Agreement & Contract

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Sale Deed Drafting: Take utmost care before registry
Agreement & Contract

Sale Deed Drafting: Take utmost care before registry

Becoming an owner of your dream house was and is one of the top most wishes of any individual’s life. Afterall, the wiser people have said and still say – a self-owned house is a matter of one’s prestige and social security. However, buying a property (flat or floor or piece of land with or without construction) is slightly complicated, especially when it is your first transaction as a buyer. Besides the huge sums of money, several documents having legal bearing are required to successfully complete the transaction. An important point to remember here is that once you register the purchase document with the local or district office of the designated government authority, you become the first or second or nth owner in the sale chain. For your information, the zeroth owner is generally referred as the original allotee of the property.

 

Out of the long list of documents that are required for buying a property, Sale Deed is one of the most important legal documents that the buyer and seller must execute/register in the district sub-registrar’s office to formally complete the transaction. Before we move forward, let us understand the definition of a sale deed.

 

What is a sale deed and why it is important?

A sale deed is a legally binding agreement between the buyer and seller of the property that enables a seller to transfer the legal right and title of his or her property to the buyer. By executing this document or in other words, registering a sale deed in the district sub-registrar office, buyer(s) becomes the new owner of the property. Once registered successfully, seller(s) no longer remain the owner(s) of the property. Additionally, the heirs and legal representatives of the seller(s) no longer have any right or claim over the property.

ALSO READ: Know Various Aspects About The Gift Deed & Stamp Duty 

We must also understand several points as mentioned below that are extremely important from the property buyer’s perspective:

  • Seller(s) is referred as a Vendor in a sale deed
  • Buyer(s) is referred as a Vendee in a sale deed
  • Sale Deed has details of buyer, seller and witness – full name, address, age, pan number and aadhaar number
  • Sale deed also includes detailed description of the property that is being sold or bought
  • It is mandatory to register a sale deed with competent government authority to complete the transaction and is legally binding
  • Sale Deed document is drafted by a qualified property lawyer or advocate
  • Sale Deed document is printed on a stamp paper
  • Stamp duty and property registration fee is paid by the buyer to the state government where the property is located for getting the stamp paper from the competent authority
  • Sale deed has details of total amount paid by the buyer to seller for buying the property
  • Sale deed includes details of all the payments made (including TDS on property and stamp duty) by the buyer to the seller
  • Sale deed also has indemnity clause where seller assures the buyer that property is free from any disputes, incumbrances, mortgages or loans and has a clear title
  • Sale deed also includes assurance from seller to buyer that seller has paid all taxes, charges and loan payments on the property before completing the sale transaction
  • Sale deed also includes the details of possession of the property under consideration

 

ALSO READ:  Rates Of Stamp Duty On Gift Deeds Across Some Prominent Cities Of India

 

Role of a Property Lawyer or Advocate in drafting a sale deed

It is advisable that a property buyer must consider all the above-mentioned points carefully. However, it becomes imperative to draft a sale deed document in a proper manner before it is printed on the stamp paper and presented to competent authority for registration. Ultimately, no buyer would like to entertain post transaction issues due to a loosely worded sale deed agreement. Hence, the role of a property lawyer or advocate becomes extremely important.

Prperty Lawyer: Consult a Property Lawyer from here

A property lawyer is a specialised legal professional who can help the parties involved in drafting a sale deed document appropriately so that rights of the buyer remain protected at any given point post successful registration of a sale deed. A property lawyer, while drafting the sale deed can takes the following steps:

  • verifies the legal status or title of the property from the office of the competent authority
  • drafts sale deed document aptly based on the information provided by parties involved in property transaction
  • edits sale deed draft document in case any changes are suggested by parties involved in property transaction
  • presents final draft of sale deed and takes approval
  • prints approved sale deed draft on stamp paper
  • takes appointment from the sub-registrar’s office for registration of the sale deed
  • presents buyer, seller and witnesses along with all property documents on the date of appointment for execution of the sale deed (usually called as registry)
  • acts as, only sometimes, as a witness to the property transaction
  • collects the registered sale deed from sub-registrar’s office and hands it over to the new owner or buyer of the property

The process of drafting a sale deed is surely not simple and having a property lawyer or advocate who is equipped with knowledge of property laws is always advantageous. Any lapses will likely prove costly in the future. Taking advise from a legal expert is a right thing to do.

What Are The Conditions to Expect In A Master Service Agreement?
Agreement & Contract

What Are The Conditions to Expect In A Master Service Agreement?

An MSA or master service agreement is an agreement between two parties wherein they agree and come to terms on the majority of points that will govern their future transactions and mutual actions. An MSA facilitates the two parties to negotiate future transactions and agreements more quickly and effectively.

This happens because the two companies take recourse to the strong foundations of the master agreement while carrying out their future transactions. So, they need not negotiate terms again and again.

The service of a master's is very common in the professional services industry. It makes you work with the service provider, project by project without re-checking the various rules and regulations about how you both should work together.

You may also read How to Draft a Service Agreement?

This way it serves the purpose of the onward momentum of the ongoing relationship, irrespective of the type of the project they are working on and so on.

Thus, MSA is an understanding between us and our clients on what we consider important and how we will carry out a healthy, moral and mutually gainful professional business relationship.

The Kind Of Terms & Conditions In An MSA Agreement

The legal department of every company has a somewhat different idea about what should or should not be contained in an MSA. But in case you’re going to hire a professional services team, there is a strong likelihood of some common ground and some terminology that you’ll need to understand.

Though the titles and ways of formatting are likely to differ from company to company, the MSA your company receives from any professional firm may contain the following sections:

  • There may be one section explaining what the Master Service general terms include or do not include in matters of project-specific agreements such as statements of work
  • Terms of Confidentiality
  • Rights to Intellectual Property
  • When, how, and how much the relationship can be discussed or disclosed
  • The conditions under which the work will be done;
  • How the client will review, reject, or approve deliverables
  • What each party will be responsible for providing or maintaining throughout the term of the services agreement
  • Consequences/implications of either party failing to comply with terms of the agreement
  • Agreement to refrain from soliciting each other’s employees or clients
  • Procedures for resolving legal disputes
  • Indemnification provisions in the event that either organization issued by a third party
  • Warranty or support information for work performed by the firm for the client
  • Insurance and/or security requirements for the service provider (and possibly the client)
  • Expectations about how the money, fees, expenses, and payments will be handled
  • Language relating to the MSA agreement’s term and how either party can terminate a specific statement of work, as well as how either party can terminate the MSA if necessary.

What Are The Expected Conditions In Master Service Agreement:

Let us divide the various sections to know in a better way of what to expect and why they are important:

You may like to read Know All About The Service Agreement

1. The More General Terms

To begin with, there should be a section that clearly mentions that the Master Services Agreement exists in addition to contracts for specific services.  It should also mention that you are hiring the firm for some time to enhance your performance.  

Every project provided by the service provider to the client, such as training, website development, software implementation, and so on, is shown negotiated in a statement of work (SOW), which is a project-specific addition to the Master Service Agreement.

These spell out the problems to be addressed for every individual project, what all the overall scope include and what it doesn’t, about the team involved, crucial dates &s milestones, the overall price, the billing deadlines, and so on.

2. The Mutual Confidentiality

The MSA should include a section that establishes confidentiality protection. This is important because we’re into the client data and working so closely with their leadership teams on the details of their various aspects like sales, marketing, and the future company growth strategy.

On the other hand, firms will be frequently training, consulting, and doing such things with clients in a manner that requires us to share unusual aspects of how we successfully operate.    

This is so because what the clients can understand from our unique experience is hugely valuable, thus we expect the protection of mutual confidentiality for what we share.

3. About Intellectual Property Rights

There is a section on intellectual property rights. This typically states who holds the rights to various processes and/or deliverables before, during, and after the work is completed.

This addresses who holds the authority over the deliverables/work and how the service provider shifts ownership rights upon acceptance. It also states who is the owner of the processes and/or tools used to create the deliverables. These are commonly known as a firm’s intellectual property (IP).

In one way, we’re like a “knowledge factory,” constantly shifting know-hows and digital assets to the client organisation through a range of collaborative projects.

4. About The Disclosure Of Relationship

If you’re thinking of working with a professional services firm, you may want them to share instances of familiar work which they’ve done for companies with same type of needs or goals like yours.

As an adjusted agreement, you may consider language requiring the service provider to obtain your written approval before some parts of your collaboration come up in public-facing material. Service providers may be willing to accept this compromise.

Also read Master Service Agreement: How Is It Important in IT Outsourcing?

5. How May The Work Be Performed    

It often happens in MSAs.  A section is included therein which spells out what each party will be responsible for throughout the time period of the relationship to complete the work successfully.  It is important to discuss these obligations beforehand so that everyone knows what they’re agreeing to.

 

 

 

Can A Share Purchase Agreement Be Rescinded?
Agreement & Contract

Can A Share Purchase Agreement Be Rescinded?

The world of business is characterized by the continuous buying and selling of shares. When someone buys a particular number of shares in a business, they ensure that there is no liability attached to their transaction. However, in some cases, liabilities may come up in the form of taxation after the transaction. This could become a significant drawback for the buyer.

The Meaning Of The Share Purchase Agreement

A share purchase agreement is signed between the buyer and seller. It is a legal agreement between the two parties which acts as approval of various sales & terms conditions that are mutually agreed upon by the two parties. As a matter of fact, the Share Purchase Agreement Companies Act of 2013 serves as the evidence for both the parties, the seller and the buyer, that the shares have been sold/bought legally.

You may like to read Know All About The Service Agreement

Share purchase agreement consists of various terms & conditions that are discussed between the buyer and seller when the deal was finalized. Most of the share purchase agreements have the following data presented:

  • Name of the company
  • Par value of shares
  • Name of purchaser
  • Document or any form of warranties provided by the seller and the purchaser
  • Employee benefits and bonuses
  • Number of shares being sold
  • Details of the transaction
  • Identification agreement for unforeseen costs

You may also read How to Draft a Service Agreement?

Is It Possible To Rescind a Share Purchase Agreement?

Well, a share purchase agreement establishes that the buyer and the seller are conducting this purchase of shares on mutual agreement and consent from both the parties.

Sometimes, it is possible that the seller may not give all the details to the buyer when the purchase is done. In that situation, the buyer stands liable. This won’t be entertained by the law principles. In such a scenario, the buyer can quickly rescind or annul a share purchase agreement.

In order to rescind a share purchase agreement, a person should be induced into a contract due to a wrong interpretation of another party. The buying side can rescind or annul a share purchase agreement or clean damage.

However, it has to be proved that the intention was to deceive.

When the shares are rescinded, they will be reverted to the seller who is obliged to repay the amount for those shares.

 There are some actions which may revoke the right to withdraw.

In case, the party which makes the false statement establishes the contract /behaviour in a way that is not consistent with the intent of the withdrawal (such as wrong misrepresentation)

Or in case the party cannot be restored to its original position. (Suppose: If the company signs a fresh contract or is re-organised)

A delay in withdrawing from the contract after the deception is discovered. This too can obstruct the right to withdraw.

Real-Life Example of Rescinding a Share Purchase Agreement.

In order to understand it better, let’s see a real-life example where the court supported rescinding the share price agreement

It so happened that Elson Precision Holdings Ltd (the buyer) initiated a share purchase agreement with Hampson Industries plc (the seller) wherein it agreed to buy a share of the Seller (the target).

This sale was negotiated by the financial director of the seller and the interim (temporary) managing director of target and, as part of its due process, income and customer predictions were provided to the buyer.

The forecasts consisted of the growth in demand, which came from a major customer of the target who represented between 34% and 40% of the target’s annual turnover.

The process of selling began in the summer of 2009 with the provision of an information memorandum and, during the passage of time, added information (including customer forecasts) were provided to the buyer.

In April 2010, soon after the two parties decided on the final terms for the sale of the target, the primary customer told the CEO of the seller that they are thinking to terminate their supply arrangement with the seller.

This was not told to the people who were negotiating the sale, who continued to provide the buyer with predictions and various other information reflecting an under-the-process relationship with the customer.

An official notice informing the termination of the vendor agreement was given by the seller only on 22 June 2010.

The sale got completed on 23 June after which the negotiating team learned of the customer’s official termination and promptly told the buyer. 

When the share purchase document had been drafted, it did not include any forms of warranties, establishing that the forecast given to the customer was true. The forecast statements and all the other documents were not considered as a breach of warranty.

Also, the agreement consisted of an entire agreement clause based on actions that favour innocent or negligent misrepresentation.

Also read Master Service Agreement: How Is It Important in IT Outsourcing?

The Judgement Of The Court

This issue was referred to the court and the judge ruled that, while the CEO had not himself given the wrong predictions to the buyer or instructed anyone else to make the buyer carry on. As per the principles of law, the CEO totally knew forecast which was provided to the buyer and also the reality that it was wrong and embedded with untrue information.

Despite that, he kept quiet about the discontinuation even though he knew the buyer would reply to the erroneous forecasts.

 

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