Key takeaway
Indian contracts are governed by the Indian Contract Act, 1872, but enforceability in practice depends on drafting, stamping and dispute resolution. For NRI-owned businesses, the clauses that most often matter are payment and currency, limitation of liability, termination, governing law and arbitration. Unstamped agreements and unclear dispute clauses are the commonest avoidable problems.
Clauses to get right
- Parties and authority: correct legal names, registered addresses and authority of signatories (board resolution or partner authority).
- Scope and deliverables: specific, measurable obligations and acceptance criteria.
- Price, payment and currency: invoicing, GST treatment, withholding tax, and for cross-border payments, compliance with FEMA and banking documentation.
- Liability: caps, exclusions of indirect loss, and indemnities. Indian courts generally award only reasonable compensation for breach, even where a sum is stated, under section 74 of the Contract Act.
- Confidentiality and IP: ownership of work product and licences.
- Term and termination: notice periods, termination for cause and convenience, and consequences.
- Non-compete: restraints of trade after the contract ends are generally void in India (section 27), though restrictions during the term are usually upheld.
- Governing law and jurisdiction: parties may choose courts with jurisdiction; Indian parties contracting between themselves generally cannot choose a foreign law to escape Indian law.
- Dispute resolution: an arbitration clause stating the seat, rules, number of arbitrators and language. See arbitration and mediation.
- Notices: addresses and email for formal notices, including your overseas address.
Stamping and execution
- Most agreements attract stamp duty under state law. Unstamped or under-stamped agreements are not admissible in evidence until duty and penalty are paid.
- Electronic signatures are valid for most contracts under the Information Technology Act, 2000, but not for certain documents such as Powers of Attorney, wills, trusts and contracts for sale of immovable property.
- Agreements signed abroad are stamped in India within the time allowed. See stamp duty on documents signed abroad.
Disputes
Commercial disputes above the specified value go to commercial courts under the Commercial Courts Act, 2015, with pre-institution mediation required unless urgent interim relief is sought.
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Related guides
- All NRI legal guides
- Setting up a business in India from overseas
- Key legal documents for overseas Indians doing business
- NRI business legal services
References
- Indian Contract Act, 1872, sections 27, 73 and 74 — India Code
- Information Technology Act, 2000, section 3A and First Schedule
- Commercial Courts Act, 2015; Arbitration and Conciliation Act, 1996; state stamp laws
Last reviewed: November 2026.
The information provided is for general educational purposes only and does not constitute legal advice. Applicable laws and procedures may vary depending on the facts, jurisdiction, and circumstances of each matter. Consult a qualified legal professional before taking action.
