Quick answerContracts in India are governed by the Indian Contract Act, 1872, and their enforcement by the Specific Relief Act, 1963. A valid contract needs free consent of competent parties, lawful consideration and a lawful object. If a party breaches, you can claim damages under Sections 73 and 74, or, since the 2018 amendment to the Specific Relief Act, specific performance as a general rule. Contracts must be stamped under the state stamp law, and a well-drafted arbitration clause can save years of litigation.
- Law
- Indian Contract Act 1872, Specific Relief Act 1963
- Breach claim limit
- 3 years from the breach
- Stamp duty
- State stamp law; varies by state
- Disputes
- Civil, Commercial Court or arbitration
Contracts we draft and review
We draft from scratch and review drafts sent by the other side, for businesses and individuals:
- Commercial: supply and distribution agreements, service and master services agreements, franchise, agency, manufacturing and job-work contracts.
- Startup and corporate: founders' agreements, shareholders' agreements, NDAs, ESOP documents and consultancy agreements.
- Technology: software development, SaaS terms, licences, website terms and privacy policies; see also our technology law practice.
- Employment: appointment letters, confidentiality and IP assignment clauses.
- Property: agreements to sell, development agreements, leases and rent agreements.
- Personal: loan agreements, family settlements and memoranda of understanding.
A review is not a proofread. We check whether the contract does what you think it does: who bears which risk, what happens on delay or default, how payment is secured, how either side can exit, and where disputes go.
The drafting gaps we see most often are vague scope of work, no acceptance or sign-off mechanism, payment terms without interest for delay, uncapped indemnities, missing limitation of liability, no clause on intellectual property created during the contract, and termination clauses that do not say what happens to advances, materials and data on exit.
What makes a contract valid and enforceable
Under Section 10 of the Indian Contract Act, an agreement is a contract if made by the free consent of parties competent to contract, for a lawful consideration and a lawful object, and not expressly declared void. Points that commonly go wrong in practice:
- Restraint of trade: Section 27 makes agreements in restraint of a lawful trade void. Non-compete clauses that operate after an employment or engagement ends are generally unenforceable, though restrictions during the term and confidentiality obligations are upheld.
- Liquidated damages: under Section 74 a pre-agreed sum is a ceiling, not an automatic entitlement. Following Kailash Nath Associates v. DDA (2015), the court awards reasonable compensation up to that amount, and a party must ordinarily show that some loss was suffered.
- Authority: confirm that the person signing for a company or LLP is authorised by a board resolution or the LLP agreement.
- Electronic signing: e-signatures under the Information Technology Act, 2000 are valid for most contracts, but not for those listed in its First Schedule, such as wills, trusts, powers of attorney and contracts for the sale or conveyance of immovable property.
Stamp duty and e-stamping
Stamp duty is payable on most written agreements, at rates fixed by each state under the Indian Stamp Act, 1899 as applied in that state or under its own stamp law. Duty may be a fixed amount, or a percentage of the contract value for instruments such as leases, conveyances and some commercial agreements. Rates differ widely between states, so we calculate duty for your state and the particular instrument. In Punjab, Chandigarh and many other states, duty is paid through e-stamp certificates issued through the Stock Holding Corporation of India and its authorised centres, or through online payment.
An insufficiently stamped document cannot be admitted in evidence under Section 35 of the Stamp Act until the deficit duty and penalty are paid. The defect is curable, not fatal: in In re Interplay between Arbitration Agreements and the Indian Stamp Act (2023), a seven-judge bench held that an unstamped agreement is not void and the stamping objection should be decided by the arbitral tribunal rather than at the appointment stage. Some documents, such as leases for more than a year, must also be registered under the Registration Act, 1908.
Remedies for breach of contract
| Remedy | Law | When it fits |
|---|
| Damages | Sections 73 and 74, Contract Act | Loss that naturally arose from the breach or was in contemplation of the parties |
| Specific performance | Section 10, Specific Relief Act | Where you want the contract performed, such as transfer of property |
| Substituted performance | Section 20, Specific Relief Act | Get the work done by a third party at the defaulter's cost, after 30 days' notice |
| Injunction | Sections 36 to 42, Specific Relief Act | To restrain a breach, for example of confidentiality |
| Recovery of the price | Order XXXVII CPC | A liquidated sum due under a written contract |
For unpaid sums, see our money recovery page. A suit for damages for breach must generally be filed within three years of the breach, and a suit for specific performance within three years of the date fixed for performance or, if none, the date of refusal.
Specific performance after the 2018 amendment
Before 2018, specific performance was a discretionary remedy and courts often awarded only damages. The Specific Relief (Amendment) Act, 2018, in force from 1 October 2018, rewrote Section 10: specific performance of a contract shall be enforced by the court, subject only to the exceptions in Sections 11(2), 14 and 16. The court's general discretion to refuse it under the old Section 20 was removed, and Section 20 now provides for substituted performance instead. Section 20A bars injunctions that would impede infrastructure projects.
The plaintiff must still prove that it has performed, or has always been ready and willing to perform, its essential obligations under Section 16(c). Contracts dependent on personal qualifications, contracts that need continuous supervision, and contracts terminable at will remain outside the remedy under Section 14. In Katta Sujatha Reddy v. Siddamsetty Infra Projects (2023) the Supreme Court held that the 2018 changes are substantive and apply prospectively, so for older contracts the pre-amendment discretion may still be relevant.
Drafting the dispute resolution clause
An arbitration clause under the Arbitration and Conciliation Act, 1996 can give you a faster, private forum, but only if it is drafted precisely. A sound clause states the seat (which decides which courts supervise the arbitration), the number of arbitrators and how they are appointed, whether an institution's rules apply, the language, and the governing law. Clauses that let one party alone appoint a sole arbitrator are invalid: the Supreme Court so held in Perkins Eastern v. HSCC (2019), and a Constitution Bench in CORE v. ECI-SPIC-SMO-MCML (2024) held that unilateral appointment offends the principle of equal treatment of parties. Commercial parties without an arbitration clause must ordinarily attempt pre-institution mediation before suing in a Commercial Court.
Documents you need
For drafting, review or a dispute, share the following:
- The draft contract or the signed agreement with all annexures
- Term sheet, quotation, emails or MoU that record the commercial terms
- Details of the parties: names, addresses, PAN, CIN or LLPIN
- Board resolution or authority letter of the signatory
- Stamp paper or e-stamp certificate and registration details, if executed
- Correspondence showing the breach, notices and replies
- Invoices and payment records, for a payment dispute
How we handle it for you
Understand the deal
A call to understand the commercial terms and the risks that matter to you.
Draft or mark up
A clean draft or tracked changes with a short note explaining each change.
Negotiate
We join calls with the other side or their lawyers to close open points.
Execute properly
Stamp duty calculated, e-stamping and signing arranged, and registration where needed.
Enforce if breached
Notice, mediation, arbitration or suit for damages or specific performance.
Why clients choose ProudLegal
Advocates who appear in courtYour matter is drafted and argued by enrolled advocates, not call-centre staff.
Company and tax filings in-houseCompany secretaries and tax professionals handle registrations and returns.
Fees agreed in writingYou receive a written fee quote before any work begins.
Updates on WhatsApp and emailEvery hearing date, filing and document is shared as it happens.
Please note: this page explains the law and procedure in general terms as on 30 October 2026. Fees, limits and timelines change, and the facts of each case matter, so take advice on your own papers before acting.
Frequently asked questions
Is a contract valid without stamp paper?
An unstamped contract is not void, but it cannot be used as evidence until the stamp duty and penalty are paid. Stamping at the time of signing avoids this.
How much stamp duty is payable on an agreement?
It depends on the state and the type of instrument. Some agreements attract a fixed duty, others a percentage of the value, so it must be checked for each state.
What is the time limit to sue for breach of contract?
Generally three years from the date of the breach under the Limitation Act, 1963. For specific performance, three years from the date fixed for performance or from refusal.
Can a court force the other party to perform the contract?
Yes. Since the 2018 amendment, specific performance is the rule rather than the exception, subject to the exceptions in the Specific Relief Act.
Are e-signed contracts valid in India?
Yes, for most contracts under the Information Technology Act, 2000. Wills, trusts, powers of attorney and contracts for sale of immovable property are excluded.
Is a non-compete clause enforceable in India?
A non-compete during the term of a contract is generally enforceable, but one operating after the relationship ends is usually void under Section 27 of the Contract Act.
Should my contract have an arbitration clause?
For most commercial contracts, yes, provided the seat, appointment method and rules are clearly stated and neither party can appoint the sole arbitrator alone.
How much does contract drafting cost?
It depends on the type and complexity of the agreement. We quote a fixed fee in writing after seeing the term sheet or draft.
