise in cost alone doesn't make performance impossible. So a supplier can't walk away from a fixed-price order just because raw material got expensive.
The notices clause looks like housekeeping. It's where plenty of good cases trip. It lists the addresses and email IDs notices must go to, and says when a notice counts as received. Your demand notice, your termination notice and the papers for Section 12A mediation all depend on it. Suppose you send a notice to an office the other side left two years ago. If the clause let them update addresses by written intimation, it can be argued that you sent no notice at all. Update the addresses whenever either side moves. And send the important notices both by post or courier and by email.
Email matters later too. Courts now commonly allow summons in commercial suits to go by email. A working email ID in the contract speeds up service when the defendant is dodging.
Clause 7: which document prevails, entire agreement and amendments
A typical customer relationship isn't one document. It's a pile. Somewhere there's a master agreement. Then statements of work, or rate annexures. Purchase orders with small print on the reverse. Invoices with their own small print. And two years of emails. If those papers disagree, which one does the judge follow? A precedence clause tells them, in so many words, for example 'master agreement, then statement of work, then purchase order, and pre-printed terms on purchase orders or invoices shall not apply'. Leave it out and you're back to the battle of forms.
An entire agreement clause says the signed document replaces all earlier negotiations. It's handy for keeping out promises a salesman made in a pitch. But it cuts both ways. If your rate concession or exclusivity was agreed in a meeting and never written down, this clause keeps it out too.
Amendment clauses usually say changes must be in writing and signed by both sides. Real life is different. Rates and quantities change over email and WhatsApp, and courts can find that conduct and correspondence varied the contract despite the clause. That uncertainty is exactly what you want to avoid. When you agree a change, put it in an email that names the clause it changes and the date it starts, and ask the other side to confirm. For what to check before signing a new contract, see the points Advocate B.K. Singh checks in a business contract before you sign.
How each clause shows up once a dispute starts, and what's at stake
| Clause | When it starts to matter | What goes wrong if it's weak | Typical time or money at stake |
|---|---|---|---|
| Jurisdiction | At filing and the first hearing | Plaint returned for lack of jurisdiction, and you refile somewhere else | Several months to a year, plus court fee and costs |
| Arbitration | When the defendant moves a Section 8 application | Suit sent to arbitration, or a Section 11 petition needed to get an arbitrator appointed | Months of delay; arbitrator fees instead of court fee |
| Payment and acceptance | From the due date on | Limitation counted from an earlier date than you thought; quality objections raised late | The whole claim if time has run out; years of argument about acceptance |
| Interest | In the plaint and at decree | Pre-suit interest refused or cut; the rate trimmed as a penalty | Often a third to half of the principal over a long case |
| Liquidated damages and caps | When the buyer deducts, or the client claims loss | Deductions held back without proof; no limit on exposure to large claims | Usually 5 to 10 percent of order value, more where there's no cap |
| Termination and notices | From the first notice | Your termination held wrongful; notices treated as never served | Damages swing to the other side; weeks lost serving again |
| Order of precedence | Whenever documents conflict | The other side's printed terms apply | A different court, rate or cap from the one you expected |
Checking the contracts you already have
For an ordinary customer or supplier contract this takes an hour or two. Start with your ten biggest relationships.
Find the signed set, not the draft
Dig out the copy both sides actually signed, every page and every annexure. Check the stamp duty position. An unstamped or under-stamped agreement can't be admitted in evidence until the duty and penalty are paid.
Work out which document governs
List the master agreement, statements of work, purchase orders and invoice terms in use. Look for an order of precedence clause. No clause? Note which document went out first and which one the other side accepted.
Read the dispute clauses as one
Take the arbitration, jurisdiction and governing law clauses together. Make sure they don't contradict each other, that the arbitrator appointment isn't one-sided, and that the named court or seat actually suits you.
Check the money clauses
Note the credit period, how acceptance works, the interest rate, and the LD formula and cap. If you're a micro or small supplier, confirm your Udyam registration is in place and the certificate is on file.
Check liability and termination
Read the liability cap and its exceptions, the termination steps and cure periods, and what's payable on termination. Put any running notice periods in the diary.
Update the notice details
Check that the addresses and email IDs in the notices clause are still right for both sides. If they're not, send a written update.
Paper the changes
Gather every email or letter that changed price, scope or timelines. If a change was never written down, confirm it now in an email that mentions the clause it changes.
What to keep on file with every business contract
- The fully signed contract, all pages and annexures, with the stamp duty receipt or e-stamp certificate.
- The board resolution or authority letter for whoever signed on each side, if you have it.
- The purchase orders, statements of work and rate annexures issued under the contract.
- Every amendment letter, plus the emails or messages where price, scope or timelines changed.
- Proof of acceptance, like goods receipt notes, inspection reports, sign-off emails or completion certificates.
- Your Udyam registration certificate, if you're a micro or small enterprise.
- Balance confirmations and ledger reconciliations you've exchanged with the other side.
- A copy of every notice sent or received, with courier receipts and email delivery records.
Where a contract dispute is filed: value, court and territory
Say there's no arbitration clause, or it doesn't cover this dispute. Three things then fix the court. First, it has to be a commercial dispute under Section 2(1)(c) of the Commercial Courts Act, 2015. That covers ordinary trade, supply, service, construction, distribution, franchise, partnership and similar contracts. Second, the specified value has to be Rs 3 lakh or more, counting interest up to the filing date. Third, the court needs territorial jurisdiction under Section 20 CPC, narrowed by any valid jurisdiction clause.
Within Delhi, anything up to Rs 2 crore is heard by the District Judge (Commercial Court) sitting in the right district complex, whether that's Karkardooma, Rohini, Dwarka or another. Bigger claims, above Rs 2 crore, go up to the Delhi High Court's Commercial Division. There's been talk of raising the district ceiling. Check the figure on the day you file. Across the border it's simpler. Uttar Pradesh and Haryana put no cap on district courts, so a Noida, Ghaziabad or Gurugram claim of any size begins before the district's designated Commercial Court. One more step comes first everywhere. Section 12A makes you try pre-institution mediation, and only a suit that genuinely needs urgent interim relief skips it.
With an arbitration clause, the seat decides which court handles interim measures under Section 9 and any challenge to the award. Our page on which court hears your case puts the value and territory rules in one place.
Why different businesses should watch different clauses
If you manufacture or trade in goods, watch the acceptance window, the credit period and the interest rate. Your typical dispute is a buyer who took delivery, said nothing for weeks, then stopped paying. Those clauses decide whether you have a clean debt or a long quality argument. Our page on disputes under supply contracts covers your side.
Service firms, IT vendors and agencies should watch acceptance and sign-off, the liability cap and termination for convenience. Their usual headache is a client who terminates halfway, refuses the last milestone and waves a large counter-claim around. Distributors and franchisees live and die by the termination clause. Notice period. Any exclusive territory. Their claim is usually for lost business after a sudden termination.
Micro and small enterprises have a statutory safety net on interest, and the option of the Facilitation Council. They still need a clear contract showing the supply, the due date and the buyer's acceptance. Startups mostly sign the bigger party's standard form. You'll rarely get to rewrite it. You can often negotiate a couple of points, though. A shorter payment period, a fair interest rate, a neutral seat or court. Those are worth spending goodwill on.
Large companies draft their own contracts. They should audit their templates for one-sided arbitrator appointment, which now causes more delay than it's worth, and for jurisdiction clauses pointing to a city the company would never want to litigate in.
A made-up example: one agreement, five clauses in play
This is an invented scenario, not a real matter. A small Gurugram software house, registered as a micro enterprise, agrees with a Mumbai retail chain to build it an inventory system. Price: Rs 1.1 crore, paid in five milestones. Disputes go to a sole arbitrator whom the retailer's chief executive will choose, seated in Mumbai. Late payments carry 18 percent a year. Delay costs the vendor 1 percent a week, never more than 10 percent. Thirty days' notice lets either side walk away for convenience. And the vendor's notice address? An office it moved out of last year.
Four milestones in, the retailer ends the contract for convenience. It won't pay Rs 48 lakh, and it has knocked Rs 11 lakh off as delay damages. The vendor wants to file in Gurugram straight away. Bad start. One Section 8 application from the retailer and the suit is off to arbitration. As for the appointment clause, giving the retailer's chief executive the sole pick won't hold after Perkins Eastman and the 2024 Constitution Bench ruling. Someone independent will be appointed, either by consent or by the court. There's another door open, too. Being a registered micro enterprise, the vendor could go before the Facilitation Council in Haryana and claim statutory interest at three times the bank rate.
On the merits, termination for convenience helps the vendor, because work done up to termination has to be paid for. The LD deduction looks weak unless the retailer can show real loss from the delay. The old notice address is a nuisance. Not a disaster. The termination notice went by email and was acknowledged. Notice that every one of these points turned on a clause. Nobody argued about the software.
Contract mistakes you only discover when the dispute arrives
- Signing their purchase order without turning it over. The small print on the back often holds the jurisdiction, interest and LD clauses that end up governing the whole dispute.
- An arbitration clause that names a person instead of a process. Name a particular officer, a retired gentleman or a body that's since shut down, and you'll be fighting about the arbitrator before you ever get to the dispute.
- 'Interest as per law'. Sounds safe. Adds almost nothing. Write down the rate, the start date and how it's worked out.
- LD with no cap. Buyers love it and courts trim it, but in the meantime the money sits in the buyer's account, not yours.
- Only one side signed. If both sides acted on it, it's usually still enforceable, but proving the terms gets harder. Chase the countersigned copy.
- No stamp duty paid. You can still get it admitted once duty and penalty are paid. It's just a cost and a delay you didn't need halfway through a case.
- Changes agreed on the phone and never written down. When rates or scope shift in a call, it later comes down to one person's word against another's.
What to do this week
Pull out the five contracts that bring in or cost you the most money. Ignore everything except these seven clauses. For each contract, answer seven questions on one sheet of paper: which court, arbitration or not, when payment is due, what interest runs, what they can deduct, how termination works, and which document wins. Wherever you've written 'not clear', you've found the clause to fix next time the contract is renewed or a purchase order goes out. Advocate B.K. Singh, looking at a contract once a dispute is already live, goes to the dispute resolution and notices clauses before the price schedule. The first three months of any fight are decided there.
If the dispute has already begun, hold off on any termination or demand notice until you've checked the cure periods and notice addresses. Our page on breach of contract sets out the remedies. Want your contract and correspondence checked before you act, or updates on how courts are reading these clauses? Send them to Advocate B.K. Singh's team through the contact page.
Frequently asked questions
Is a jurisdiction clause valid if it names a city where neither party operates?
Generally, no. Parties can only choose among courts that already have jurisdiction under Section 20 CPC, such as where a party does business or where part of the cause of action arose. You can't give jurisdiction by agreement to a court with no connection to the deal.
Can I still file a suit if my contract has an arbitration clause?
You can file. But if the other side applies under Section 8 of the Arbitration Act before its first statement on the merits, the court will usually send the dispute to arbitration. If they don't object and file a defence instead, the suit carries on. For urgent interim relief you can still go to a court under Section 9.
Does interest printed on my invoices bind the buyer?
It depends on the facts. Courts have held such terms binding where the buyer accepted many invoices carrying them without protest. In other cases they've refused. A rate in the signed agreement or purchase order is far stronger than one printed only on the bill.
Can a buyer deduct liquidated damages without proving any loss?
The contract may allow the deduction. In court, though, the buyer gets only reasonable compensation up to the named sum. Where loss can be proved, it has to be. Where there was no loss, the deduction is hard to defend, and a seller can sue or arbitrate to get it back.
Is a clause saying claims must be made within six months enforceable?
Not as a bar on going to court. A clause that cuts down the statutory period for suing, or wipes out rights after a fixed time, is void under Section 28 of the Indian Contract Act. Notice requirements for raising complaints can still matter as evidence, so don't ignore them.
Does the MSMED Act override a contract that says no interest is payable?
Yes, for a supplier registered as a micro or small enterprise. Sections 15 and 16 apply whatever the agreement says, so the buyer owes compound interest at three times the RBI bank rate on payments delayed beyond the agreed period, which is capped at 45 days.
Are contract changes agreed over WhatsApp valid?
They can be, if both sides clearly agreed and acted on them. A clause requiring signed written amendments still hands the other side an argument. Confirm any change in an email that names the clause being changed, and get a reply accepting it.
Should a small business accept a large client's standard contract as it is?
There's often little room to negotiate. It's usually worth asking about two or three points anyway: the payment period, the interest rate, and a neutral or convenient court or arbitration seat. Those are the clauses you'll care about most if the payments stop.
Advocate B.K. Singh
Founder of B.K. Singh & Associates. MCA, LL.B., LL.M. More than twenty years in practice before the Supreme Court, the Delhi High Court, district and commercial courts in Delhi NCR, and tribunals.
This guide explains the law in general terms and is not legal advice. For advice on your own papers, contact the team.