India follows the principle of party autonomy, allowing parties to a commercial contract the freedom to choose their governing law. Indian courts will uphold an express choice of foreign law provided that the choice is made in good faith, is not intended to evade mandatory Indian statutes and is not contrary to Indian public policy. In practice, this means that a contract with significant Indian elements can still be governed by a foreign law if the parties so agree, except where doing so would violate India’s fundamental legal principles or statutory prohibitions.

If the contract’s performance or subject matter is in India, certain overriding mandatory provisions of Indian law (such as exchange control regulations or competition law) may still apply, regardless of the chosen foreign law.

In the absence of an express governing law clause, Indian courts will apply conflict-of-law rules to determine the applicable law. For a purely domestic agreement, Indian law would naturally be applied if the contract is silent.

While written contracts are customary in commercial deals to provide certainty and evidence, Indian law is highly flexible regarding the form of most commercial contracts. There is no single mandatory form, and contracts may be concluded in writing, verbally or even implied by the conduct of the parties, provided the essential elements of a valid contract (like offer, acceptance and consideration) are met.

There is no general requirement for a signed written document for a contract to be enforceable. This flexibility extends to modern communication methods; the Supreme Court of India has (in Trimex International Fze. Limited, Dubai v Vedanta Aluminium Limited, India) confirmed that binding contracts can be formed through email exchanges without the requirement of any signed formal agreement.

The Information Technology Act, 2000 (the “Information Technology Act”) also gives legal validity to electronic records and digital signatures, making contracts executed on platforms like DocuSign enforceable for most commercial matters. However, this flexibility is not absolute. Specific statutes mandate written and/or registered forms for certain types of agreements. The most notable exceptions include:

• contracts for the transfer or lease of immovable property;
• powers of attorney (POA), which requires notarisation;
• wills and trust deeds; and
• negotiable instruments.

While the Indian Contract Act, 1872 (the “Contract Act”) lays down the general principles of contract formation, enforceability, performance, breach and remedies for contracts involving the sale of goods, the Sale of Goods Act, 1930 (the “Sale of Goods Act”) provides specific provisions on the transfer of property in goods, seller and buyer obligations, and remedies for breach.

India has not ratified the UN Convention on Contracts for the International Sale of Goods (CISG), so international sales contracts involving Indian parties are governed by Indian sales law unless the contract explicitly chooses the CISG or another law.

Key differences between Indian law and the CISG include the following.

• Indian law requires the element of consideration for a contract to be enforceable, whereas the CISG does not mandatorily require consideration.
• Indian sales law divides terms into conditions and warranties, allowing cancellation of the contract for breach of essential conditions, while the CISG uses the concept of “fundamental breach” to similar effect.
• Historically (until the 2018 amendment to the Specific Relief Act, 1963), Indian law primarily favoured damages over specific performance, unlike the CISG, which tends to allow parties to demand performance. However, following the 2018 amendment, specific performance is now the presumptive remedy in India, narrowing this difference with the CISG’s approach.
• Additionally, under the Indian Contract Act and Sale of Goods Act, certain protections like implied warranties of title, quality (in certain conditions), etc, apply automatically, analogous to but not identical with the CISG provisions.

In summary, Indian domestic contract law is somewhat more formalistic (eg, requiring consideration and adherence to certain statutory voidness provisions) and does not adopt the CISG’s framework unless parties contractually incorporate it. Companies engaged in international trade often still reference the CISG as a benchmark, but in Indian courts the local statutes (the Contract Act and the Sale of Goods Act) will prevail absent an agreement to the contrary.

Generally, Indian contract law is based on freedom of contract, but certain types of agreements are subject to mandatory statutory rules and cannot be altered purely by private agreement.

Unlike some jurisdictions, India does not have a single overarching statute for franchising, distribution or agency contracts; such arrangements are governed by general contract law and other applicable laws (eg, competition law, intellectual property law).

However, there are sector-specific mandatory rules that affect certain contracts. For example, franchise and distribution agreements must comply with competition law (the Competition Act, 2002) – provisions that amount to an unreasonable restraint of trade or create anticompetitive effects (like absolute territorial restrictions or price-fixing) could be void or unenforceable under competition law or Section 27 of the Contract Act (which renders agreements in restraint of trade void, subject to limited exceptions). Similarly, contracts with consumers must observe the Consumer Protection Act, 2019, which prohibits “unfair contracts” that cause significant imbalance in consumer rights (such as unilateral termination clauses or excessive penalties on consumers).

There are also statutory requirements in certain industries: for instance, real estate purchase agreements are governed by the Real Estate (Regulation and Development) Act, 2016 (RERA), which mandates standard form terms to protect buyers (such as specified payment schedules, construction milestones, and penalty interest for delays) – parties cannot contract out of these RERA safeguards. Further, contracts for sale, lease or transfer of immovable property are subject to the Transfer of Property Act, 1882 and the Registration Act, 1908 (the “Registration Act”).

In employment contracts, various labour laws set minimum standards (on wages, termination notice, etc) that override any less favourable contractual terms. In certain industries, regulations prescribe mandatory contract terms to protect weaker parties or the public interest. Insurance policies are a notable example where insurers must include specific coverages and cannot exclude liabilities beyond what the Insurance Regulatory and Development Authority (IRDAI) allows. Similarly, banking and lending agreements with retail borrowers must incorporate certain conditions prescribed by Reserve Bank of India (RBI), including disclosures regarding commercial terms, penalties, rates of interest (ROI), events of default (EODs) and borrower rights, in a specific form and manner.

Overall, while Indian law permits broad contractual freedom in commercial contracts, mandatory rules will intervene to invalidate clauses that violate law or public policy.

The commercial contracts landscape in India (2023–25) has been shaped by definitive judicial clarity, particularly in dispute resolution, and landmark legislative action focusing on digital governance and market competition.

Key Judicial Decisions (2023–2025)

The Supreme Court has delivered a series of significant rulings to bolster arbitral efficiency and clarify core contract principles.

• Arbitration and stamping: In In Re: Interplay Between Arbitration Agreements Under The Arbitration And Conciliation Act 1996 And The Indian Stamp Act 1899 (2023), the Supreme Court ruled that inadequate stamping or non-stamping is merely a “rectifiable defect” that does not invalidate the arbitration agreement itself. The court also held that agreements that are not stamped or are inadequately stamped are inadmissible in evidence under Section 35 of the Stamp Act, and such agreements are not rendered void, void ab initio or unenforceable.
• Binding non-signatories: In Cox & Kings Ltd. v SAP India Pvt. Ltd. (2023), the SC reaffirmed the “group of companies doctrine”, clarifying that non-signatory affiliates can be bound by an arbitration clause if a mutual intention to bind them can be inferred from the composite transaction and facts.
• Judicial review threshold: In Reliance Infrastructure Ltd. v State of Goa (2023), the Court reinforced the narrow scope of review under Section 34 of the Arbitration Act, cautioning courts against re-assessing evidence or merits when challenging an award.
• Modification of awards: Conversely, in Gayatri Balasamy v ISG Novasoft Technologies Limited (2025), the SC controversially held it could modify an arbitral award, such as adjusting post-award interest, by invoking its extraordinary discretionary power under Article 142 of the Constitution.
• Stamp duty: The Supreme Court in Godwin Construction Private Limited v Commissioner, Meerut Division & Anr. (2025) affirmed that in matters of stamp duty, the decisive factor is not the nomenclature assigned to the instrument, but the substance of rights and obligations it embodies.
• Bonds in employment contract: The enforceability of employment bonds containing liquidated damages clauses was reaffirmed in Vijaya Bank v Prashant B. Narnaware (2025). The Supreme Court upheld a clause in a public sector bank’s employment contract that required an employee to serve for a minimum period of three years or pay Rs2,00,000 as liquidated damages upon premature resignation.

Key Legislative and Regulatory Developments (2023–25)

Key legislative developments include the following.

• Digital Personal Data Protection Act, 2023 (DPDP Act): Established a comprehensive data protection regime, necessitating substantial revision of liability, indemnity and security clauses in all contracts.
• Competition (Amendment) Act, 2023: Introduced the deal value threshold (DVT) of over INR20 billion, expanding merger control scrutiny to high-value digital and technology acquisitions regardless of traditional turnover thresholds.
• Mediation Act, 2023: Provided a statutory basis for mediation, making mediated settlement agreements binding and enforceable as the court decrees.
• Draft Arbitration Amendment Bill, 2024: Draft amendments to the Arbitration and Conciliation Act 1996 were made available for public comments in 2024. The bill is yet to be tabled before the Indian Parliament.
• Shift in government procurement dispute resolution (2024): New Ministry of Finance guidelines signal a preference for mediation over arbitration for disputes in domestic public procurement contracts, except for low-value cases. This requires businesses contracting with government entities to adapt their dispute strategies.

Notable Trends (Last 12 Months)

Recent trends include:

• ESG framework – there is a significant movement towards incorporating binding ESG obligations and requirements in various commercial contracts, including supply and procurement contracts;
• technology integration – the use of AI in contract life cycle management (CLM) is accelerating for automated drafting, review and compliance monitoring, leading to better efficiency;
• mandatory mediation – including multi-tiered dispute resolution clauses with a mandatory, binding mediation stage has become a regular practice in commercial agreements;
• validation of electronic execution – the legal validity and enforceability of electronically signed contracts (eg, via DocuSign, Aadhaar eSign) is now firmly established, supported by judicial decisions like the Delhi High Court’s 2024 ruling on e-signed affidavits; and
• data privacy – businesses are actively revising contracts to align with the DPDP Act, particularly focusing on liability allocation and indemnity for potential penalties.

As noted in the foregoing, Indian law grants broad autonomy to contracting parties to select the governing law. This choice of law will be respected by Indian courts. This autonomy is subject to two primary limitations:

• the choice must be bona fide and not intended to evade mandatory laws; and
• the chosen law must not contradict the public policy of India.

In practice, courts will apply the chosen foreign law to interpret the contract and the parties’ obligations, except in extreme scenarios, such as if the contract is for an object that is illegal in India (eg, a gambling debt).

If a contract does not specify an applicable law, Indian courts apply conflict-of-law principles to determine the governing law. The courts’ approach, derived from common law rules and influenced by authorities like Dicey, Morris & Collins on the Conflict of Laws, involves a two-stage test.

• Implied choice: The court first examines the contract terms and surrounding circumstances to ascertain if an implied choice of law can be discerned. Factors indicating an implied choice may include the language of the contract, the currency used for payment or the selection of a specific jurisdiction’s courts for dispute resolution.
• Closest and most real connection: If no implied choice can be identified, the court will apply the law of the system that has the “closest and most real connection” to the contract. Determining this connection is fact-specific, often considering factors such as the place of contract formation, the place(s) of performance, the location of the subject matter, and the domicile or place of business of the parties.

Even when a foreign law is chosen to govern a contract, certain overriding mandatory provisions of Indian law may still apply if the dispute is litigated in India or the contract is performed in India. The choice of foreign law does not permit parties to “contract out” of non-derogable Indian statutes or fundamental public policy.

An Indian court will apply the chosen foreign law to substantive contractual issues, but will refuse to enforce any provision or outcome that violates these overriding laws.

• Statutory illegality: If performance of the contract in India would violate an Indian law – eg, the Foreign Exchange Management Act, 1999 (FEMA), tax laws, goods and services tax (GST), etc – an Indian court will not enforce that performance. For instance, if a foreign-law contract required one party to export a product from India without the necessary government licence (contrary to Indian export control regulations), an Indian court would refuse enforcement on grounds of illegality

• Procedural and tax laws: The Stamp Act requirements (both Indian and state-specific) and court fee/stamping rules are procedural mandates – if a contract (or an instrument) is presented before an Indian court or authority, it must be adequately stamped as per Indian law to be admissible in evidence, no matter which substantive law governs the contract.

• Consumer protection: If a consumer brings a claim in India, a clause choosing foreign law will not deprive the consumer of protections under the Consumer Protection Act, 2019 as those protections are considered mandatory for anyone qualifying as a “consumer” under said Act.
• Public policy: Indian courts will refuse to enforce foreign law to the extent it leads to a result that offends the “public policy of India”. For instance, a contract valid under foreign law but involving a gambling transaction would not be enforced in India on public policy grounds.
• Other overriding statutes: Additionally, certain Indian statutes explicitly state their overriding effect, such as the Prevention of Money Laundering Act or anti-corruption laws.

In summary, while the choice of foreign law is respected, the parties cannot contract out of Indian statutes that are expressly or impliedly mandatory.

One Indian Party (Cross-Border Contract)

Under Indian law, if one party is Indian (and the other foreign), the parties are generally free to agree on a foreign court as the exclusive forum for disputes. Indian courts will usually honour an exclusive jurisdiction clause favouring a foreign court, viewing it as a legitimate exercise of party autonomy in international contracts.

Both Indian Parties (Domestic Contract)

If both parties are Indian, choosing a foreign court’s jurisdiction may not be enforced by courts in India. However, for arbitration, parties can select foreign-seated arbitration, and the same has been upheld by the courts in India.

Validity of Arbitration Agreements

Arbitration is a favoured dispute resolution mechanism in commercial contracts involving Indian parties. If one or both parties are Indian, they absolutely can agree to refer disputes to arbitration, either in India or abroad, by inserting an arbitration clause in the contract. The Supreme Court’s decision in PASL Wind Solutions (2021) reinforced that even purely Indian-party contracts can opt for foreign arbitration.

Enforcement of Arbitration Agreements by Local Courts

India’s Arbitration and Conciliation Act, 1996 (as amended from time to time) (the “Arbitration Act”) places arbitration agreements on a strong footing. If a valid arbitration agreement exists, Indian courts will refer the parties to arbitration if a lawsuit is filed, as mandated by Section 8 (for domestic arbitration) and Section 45 (for foreign-seated New York Convention arbitration) of the Arbitration Act. An arbitration agreement will generally prevent a party from pursuing the same dispute in Indian courts.

This aligns with India’s obligations under the New York Convention, Article II(3). There are limited exceptions where a court might accept a case, typically if the arbitration agreement is null and void or inoperative, or if the dispute is considered non-arbitrable by law in India (for instance, criminal allegations, matrimonial disputes or insolvency/winding-up matters). Purely commercial contractual disputes are generally arbitrable.

Section 48 of the Arbitration Act (as amended) is also in line with Article V(2) of the New York Convention. An Indian court will refuse enforcement of an award if it finds the dispute concerned a subject not capable of settlement by arbitration under Indian law or if the award itself violates Indian public policy (eg, an award involving fraud/corruption).

Application of Mandatory Local Laws

If the contract is arbitrated with a foreign governing law, the arbitrator might not apply Indian protective statutes unless they are considered part of Indian public policy or have overriding effect. However, at the enforcement stage of an award in India, if the award neglects or violates an Indian mandatory law, there is a risk the award could be challenged as contrary to Indian public policy.

It is important to note that generalised distributor protection laws (providing statutory compensation on termination, etc) do not exist in a generalised manner in India, so that specific concern is minimal. The main mandatory rules are those of general application (illegality, public policy, non-arbitrable subject matters).

As noted in the foregoing, under Indian law, a contract can be concluded in various forms – there is no requirement that a contract be in writing or in any particular format, except for specific types of contracts governed by statute. Contracts may be made orally, through correspondence (letters, emails), by exchange of documents or through conduct of the parties (implied contracts). As long as the essential ingredients – offer, acceptance, mutual intent to create legal relations, consideration, capacity and lawful object – are present, the contract is valid whether or not it is formally documented.

An effective contract can be concluded in several forms.

• Written contracts: This is the most common and secure form for commercial deals, providing clear evidence of the terms. This includes traditional “wet ink” signatures as well as electronic execution.
• Oral contracts: Under Indian law, verbal agreements are valid and enforceable, although proving their precise terms in a dispute can be challenging.
• Implied contracts (by conduct): A contract can be inferred from the actions of the parties. For example, if a company sends a purchase order and the supplier ships the goods without signing, the supplier’s conduct implies acceptance of the order.
• Electronic contracts: The Information Technology Act validates contracts formed electronically. This includes:
1. email exchanges – courts have enforced agreements concluded entirely over email where the correspondence clearly shows a meeting of minds on essential terms; and
2. click-wrap agreements – clicking an “I Agree” button on a website or app, after being given the opportunity to review the terms, forms a binding contract.

Certain transactions require special formality. For example, contracts for sale of immovable property must be in writing, signed and registered; leases above a year must be registered. Similarly, negotiable instruments (like promissory notes) must be signed by hand. But aside from these specific categories, Indian law’s stance is flexible, focusing instead on the fact of agreement (consensus ad idem).

Indian law does not explicitly recognise a doctrine of culpa in contrahendo (fault in negotiations) in the same way as some civil law systems do. There is no general legal duty of good faith in negotiations imposed by statute in India. Parties are generally free to negotiate and abandon negotiations without incurring liability, provided they have not misrepresented facts or otherwise breached a specific duty.

However, certain principles address pre-contract conduct to some extent:

• misrepresentation or fraud – if a negotiating party makes false representations or conceals material facts and the other party relies on them and concludes a contract, the misled party can void the contract under misrepresentation or the fraud provisions under Sections 17 and 18 of the Contract Act; and
• breach of preliminary agreements – if parties sign a preliminary agreement like a memorandum of understanding (MoU) or term sheet that includes binding obligations (such as confidentiality, exclusivity in negotiations or cost-sharing), then breaching those obligations can incur liability according to that agreement’s terms.

In sum, while there is no broad doctrine of culpa in contrahendo, parties generally cover this by agreeing on break fees or cost-sharing terms in their MoUs if they want to mitigate pre-contract risk.

For a party’s standard terms and conditions (T&Cs) to be successfully incorporated into a contract under Indian law, the fundamental requirement is that the other party must have been given reasonable notice of those terms before or at the time the contract was concluded.

There are a few practical ways this occurs.

• Signature or express agreement: The clearest way is for the contract document to expressly include the standard terms (eg, printed on the reverse or appended) and the parties to sign the contract. A signed contract is generally conclusive evidence of acceptance of all its terms, even if one party did not actually read the fine print.
• Reference in main contract: The main agreement might refer to a separate document of standard terms (eg, “This purchase is subject to Seller’s General Terms and Conditions...”). If the other party signs the contract containing that reference, those standard terms become part of the agreement. It is advisable that the full text of referenced terms be made available (physically attached or accessible via a link) at or before contract conclusion.
• Purchase orders/invoices (course of dealing): In ongoing trade relationships, purchase orders or invoices may carry printed standard terms. Such terms can become part of the contract if the parties have a course of dealing where these documents are consistently used and not objected to.
• Online contracts (click-wrap/browse-wrap): In digital transactions, standard terms are typically included via a click-wrap agreement (user clicks “I agree to the Terms and Conditions”). Indian courts have enforced click-wrap agreements when the user had to take an affirmative step to accept the terms.

It is important to note that if a party seeks to incorporate unusual or particularly onerous terms, the law expects that reasonable notice of such terms be given. A disclaimer of liability or an indemnity hidden in fine print might not bind the other party if it is exceedingly unexpected and the party was not made aware.

India does not have specific, comprehensive legislation on standard form contracts. Instead, general contract law and a few statutes govern how standard terms are treated.

Application of General Contract Law

The Indian Contract Act itself does not differentiate between standard form contracts and individually negotiated contracts in terms of validity. All contracts are subject to the Act’s provisions, such as free consent (absence of coercion, undue influence, fraud, etc), legality of object, consideration, etc. Having mentioned this, please note that certain protective principles do apply to standard form of contracts.

• Contra proferentem: If a standard term is ambiguous, Indian courts will interpret it against the party who drafted and imposed it.
• Unconscionability (Section 23 of the Contract Act): In cases of gross unequal bargaining power, courts can strike down standard terms that are oppressive or “against public policy”. The landmark case Central Inland Water Transport Corp. v Brojo Nath (1986) established this principle, voiding a one-sided termination clause in an employment contract.
• Statutory voidness (Section 28 of the Contract Act): Any standard term that absolutely restricts a party from enforcing their rights through legal proceedings is void.
• Consumer contracts: In the consumer context, the Consumer Protection Act, 2019 explicitly introduces the concept of an “unfair contract”. This empowers consumer courts to modify or nullify terms in a consumer contract that are unfair or heavily biased against the consumer (for instance, excessive security deposits or unilateral termination rights for the seller). If a term is declared “unfair”, it can be struck out and treated as void.
• Sector-specific laws: Special laws in sectors such as insurance, housing and banking also regulate contract terms. For example, insurance policy terms must be approved by the IRDAI. Real estate developers under RERA must use a model form of sale agreement that contains mandatory protections for homebuyers.

In summary, Indian law applies to standard terms just as to any contract, but with heightened scrutiny. In B2B contracts between equals, they are generally enforced. In B2C or unequal B2B contexts, they are scrutinised for fairness, unconscionability and compliance with consumer protection statutes.

In India, it is possible that a standard term in a contract might be held invalid due to unreasonableness or because it puts one party at an undue disadvantage.

The bases for this are general doctrines in contract law.

• Against public policy (Section 23 of the Contract Act): A contract term that is so patently one-sided that it “shocks the conscience” of the court could be deemed opposed to public policy and void. The Brojo Nath case is a precedent for invalidating egregious clauses.
• Consumer Protection Act unfair terms: As discussed, for consumer contracts, terms causing a significant imbalance may be struck down. For instance, a non-negotiated term requiring a consumer to pay a huge cancellation charge while the company can cancel without penalty would likely be voidable as unfair.
• Unequal bargaining power doctrine: The courts in India have propounded that where there is gross inequality of bargaining power (such as standard form contracts imposed by monopolies or large employers), the court can step in to relieve the weaker party of unfair terms. This is applied rarely in purely commercial B2B contexts where parties are expected to protect their own interests, but is used in situations akin to adhesion contracts for essential services.
• Moderation of penalties (Section 74 of the Contract Act): Exorbitant liquidated damages or penalty clauses can be moderated by courts under Section 74 of the Contract Act, which states that only reasonable compensation not exceeding the stipulated amount can be awarded.

While courts are more reluctant to intervene in B2B contracts between sophisticated parties, a standard term that effectively leaves one party with no remedy or is egregiously oppressive could still be challenged, especially if one business is significantly smaller and had no real ability to negotiate.

The “battle of forms” arises when contracting parties exchange documents (like purchase orders and acknowledgments), each containing their own standard terms. Under Indian contract law, which is rooted in common law, this is typically resolved by the mirror image rule and the last-shot rule.

Legal Principles

In principle, an acceptance must unconditionally accept all terms of an offer (mirror image rule); if the “acceptance” instead alters or adds terms, it is considered a counter-offer.

Practical Application (Last-Shot Rule)

In practice, if the parties proceed with performance (delivery of goods, payment, etc) despite form mismatch, the courts look at whose terms constituted the final counter-offer that was implicitly accepted by the other’s performance. This is the last-shot doctrine: if a party sent the last form (with terms) without the other explicitly objecting, and performance then happened, those terms might control the contract. For example, A sends an order with A’s terms; B sends an order confirmation with B’s terms (counter-offer); and A receives goods and pays (performance), implying acceptance of B’s counter-offer. B’s terms (the last shot) could be seen as the agreed terms.

Original Signature and Notarial Requirements

For the vast majority of commercial contracts, Indian law does not require an original “wet-ink” signature or a notarial deed for validity. As discussed in 3.1 Necessary Form, contracts can be formed electronically and even orally However, a few specific categories of documents legally require traditional execution (original signatures, and sometimes attestation or notarisation) to be valid or registerable.

• Documents for immovable property: Contracts for the sale, gift or long-term lease of real estate must be in writing, bear original signatures and be registered with the Sub-Registrar of Assurances. These often require witness signatures as well.
• Negotiable instruments: Promissory notes and bills of exchange require the signature of the maker/drawer under the Negotiable Instruments Act, 1881.
• POA: A POA form must be signed by the principal. Notarisation is common practice for POAs in India.
• Wills and trusts: These documents have specific signature and witness attestation requirements.

Electronic Signatures

A contract can be effectively concluded via an electronic signature in India. The Information Technology Act gives legal recognition to electronic signatures, placing them on par with physical signatures for most purposes. This includes methods used by platforms like DocuSign, as well as Aadhaar e-Sign. The widespread adoption of e-signatures during the pandemic has led to their use becoming standard business practice. However, Schedule I of the Information Technology Act specifically excludes certain contracts from the purview of the application of said Act, and accordingly, one cannot use an electronic signature to validly execute:

• a will or trust;
• a negotiable instrument (other than a cheque); or
• certain specific POA.

For all other typical commercial contracts (eg, service agreements, supply contracts, software licences, employment contracts), electronic signatures are valid and enforceable.

Some types of contracts in India require registration with a government authority to be fully effective or legally recognised.

• Immovable property contracts: Any instrument that creates or transfers an interest in immovable property (eg, sale deed, gift deed, lease deed, mortgage deed) must be registered with the local Sub-Registrar of Assurances under the Registration Act.
• Partnership deeds: Partnership firms can optionally register with the Registrar of Firms by submitting the partnership deed. It is not mandatory to register the partnership deed, but an unregistered firm faces limitations. An LLP agreement must be registered with the Ministry of Corporate Affairs.
• Charges and asset security: If a company creates a charge on its assets (like a mortgage) in favour of a lender, the Companies Act, 2013 requires that charge to be registered with the Registrar of Companies. Further, if such charge is created in favour of a bank or a non-banking company, the Company is also required to register such charge with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the “SARFAESI Act”).
• IP assignments and licences: Assignments of intellectual property (patents, trademarks, copyrights) have prescribed forms of registration. For example, trademark assignments should be recorded with the Trademark Registry, and patent assignments must be in writing and registered with the Patent Office to have legal effect.

For most routine commercial contracts, no official registration is necessary. It is important to differentiate between registration and stamping. All contracts must be stamped (paid stamp duty) to be enforceable in court, but stamping is a tax, not public registration. An unstamped contract will not be admissible in court until the duty and penalty are paid.

Apart from mutual consent, Indian law requires several fundamental elements to conclude an effective contract, as laid out in the Indian Contract Act.

• Consideration: Except for specific exceptions (like contracts of guarantee), a contract must be supported by consideration (something of value exchanged), as per Sections 10 and 25 of the Contract Act. A promise without consideration is generally not enforceable.
• Capacity: Parties must have legal capacity. Minors (below 18) and persons of unsound mind cannot enter into contracts (a contract with a minor is void ab initio).
• Free consent: Consent must be free, not vitiated by coercion, undue influence, fraud, misrepresentation or mistake. If consent is not free, the contract is voidable under the Indian Contract Act.
• Lawful object and purpose: The contract’s purpose and consideration must be lawful. Agreements for an illegal object (such as a crime or fraud) or that are against public policy (like wager agreements) are void under Sections 23 and 24 of the Contract Act.
• Certainty and possibility: The contract terms must be sufficiently certain to be enforceable (Section 29 of the Contract Act). The act agreed upon must also be possible (Section 56 of the Contract Act voids agreements to do impossible acts).
• Intention to create legal relations: While not explicitly stated in the Act, Indian courts consider whether parties intended to enter a binding legal arrangement (distinguishing social/domestic agreements from commercial ones).

Additionally, the following applies for enforceability:

• proper form (if required) – if a contract is required by law to be in writing (eg, arbitration agreements, sale deeds, gift deeds), that form must be followed; and
• stamp duty – ensuring appropriate stamp duty is paid is crucial, as an unstamped contract (where applicable) cannot be admitted in evidence until duty and penalty are paid.

By and large, mutual consent is the core, but it must converge with all these conditions for a fully effective contract under Indian law.

Indian law distinguishes between B2B and B2C contracts primarily through the application of consumer protection legislation.

B2B Contracts

B2B contracts are generally governed solely by the general laws of contract, sales, etc, with the assumption that businesses are on a more equal footing and can negotiate terms. Key laws include the Indian Contract Act, the Sale of Goods Act and specific laws related to the subject matter (the Competition Act, intellectual property laws, insurance and banking laws, real estate legislation, etc).

There is generally no special treatment in law simply because both parties are businesses. The Consumer Protection Act, for example, defines “consumer” such that it does not include a person who buys goods or services for a commercial purpose. A company buying raw materials cannot claim consumer law protections.

B2C Contracts

In B2C contracts, the Consumer Protection Act, 2019 imposes significant additional obligations on sellers and service providers. This law grants consumers rights such as protection against defective goods or deficient services and the right to seek redressal through special consumer tribunals, and it prohibits unfair trade practices and unfair contract terms.

Supplementing this, there are sector-specific regulations:

• telecom customers are protected by Telecom Consumer Protection Regulations;
• e-commerce is governed by the Consumer Protection (E-Commerce) Rules, 2020 (E-Commerce Rules), which require disclosure of terms, easy returns, etc, for online sales;
• real estate buyers (consumers of housing) have RERA, which mandates that builder-buyer agreements contain certain pro-buyer provisions (interest for delay, etc) and prohibits certain unfair practices by builders; and
• insurance and banking contracts are required to comply with mandatory sector-specific regulations issued by the regulators.

Summary of Differences

The differences between B2B and B2C contracts can be summarised as follows.

• Enforcement: A consumer (B2C) can approach consumer forums, which are designed to be faster and more consumer-friendly. A business (B2B) must use civil courts or arbitration.
• Implied terms: Both B2B and B2C sales have implied warranties under the Sale of Goods Act, but consumers have additional statutory guarantees under consumer law (eg, right to refund/replacement).
• Limitation of liability: In B2B, broad limitation clauses are generally enforced. In B2C, such clauses may be struck down as “unfair terms” if they unfairly prejudice the consumer.

The Consumer Protection Act, 2019 enumerates various rights and provides remedies to consumers. Key consumer protection rights that must be observed in B2C contracts include the following.

• Right to be informed: Consumers must be given complete information regarding the product/service (quality, quantity, price, terms of use, etc). Misleading omissions or false statements can be an unfair trade practice.
• Right to safety: Products must meet safety standards. The 2019 Act introduced product liability provisions, allowing a consumer to sue for compensation for harm caused by defective products.
• Right to redressal: If products or services are defective/deficient, consumers have the right to seek remedies, including repair, replacement, refund and compensation for loss.
• Protection from unfair contract terms: As mentioned earlier, terms causing a significant imbalance to the consumer’s detriment can be nullified. The law specifically lists examples like excessive security deposits, disproportionate penalties and unilateral termination.
• Protection from unfair trade practices: Businesses cannot indulge in deceptive advertising or false representations, or hide material information.
• Right to cancel (cooling-off): In certain types of sales (eg, e-commerce under certain conditions), consumers have a window to cancel the contract. The E-Commerce Rules require a clear refund policy.
• Grievance redressal mechanism: E-commerce platforms and many service providers are required to have in-house grievance officers to address consumer complaints within a set timeframe.
• Right to seek redressal: Consumers have the right to access a specialised, three-tier judicial system for grievance redressal. These forums are designed to be faster and more accessible than civil courts. B2C contracts cannot oust the jurisdiction of these courts.

B2C contracts should be drafted with these rights in mind. Any clause denying or diluting a statutory consumer right will likely be unenforceable.

In India, the law of contract is premised on the idea that if a party fails to fulfil its contractual obligations (a breach), it must compensate the other party for the loss caused by that breach. The core principle under India law is compensatory damages, that is, to put the injured party in the position they would have been in had the contract been performed. The law in India is not designed to punish the breaching party.

Key aspects of the liability concept include the following.

• Statutory basis (Section 73): Section 73 of the Contract Act codifies that the party suffering the breach is entitled to compensation for any loss or damage that naturally arose in the usual course of things from the breach, or which the parties knew, when they made the contract, to be likely to result from the breach.
• Remoteness: The Act disallows compensation for remote and indirect loss or damage (ie, those that do not naturally arise or were not in contemplation).
• Duty to mitigate: The injured party is expected to take reasonable steps to mitigate the loss from the breach; any avoidable losses will not be recoverable.
• Compensation, not punishment: Contractual liability is not about punishing the breaching party. Hence, Indian courts do not grant punitive damages for breach of contract.
• Liquidated damages (Section 74): Parties often pre-estimate damages (liquidated damages). Section 74 of the Contract Act states that the party complaining of the breach is entitled to reasonable compensation not exceeding the stipulated amount. Courts can adjust the amount to ensure it is not punitive.

Punitive Damages

Indian contract law does not provide for punitive damages for breach of contract. Damages are meant to compensate the injured party, not punish the defaulting party. Courts have consistently held that in contract cases, compensation is limited to the loss suffered. Even if a breach is wilful or in bad faith, the remedy remains compensatory.

The only quasi-exception is if the conduct of breach also constitutes an independent tort (like fraud) or a statutory violation. Under the Consumer Protection Act, 2019, consumer forums have occasionally awarded compensation for harassment or mental agony, which could be analogised to punitive in effect, but this is outside pure contract law. In normal commercial contract disputes, punitive damages are not awarded.

Maximum Liability and Damage Categories

Indian law itself does not impose a fixed maximum or statutory cap on damages categories. The extent of liability is determined by the contract terms (if they limit liability) and the legal principles of remoteness and mitigation. However, certain categories of damages are usually not awarded:

• remote or speculative losses – if loss of profit is too speculative or not substantiated, the court will not award it; and
• damages for mental distress – these are not awarded in commercial contracts.

Legally, the quantum of liability is not capped; however, practically, contracting parties often include liability caps by agreement (eg, limiting liability to the contract value or excluding certain damages), which are generally enforceable.

In Indian contract law, obligations are generally strict in the sense that if a party promised to do something, they are liable for failing to do it, regardless of whether they intended the breach or were negligent.

• Absolute obligations: If a party guarantees a result (eg, a seller guarantees delivery by a specific date), that is an absolute obligation. If delivery is late, the seller is liable even if the delay was beyond its control – unless the contract has a force majeure clause or the law excuses it (via frustration). The breaching party cannot usually escape liability by saying “I did my best”, unless the contract was explicitly a “best efforts” obligation.
• Warranty liability: In a commercial contract setting, warranty liability is an example of strict liability. If a seller gives a warranty that a machine will perform at X capacity, and it does not (even if the seller was not negligent in manufacturing), the seller is liable to remedy or compensate.

Separately, the Consumer Protection Act, 2019 imposes a statutory strict liability regime. A manufacturer or seller can be held liable for harm caused by a defective product without the consumer needing to prove negligence.

Outside commercial contracts (B2C or B2B), Indian law recognises strict liability in certain labour welfare legislations, environmental protection legislation and tort.

Allowable Extent of Limitation

Indian law generally permits parties to limit or exclude liability by contract. Freedom of contract allows businesses to allocate risk. These clauses will usually be honoured by courts, especially in B2B contracts where bargaining power is more equal. It is common to see clauses such as: “Neither party shall be liable to the other for any indirect or consequential losses, loss of profits, loss of revenue, etc.” – these are generally enforceable in India. Also, clauses capping liability (eg, to the total fees paid under the contract) are common and usually valid.

The main limitations on this freedom are:

• the clause must not violate Section 23 (unlawful object/public policy) or Section 28 (agreement in restraint of legal proceedings) of the Contract Act;
• parties cannot contract out of liability for fraud – a clause limiting liability for fraud would likely be void as against public policy;
• parties cannot reduce liability below a statutory minimum (eg, penalties under FEMA or other statutes); and
• a clause seeking to exclude liability for death or personal injury caused by negligence would likely be held void as against public policy, especially in a B2C context.

Difference: Standard Term Versus Individually Negotiated

The context in which the clause appears makes a significant difference to its enforceability.

• Individually negotiated (B2B): In a negotiated contract between sophisticated parties, courts will very rarely interfere. Individually negotiated limitation clauses between companies of equal bargaining power are upheld almost without question.
• Standard terms (B2C or unequal B2B): If a liability limitation clause is in a party’s standard terms and the other party is an individual consumer or a much weaker party, courts will scrutinise it more closely:
1. in B2C contracts, the Consumer Protection Act, 2019 now directly disallows terms that put the consumer at a disadvantage by limiting the seller’s liability for harm (this would likely be deemed an “unfair contract term”); and
2. in B2B standard form contracts, if one party can show the limitation clause was imposed and leaves them with no substantial remedy, a court might find it against public policy in extreme cases, but this is rare.

In conclusion, contractual limitations of liability are allowed to a large extent, but standard form clauses imposed on weaker parties are subject to a fairness review.

Statutory Relief (Doctrine of Frustration)

In the absence of a specific force majeure clause, Indian contract law (Section 56 of the Contract Act) provides relief through the doctrine of frustration of contract. This doctrine applies when an event occurs, after the formation of the contract, that renders the performance of the contract impossible or unlawful, and which was not caused by either party. If such an event happens, the contract becomes void, and both parties are discharged from further performance. Examples include the destruction of the subject matter, a change in law or government order that forbids performance (like a lockdown) or the death of a party in a personal services contract.

Prerequisites for Relief (Frustration)

The prerequisites for relief under Section 56 of the Contract Act are:

• the event must occur after the contract is made;
• it was not foreseeable and not the result of either party’s fault or conduct;
• it makes performance impossible, or completely undermines the purpose of the contract; and
• the event’s impact must be such that the foundation of the contract is gone – mere hardship, inconvenience or material loss does not suffice if performance is otherwise possible.

Mitigation and Other Requirements

The affected party must show it tried to perform and the event prevented it. There is an implicit expectation to mitigate. A party claiming relief should demonstrate it took reasonable steps to avoid or overcome the event’s impact. If an alternative mode of performance is available, even if more onerous, classical law holds that this is not frustration.

If the contract is voided for impossibility, any advance payments or benefits received must be restituted under Section 65 of the Contract Act.

Standard Practice

In commercial contracts in India, it is standard practice to include a force majeure clause, even with the existence of Section 56 of the Contract Act. Most sophisticated contracts have one, enumerating events like natural disasters, war, strikes, governmental actions and (especially post-COVID-19) epidemics/pandemics.

Including a force majeure clause is preferred because it allows parties to customise the outcome (eg, suspension of obligations, extension of time or a right to terminate after a set period) rather than relying on the blunt instrument of frustration under Section 56 of the Contract Act, which automatically voids the contract. Further, as noted in the foregoing, Section 56 of the Contract Act, which addresses contract frustration due to impossibility, is distinct from a contractual force majeure clause. Consequently, it may not cover many events that parties typically define and agree upon as force majeure within their contracts.

Effect of Absence of a Clause

If a contract does not have a force majeure clause, a party is not prevented from claiming relief; they can still rely on the statutory doctrine of frustration (Section 56 of the Contract Act). However, the absence of a clause can be prejudicial. Section 56’s threshold (impossibility) is often higher than a negotiated force majeure clause’s threshold. Many force majeure clauses cover temporary hindrances and allow suspension, whereas Section 56 of the Contract Act does not clearly allow suspension – it leads to termination. If a court finds an event was merely a temporary hardship and not “impossibility”, a party without an force majeure clause might not get any relief at all. Therefore, while the absence of a clause does not bar statutory relief, that relief is less flexible and harder to obtain than the remedies typically provided in a contractual force majeure provision.

Indian law does not explicitly have a concept of “hardship” distinct from force majeure/frustration. There is no statutory provision allowing renegotiation or adaptation of contracts due to hardship.

The courts in India in several pronouncements have been clear that a mere increase in cost or an onerous turn of events is not frustration. Thus, absent a contractual clause, Indian law offers no general relief for hardship short of actual frustration (which terminates the contract). If an event stops short of impossibility but makes the contract highly unviable for one party, Indian law’s stance is that the party remains bound. Therefore, if no clause exists, a party facing hardship has no legal right to compel renegotiation or get the contract adjusted by a court. The contract remains binding as is, or it is frustrated (if it qualifies), which ends it.

Standard Practice

Including a specific “hardship clause” is not as standard as including a force majeure clause in all Indian contracts. However, such clauses are increasingly seen and are becoming common in certain types of agreements, particularly long-term, high-value or cross-border contracts where economic volatility is a significant risk. The macro-economic stresses of recent years (inflation, supply chain disruption) have made sophisticated parties more aware of this risk.

These provisions may not always be labelled “hardship clauses”. They often take the form of:

• price escalation clauses – common in construction or long-term supply contracts, allowing price adjustments if raw material costs exceed a certain threshold;
• change in law clauses – common in infrastructure projects, allowing for tariff adjustments if a new law impacts costs; and
• material adverse change (MAC) clauses.

Effect of Absence of a Clause

As explained in 6.3 Concept of Hardship, Indian statutory law does not foresee any right or remedy for “hardship”. The only (and distinct) statutory relief is frustration (under Section 56 of the Contract Act), which requires impossibility. Therefore, the absence of a hardship clause is critical. It means the parties have no legal fallback to demand adjustment or renegotiation if the contract becomes economically burdensome.

Indian law provides a framework of rights and remedies under the Indian Contract Act, the Sale of Goods Act and the Specific Relief Act, 1963.

Warranties and Conditions (Sale of Goods)

The Sale of Goods Act implies certain conditions (major terms) and warranties (minor terms) in every sale.

• Implied conditions:
1. condition as to title – the seller has the right to sell the goods;
2. condition of quality/fitness – if the buyer made known the particular purpose and relied on the seller’s skill, the goods must be reasonably fit for that purpose; and
3. condition of merchantable quality – if goods are bought by description, they must be of merchantable quality.
• Implied warranties:
1. warranty of quiet possession – the buyer shall enjoy goods without disturbance; and
2. warranty of freedom from encumbrances – the goods are free from any third-party charge.

If a condition is breached, the buyer has the right to treat the contract as repudiated (reject the goods) and claim damages. If a warranty is breached, the buyer must accept the goods but can claim damages.

Remedies for Non-Fulfilment, Late Fulfilment and Breach

The remedies are as follows.

• Damages: This is the primary remedy. Section 73 of the Contract Act covers monetary compensation for direct and foreseeable consequential losses.
• Specific performance: Following the 2018 amendment to the Specific Relief Act, specific performance (forcing the party to perform the contract) will be enforced by courts as a general rule when monetary compensation is not an adequate relief (eg, sale of unique goods or property).
• Injunctions: A court can grant an injunction to restrain a party from committing a breach (especially breach of a negative covenant, like a non-compete).
• Termination and rescission: If one party fundamentally breaches or renounces the contract, the other party can terminate the contract and sue for damages.
• Late fulfilment: If time is of the essence, failure to meet the deadline is a breach entitling the promisee to terminate and/or claim damages. If time is not of the essence, the innocent party is still entitled to compensation for any loss caused by the delay.
• Liquidated damages: If the contract has a clause for a predetermined sum, Section 74 of the Contract Act allows the aggrieved party to claim a reasonable sum not exceeding that amount.
• Rescission for misrepresentation or fraud: If a contract was induced by misrepresentation or fraud, the innocent party can rescind (void) the contract and demand restoration to the pre-contract position.

Parties to a commercial contract in India largely have the freedom to vary or exclude the default warranties and remedies to suit their agreement. This contractual flexibility is part of party autonomy and is generally upheld in B2B contracts.

Examples of common deviations include the following.

• Excluding implied warranties: Section 62 of the Sale of Goods Act allows the exclusion of implied terms by express agreement. A contract can state “goods are sold as-is, with all faults”, and many B2B contracts do exclude implied warranties of merchantability or fitness.
• Capping damages or specifying sole remedies: Parties can agree on clauses like: “the sole remedy for defective goods shall be repair or replacement... and seller’s liability will not exceed the price of the goods”. This type of clause is common and generally enforceable.

• Waiving consequential damages: Parties can agree to exclude liability for “consequential damages” or “loss of profit”, forcing the other side to bear that risk.
• Agreeing on liquidated damages: Parties can set a predetermined sum for breach, thus modifying the remedy from actual damage proof.
• Modifying timeframes: Parties can agree that "time is not of the essence" or provide for shorter limitation periods for making claims (as long as it is reasonable and does not completely close off legal recourse).

This freedom is not absolute. Indian law does not permit such deviations in certain cases.

• Consumer contracts: In B2C contracts, an attempt to contract out of statutory consumer guarantees or minimise liability for defective goods can be declared void as an “unfair contract term” under the Consumer Protection Act, 2019.
• Public policy and statute: A clause cannot override statutory rights (like those of employees) or fundamental public policy. For example, a clause excluding liability for death or personal injury caused by negligence would likely be found void against public policy.
• Fraud: A party cannot exclude or limit its liability for its own fraud.

In sum, apart from consumer and statutory limitations, commercial parties in India have broad leeway to contract around or customise warranties and remedies.