Learn Contract Drafting – Part 4 – Write for your audience – Part 1

“A wider audience of a writer’s creative work reflects that writer’s influence on such audience. In case of legal writing, a writer’s audience is both well read and well informed. So, a writer writing for such an audience has to be careful not only in choosing the words but also – in words of so many proponents of ‘better legal writing’- keeping the prose clear, precise and brief.”

Hello there, my beloved readers! I draw back your attention to above paragraph. If you did not read it carefully, please read it once again.

I asked you to read the first paragraph, again, for two reasons: (a) firstly, to tell you that better reading habit includes “reading carefully”, so you should both read a paragraph and also understand its whole meaning; (b) secondly, to ask you what you thought of the writer’s writing skills after reading the paragraph.

As part of learning process, I invite your comments to my request in (b) above.

Now, coming back to the first paragraph, my honest opinion about ‘I’ as a writer and ‘you’ as audience is that I did fail miserably, but on purpose, to adhere to ‘the message’ I am trying to convey through the first paragraph.

‘The message’ is to “write for your audience.”

Why I failed in giving this simple message?

I failed because I did not use simple sentence structure, assuming that my audience incudes a group of students, who are not comfortable with “reading comprehension”. I failed this audience.

I failed because the first sentence of the paragraph is having a long subject – “A wider audience of a writer’s creative work…”. Huh! That is a long subject, and goes against the recommendation of writing “clearly”. Don’t you agree?

I failed because the whole message could have been simply given by stating that “One should write for one’s audience;” which is far more “precise”.

I failed because by writing one whole paragraph having three complex sentences did not keep the message ‘brief’.

Hmm!  You must be wondering, why at all this paragraph and the article itself was written in first place. If you are not, you got my message.

 

PS: Do write back your views on this article.

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Food for thought– Is university syllabus a contract?

I came across a news item that talks about an interesting lawsuit. A former law student of the Massachusetts School of Law has claimed in his suit against the law school that he received an unfair D grade in contracts paper due to professor deviating from the syllabus.

Read more about the news in detail HERE and HERE.

In India, if a student receives “deficient services” in relation to education received from any school, college or university in India, such a student may sue such school, college or university as a consumer, and may recover refund of amount spent as fees, and in some cases even damages.

Do you think that such case will be seen as a breach of contract between a student (as a consumer) and law school (as a service provider) if filed in Indian courts?

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Learn Contract Drafting – Part 3 – Read Patiently

Hello readers. Welcome back.

If you read my last two articles on ‘contract drafting’ and have come back for more (that means you are not angry on me for my last advice), my next most important advice to you is – “read some more, read carefully and read with patience.”

I am hoping that your anger is now turning into a wicked smile.

By the way, I am not fooling you. I just gave you some very important advice.

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Learn Contract Drafting – Part 2 – Read Carefully

Some of you might be wondering why I have not written anything in continuation to previous article on the “contract drafting”. This is only because I have been engrossed with work, lethargy and lack of motivation to write. So, I have finally found the motivation and courage to write this piece, and here I am.

Coming back to where I left off.

In my previous article on ‘contract drafting’, I asked my readers (interested in my articles) to read as much they can, and to also develop a habit of reading regularly. But, I sincerely believe that the advice got lost on most of you.

If you are one of the lucky ones, who took my earlier advice to read and are reading this article, my next advice to you is “read some more and read carefully.”

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Learn Contract Drafting – Part 1 – Start Reading

This is the first post in a series on Contract Drafting, which I believe in and am trying to make as persuasive as I can to be taken by everyone as learning material on contract drafting in context of India and laws applicable in India.

If you are a practicing litigation lawyer, you will understand that drafting a contract, especially for an individual Indian client, is not an easy task. First and foremost, such a client likely thinks that you are copying the text from so many publicly available templates. Second, they strongly believe that they could have done the task better than you, if they were themselves a lawyer. If you are the one [the lawyer to whom I am writing to] who agrees with above, the following article is for you. Rest of you obviously know better than me. So, may be, you can correct me through your enlightening comments. Let me know if you felt that the preceding sentence reflects my ego or if it has effectively reflected my humble request to you and encouraged you to write  comments that will be sincerely be enlightening for me.

So you, the person, my beloved reader, who agrees with me about the client’s view, and you so agree because you know that there is some truth in such statements. But [Oh!, You prefer “Having said that” instead of “But”], you being a learned gentleman having profound knowledge of law does not agree with such client, because you have the license to practice law and the client, poor or otherwise, is just behaving like a client – a person claiming to know better than you only because you are being paid by that client. Yes, I understand your pain. The same pain that you have hidden beneath so many layers [Do you prefer to add a “i.e.” here, i.e., between the words “layers” and “formed”] formed of guilt, ignorance, arrogance and what not. If you are willing to make the situation better and wished so desperately for the client to see your point of view, you should stop reading this article NOW for next 2 Minutes.

Have You stopped? Stop now, please, for next 2 minutes, and use a watch.

Thank you for hearing and acting on my recommendation to stop. If you have not done so yet, please do, else continue, because I understand your arrogance which requires you to continue. I understand, as I am like you – an arrogant lawyer.

The suggestion to stop was only to make you understand that a lawyer – who wants to understand “how to draft a contract” or “how to draft any legal document” – should be humble enough to accept advice of others, before the lawyer can become qualified enough to advise others. Do you see the two words underlined above? Do you remember going past them? I mean you, if you ignored, before I specifically asked you to stop, and thought that they have been underlined only because I thought that this will be a fancy thing to do, and I have no purpose behind writing these two words as underlined. However, if you took time to see them as underlined words and thought that I am trying to tell you that they are important, you are right and have saved me embarrassment.  “Embarrassment”, you are now thinking why I would have felt embarrassed.

I will explain “my embarrassment” in next paragraph. But, coming back to the two underlined words, I did underlined them, because: (1) while writing this article [please observe how I was thinking on writing the two words to attract your attention], I wanted to write about the underlined words (I did in this paragraph, hmmm…); and, because (2) those two words are “action words”, i.e., “verbs”, which demand some action from you. So, now you know what such words can do and why I underlined them, because I wanted to talk to you through this article – ‘my purpose’ behind writing this article – by using the ‘action words’ directed at you to comply with.

I will explain now, why I would have felt embarrassed, if you did not notice those two underlined words.

Simple, if you failed to understand my intention it would have meant that my writing is not compelling enough to attract my reader’s attention. Please take special note that if you first failed to understand my true purpose in writing this article, my intention is not to hurt your big ego, but to point out to you that you are a poor lawyer, because you do not read. If you read, and if you also know ‘how to read well’, you have won half the battle [to learn contract drafting]; because, then it will be fairly easy for you to  write the contracts using the knowledge gained by reading.

But, if you do not know how to read, as I have pointed out above, it is important that you start now and improve your present reading habit. Please feel no guilt, because it is conversely true that sometimes writers fail to clearly express, if their reader fails to understand the written words. I fear that I am in a category of such writers too. Only you can prove otherwise.

So, now, I am of firm opinion that you will truly understand, why a chid is taught to read first and to write later.

Henceforth, make a firm conviction or a promise [not meant to be broken] to yourself that you will make a habit to read something at least one hour a day, everyday. I will ask you not to include the legal memos, notices, plaints and rejoinders, to your reading list.  Because, if you do, you are prone to learn more mistakes of other lawyers.

I hope you enjoyed my writing and will like to see more to come from me. I will write, if you promise to get engaged with me and be my guide as well. So, help us god. I intend to write more, with your blessings of course.

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When communication is complete under Indian Contract Act?

When a contract comes into effect?

Section 3 of the ICA reads:

The communication of proposals, the acceptance of proposals, and the revocation of proposals and acceptance, respectively, are deemed to be made by any act or omission of the party proposing, accepting or revoking, by which he intends to communicated such proposal, acceptance or revocation, or which has the effect of communicating it.

Section 4 of the ICA reads:

The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.

The communication of an acceptance is complete,—

as against the proposer, when it is put in a course of transmission to him so as to be out of the power of the acceptor;

as against the acceptor, when it comes to the knowledge of the proposer.

The communication of a revocation is complete,—

as against the person who makes it, when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it;

as against the person to whom it is made, when it comes to his knowledge.

Section 5 of the ICA reads:

A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards.

An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but no afterwards.

Perusal of above sections makes it clear that a contract comes into effect when communication of its acceptance is complete as against the acceptor, i.e., the acceptance reaches to the knowledge of the proposer.

Do we have an enforceable agreement when elements of Sections 3, 4 and 5 of the Indian Contract are complete, irrespective whether the Parties have signed a written contract or not?

Answer to this question is in affirmative, in certain circumstance. Why so?

To understand this, let us see some illustrations.

Illustration A: When communication is made by Post

On January 01, 2013 Party A makes a written offer, by post, to Party B to buy certain quantities of certain goods from Party B.

The Offer Letter reaches to Party B on January 03, 2013.

The Party B send its written acceptance, by post, on January 05, 2013 by post.

The acceptance letter reaches to Party A on January 08, 2013.

Illustration B: When communication is made by Email

On January 01, 2013 Party A makes an offer, by email, to Party B to buy certain quantities of certain goods from Party B.

The Offer Letter reaches Party B’s email inbox on January 01, 2013.

Party B reads the email on January 03, 2013.

Party B send its written acceptance by email on January 05, 2013.

The acceptance email reaches to Party A on January 05, 2013.

Party A reads the email on January 06, 2013.

In both cases of Illustration A and Illustration B, the contract comes into effect when the acceptance reaches to Party A and also comes to Party A’s knowledge.

Conclusion:

So, in case of Illustration A the Contract comes into effect January 08, 2013; whereas, in case of Illustration B the Contract comes into effect January 06, 2013.

Is it really so?

Continue reading below for position countering above conclusion.

The readers should think again about position stated in Illustration A. What will be your answer, if the Party A has received the letter but has not opened and read it. Can it be argued that the contract is not complete as the Party A does not yet has the knowledge of acceptance, even if it knows that the letter is from Party B?

Readers can answer to above question in comments section below.

The reader should also think again about position stated in Illustration B. What will be the answer, if the Party A has received the email and read it but marked it unread again. What will be the answer, if Party A has the not opened the email, but the email subject itself conveys the response of Party B (or when the email client is MS Outlook and Party A uses preview option). How you will prove that Party A has the knowledge of acceptance mail by Party B.

Readers can answer to above question in comments section below.

Contract concluded by electronic means [read email] is a subject which has been touched upon in detail by western courts, but Indian courts have not their share of enough cases, where they could have an opportunity to provide their opinion to the scenarios posed in Illustration B.

In year 2008, Hon’ble Supreme Court of India [Bench: Hon’ble Justice D Bhandari] in the matter of Great Offshore Ltd. Vs. Construction Company [http://indiankanoon.org/doc/947723/], answered the question “…whether [on review of correspondence exchanged] the Parties have entered into a valid contract containing an arbitration clause”, as follows:

I have heard the learned counsel appearing for the applicant and the respondent at length. I have carefully reviewed the entire correspondence between the parties. The charter party agreement that had been signed by the applicant and the respondent clearly indicated that the parties have entered into a valid and concluded contract. The other correspondence between the parties also leads to a definite conclusion: the parties have entered into a valid contract containing an arbitration clause.

The judgment touches upon the communication exchanged by email. I invite readers to go through this case in detail for better understanding of Hon’ble Supreme Court’s view on communication by email.

Now see below another Illustration C.

Illustration C:

The Party B in his acceptance email to the Party A writes that, it accepts Party A’s offer provided they sign a written agreement by a definitive date.

Here, the acceptance being qualified becomes a counter-offer by Party B, and must be accepted by Party A and such acceptance must be communicated back to Party B and upon such communication coming to Party B’s knowledge will become a contract.

Is it really so?

What will be your answer if Party B has also sent a draft contract copy attached to the email and Party A had sent a redline version of that draft contract with his comments. Does the contract conclude when the Party A’s response reaches to the knowledge of Party B?

Readers can answer to above question in comments section below.

  1. What if this exchange continued between Party A and Party B, without any conclusive agreement on the final draft?

  2. What if this exchange continued between Party A and Party B, and they agreed to a final draft, but did not sign the copy of such draft?

  3. What if Party A signed the finally agreed contract draft and sent it to the Party B, and the later did not sign and sent back a copy. But, Party B in its email to Party A said that it accepts the signed copy by Party A?

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Meeting Condition Precedents- Part One

There are two kinds of share sale-purchase agreements (“SPA“). Most of transactional lawyers see the type of SPA that involves signing and completion of the transaction with different dates. Sometimes, one principle SPA is divided in several sub-agreements. Here what is important for a contract drafter is to watch for the date which is the deal closing date. This date is most often a ‘long stop date’ by when certain events specified in the SPA must get completed. Examples of such events will be signing of agreements ancillary to the SPA, delivery of signed share certificates, delivery of updated/ audited financials, resignation by officers, etc. Once these events get completed only then the Buyer makes the payment of the consideration that is due. Sometimes the payments are handled by third party’s, most often, legal firms involved in the transaction, a if the parties’ relation are based on caution then this third party is an “escrow agent”.

Being a transactional lawyer requires that the contract drafter has thorough knowledge about different kinds of agreements. Examples of such agreements are share sale-purchase agreement, parent company guarantee, collateral warranty agreement, funder direct agreement, service agreements, escrow agreement, etc. Try reading more about such agreements and how they are drafted if you desire to become a transactional lawyer.

The due diligence exercise that you will undertake before you start drafting such agreements, will certainly shape the provisions of these agreements.

Kindly share your experiences for the benefit of other readers.

Happy commenting.

NOTE:

I will write again about the second type of SPAs, which involve same day signing and closing.

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How the word “Agreement” is different from the word “Contract”?

I recently saw a discussion on Linkedin, one of the popular website for professionals. Someone has asked: “Is there any difference in an agreement and a contract?” In my opinion: yes there is a clear difference, at least in the context of Indian Contract Act of 1872.

Some of the popular opinions offered were pointing to single conclusion, i.e., of no difference.

Oxford English Dictionary defines

“Agreement” as “[count noun] a negotiated and typically legally binding arrangement between parties as to a course of action[1]”, and

“Contract” as “a written or spoken agreement, especially one concerning employment, sales, or tenancy, that is intended to be enforceable by law[2]”.

Both the above definitions are almost identical in meaning, but yet leave much for general public to decipher to understand their true meaning. I agree that almost every one uses and understand the two terms to be identical.

Indian Contract Act of 1872 on the other hand has clear language that differentiates between the two words. I challenge you to find any other piece of legislation in any jurisdiction, which provides such clear demarcation between the two words.

Section 2(e) of the Act says: “Every promise and every set of promises, forming the consideration for each other, is an agreement”.

Section 2(h) of the Act says: “An agreement enforceable by law is a contract”.

So from above two simple definitions it is clear that as far as Indian Contract law is concerned an “Agreement” is specie of “Contract”.

You will, however, find several journals, court judgement and articles on topic of law using the two words interchangeably.

Will using “Agreement” or “Contract” in your writing affects the understanding of your readers? In my opinion it depends upon the intent of your writing, i.e., if you want to show to your readers the true difference in meaning and scope of the two words. Otherwise, you may safely use either of the two words in your contract drafts, if you use only one word throughout your draft. Why? Because, so long as all elements under Indian Contract Act are satisfied, it makes no difference which word you are using. Judges are not likely to strictly interpret these words while understanding the true meaning of terms of a private contract between two parties. To interpret the true meaning of the terms of such contracts, judges usually employ the test of a person of reasonable skill and knowledge having understanding of the subject matter of the contract.

I sincerely hope that this puts to rest any animated discussions on social forums about differences between the two words.

For another

valid counter-opinion

(not based on Indian Contract law) and some good opinion see the post from

Knowledge to Negotiate

Blog by

Mr. John “Jack” Tracy.

 

Can some one find out the true meaning of word “Deed” under Indian law?



[1] http://oxforddictionaries.com/definition/agreement?q=agreement

[2] http://oxforddictionaries.com/definition/contract?q=contract

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Website Terms-Termination clause

I have seen and drafted many termination clauses in past for User terms and conditions of various kinds of websites. Often, reluctantly, I have drafted a termination clause, which I never believed would stand on its own legs.

Have you come across such termination clauses, which you think are not fair to you as a consumer?

Let me have your thoughts on this, and I will delve deeper and discuss it with you in detail.

Happy commenting…

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