Contract Review Checklist: 50 Points Every Indian Lawyer Must Check

Every contract that lands on your desk carries risk. A missed clause, an ambiguous definition, or a non-compliant termination provision can cost your client lakhs — sometimes crores. Yet most lawyers review contracts without a structured methodology, relying on memory and experience rather than a repeatable process.

This is the checklist that fixes that.

Whether you are a junior associate reviewing your first vendor agreement, a law student preparing for moot court, or in-house counsel handling dozens of contracts each quarter, this 50-point checklist covers every critical area of contract review under Indian law. It references the Indian Contract Act 1872, the Digital Personal Data Protection Act 2023, the Arbitration and Conciliation Act 1996, the Indian Stamp Act 1899, and other sector-specific legislation.

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How to Use This Checklist

Each of the 50 checkpoints below is organised into ten sections that mirror the structure of most commercial contracts. For every checkpoint, you will find three things:

• What to check — the specific element to verify
• Why it matters — the legal or commercial consequence of getting it wrong
• Red flag — the warning sign that something needs immediate attention

Work through the sections sequentially. By the time you reach checkpoint 50, you will have a comprehensive picture of the contract's risk profile.

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A. Parties & Recitals (Checkpoints 1–5)

The opening section of any contract establishes who is bound and why. Errors here can render the entire agreement unenforceable.

1. Correct Legal Names and Entity Types

What to check: Verify the full legal name of each party exactly as it appears in their certificate of incorporation, registration certificate, or identity documents. Confirm entity types — Private Limited, LLP, Partnership, Proprietorship, HUF, or individual.

Why it matters: A contract executed with an incorrect legal name creates ambiguity about who is actually bound. In disputes, a party may argue that the contracting entity is different from the entity named, particularly in group company structures. Courts have refused to enforce contracts where the named party does not match the actual contracting entity.

Red flag: The contract names a brand or trade name rather than the registered legal entity. For example, "Zomato" instead of "Zomato Limited" or "Paytm" instead of "One97 Communications Limited."

2. Authorised Signatory Verification

What to check: Confirm that the person signing on behalf of each party has actual authority to do so. For companies, check board resolutions or powers of attorney. For LLPs, check the LLP agreement for designated partners. For partnerships, check the partnership deed.

Why it matters: Section 27 of the Indian Contract Act 1872, read with the Companies Act 2013, requires that a signatory must have authority to bind the entity. An unauthorised signature may render the contract void or voidable at the option of the entity.

Red flag: No board resolution or power of attorney is referenced or annexed. The signatory's designation is vague — "Manager" or "Executive" rather than "Director" or "Authorised Signatory pursuant to Board Resolution dated [date]."

3. Recitals Accuracy and Completeness

What to check: Verify that the "Whereas" clauses accurately describe the background, purpose, and context of the agreement. Ensure they correctly reference any prior agreements, memoranda of understanding, or term sheets that led to this contract.

Why it matters: While recitals are generally not operative clauses, Indian courts rely on them as aids to interpretation when operative clauses are ambiguous. Inaccurate recitals can lead to unintended interpretations. In Investors Compensation Scheme Ltd v. West Bromwich Building Society, the principle that background context informs interpretation was firmly established — a principle Indian courts have adopted.

Red flag: Recitals reference a prior agreement that no longer exists, contain factual inaccuracies about a party's business, or describe a scope of work that does not match the operative clauses.

4. Party Addresses and Registered Office

What to check: Confirm the registered office address for companies and LLPs (as per MCA records), and the correspondence address for each party. Verify that the address for service of notices matches the party's actual address.

Why it matters: The notice address determines where legal communications — termination notices, dispute notices, demand letters — must be sent. An incorrect address can invalidate a notice, giving the defaulting party a technical defence.

Red flag: The address listed is a co-working space, virtual office, or outdated registered office. No mechanism exists to update the address during the contract term.

5. Capacity and Authority to Contract (Sections 11–12, ICA)

What to check: Verify that each party has the legal capacity to enter into the contract under Sections 11 and 12 of the Indian Contract Act 1872. For individuals, confirm they are of the age of majority, of sound mind, and not disqualified by law. For entities, confirm they are not under insolvency proceedings, winding up, or regulatory restrictions that would prevent them from contracting.

Why it matters: Section 11 of the ICA makes an agreement with a person incompetent to contract void ab initio — not merely voidable. The Supreme Court in Mohori Bibee v. Dharmodas Ghose (1903) established that a minor's agreement is void. Similarly, a company under moratorium during CIRP under the Insolvency and Bankruptcy Code 2016 cannot enter into new contracts without the resolution professional's approval.

Red flag: One party is a newly incorporated entity with no track record, a foreign entity not registered in India, or an individual whose capacity is uncertain. No representations regarding capacity are included.

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B. Definitions (Checkpoints 6–10)

The definitions section is the DNA of a contract. Every substantive clause depends on it. Errors in definitions propagate through the entire agreement.

6. All Capitalised Terms Defined

What to check: Read through the entire contract and identify every capitalised term. Cross-reference each one against the definitions section. Ensure no capitalised term is used without being defined, and no defined term goes unused.

Why it matters: An undefined capitalised term is a ticking time bomb. It introduces ambiguity that both parties will exploit in a dispute. Courts will interpret undefined terms using their ordinary meaning, which may not align with either party's intention.

Red flag: A term like "Confidential Information," "Material Adverse Change," or "Affiliate" is used repeatedly in operative clauses but is either undefined or defined incompletely.

7. Definitions Internally Consistent

What to check: Ensure that definitions do not contradict each other or contradict the operative clauses. Verify that a term defined in the definitions section carries the same meaning wherever it is used in the contract.

Why it matters: Inconsistent definitions create interpretation disputes. If "Deliverables" is defined one way in the definitions section but described differently in the scope of work schedule, the parties will disagree on what was actually promised.

Red flag: The contract uses both "Services" and "Work" interchangeably without defining the relationship between them. A definition in a schedule conflicts with the definition in the main body.

8. No Circular Definitions

What to check: Ensure no definition refers to another undefined term, or worse, refers back to itself. Each definition should be self-contained or reference only terms that are themselves properly defined.

Why it matters: Circular definitions are legally meaningless. A court cannot interpret a term that is defined by reference to itself. This is more common than most lawyers realise, particularly in heavily negotiated contracts where definitions are amended multiple times.

Red flag: "Intellectual Property" is defined as "all intellectual property rights," or "Affiliate" is defined using the term "Affiliate" within the definition itself.

9. "Material" and "Reasonable" Qualified Where Needed

What to check: Identify every use of subjective qualifiers — "material," "reasonable," "substantial," "significant," "promptly," "best efforts." Determine whether each instance is appropriately qualified with objective criteria or left dangerously vague.

Why it matters: Indian courts interpret "reasonable" by reference to what a reasonable person in the same circumstances would consider appropriate, but this still leaves significant room for dispute. "Material breach" without a definition of materiality invites litigation.

Red flag: The termination clause allows termination for "material breach" but nowhere defines what constitutes a material breach. "Reasonable efforts" is used without specifying any objective standard or benchmark.

10. Alignment with Statutory Definitions (Where Applicable)

What to check: Where the contract uses terms that have statutory definitions — "consumer" (Consumer Protection Act 2019), "personal data" (DPDP Act 2023), "goods" (Sale of Goods Act 1930), "workman" (Industrial Disputes Act 1947) — verify that the contractual definition does not conflict with or impermissibly narrow the statutory definition.

Why it matters: A contractual definition cannot override a statutory definition in matters where the statute is mandatory. If the contract defines "personal data" more narrowly than the DPDP Act 2023, the broader statutory definition will prevail, creating a gap between what the contract promises and what the law requires.

Red flag: The contract defines "employee" in a way that attempts to classify workers as independent contractors to avoid labour law obligations. The definition of "confidential information" attempts to override the Right to Information Act 2005.

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C. Obligations & Rights (Checkpoints 11–18)

This is the heart of the contract — the section that defines what each party must do, may do, and must not do. Most disputes arise here.

11. Mutual vs Unilateral Obligations Clear

What to check: For every obligation, identify which party bears it. Map out the obligations of Party A and Party B separately. Identify any obligations that are mutual and confirm they are genuinely reciprocal or whether one party bears a disproportionate burden.

Why it matters: Section 2(f) of the ICA defines "reciprocal promises." If a contract is structured as reciprocal but in practice imposes obligations primarily on one party, it may fail the test of mutuality, and a court may view the consideration as inadequate or the terms as unconscionable.

Red flag: One party has 15 specific, measurable obligations while the other party's obligations are limited to "making payments." Obligations are described in passive voice ("the work shall be completed") without identifying who must complete it.

12. Performance Standards Specified

What to check: For every obligation to perform work, deliver goods, or provide services, verify that the standard of performance is objectively defined. Look for SLAs, KPIs, acceptance criteria, quality benchmarks, or reference to industry standards.

Why it matters: Without performance standards, disputes about whether a party has discharged its obligations become subjective. Section 37 of the ICA requires that parties perform their promises according to the contract's terms. If those terms are vague, enforcement becomes difficult.

Red flag: The contract requires "satisfactory" performance without defining what satisfactory means. Service levels are described as "industry standard" without specifying which industry or which standard.

13. Timelines and Milestones Defined

What to check: Verify that every obligation has a clear timeline — specific dates, number of days from a trigger event, or defined milestones. Check whether timelines are realistic and whether "time is of the essence" has been specified where appropriate.

Why it matters: Under Section 46 of the ICA, where time is specified and performance at the specified time was intended by the parties, time becomes of the essence. Under Section 55, if time is of the essence and a party fails to perform within the specified time, the contract becomes voidable at the option of the other party.

Red flag: The contract uses vague language like "within a reasonable time" or "as soon as practicable" for critical deliverables. The milestones in the schedule do not match the timelines in the operative clauses.

14. Conditions Precedent Identified

What to check: Identify all conditions that must be satisfied before a party's obligation to perform arises. These may include regulatory approvals, third-party consents, completion of due diligence, or payment of advance consideration.

Why it matters: Section 31 of the ICA defines contingent contracts — contracts to do or not to do something if some event does or does not happen. If conditions precedent are not clearly identified, a party may claim its obligation never arose because an unstated condition was not met.

Red flag: The contract requires "all necessary approvals" without specifying which approvals, from whom, and what happens if they are not obtained. No long-stop date exists for satisfaction of conditions precedent.

15. Representations and Warranties Scope

What to check: Review each representation and warranty for accuracy, scope, and materiality qualifiers. Distinguish between representations (statements of fact at a point in time) and warranties (ongoing promises). Identify any knowledge qualifiers ("to the best of the party's knowledge") and assess whether they are appropriate.

Why it matters: Representations and warranties allocate risk between the parties. A breach of representation may give rise to a claim for misrepresentation under Section 18 of the ICA, while a breach of warranty is treated as a breach of contract under Section 73.

Red flag: Representations are heavily qualified with "to the best knowledge" of a party that should have actual knowledge. Warranties are limited to a very short survival period. There is no bring-down mechanism at closing.

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16. Covenants (Affirmative and Negative)

What to check: Identify all affirmative covenants (things a party promises to do during the contract term) and negative covenants (things a party promises not to do). Verify that negative covenants — non-compete, non-solicitation, exclusivity — comply with Section 27 of the ICA.

Why it matters: Section 27 of the ICA renders void any agreement in restraint of trade. Indian courts have consistently held that post-employment non-compete clauses are unenforceable, although non-solicitation clauses and non-competes during the term of the agreement may be upheld if reasonable. Getting this wrong means your covenant is unenforceable precisely when you need it most.

Red flag: A non-compete clause that extends beyond the contract term without being tied to a sale of goodwill (the only exception under Section 27). Negative covenants that are so broad they effectively prevent a party from carrying on its business.

17. Best Efforts vs Reasonable Efforts Distinction

What to check: Identify every efforts standard in the contract — "best efforts," "reasonable efforts," "commercially reasonable efforts," "all reasonable endeavours." Ensure the appropriate standard is used for each obligation and that the parties understand the difference.

Why it matters: While Indian courts have not drawn as sharp a distinction between these standards as English or American courts, the hierarchy matters. "Best efforts" implies a higher standard than "reasonable efforts." Using the wrong standard can either over-burden a party or give them too much latitude to avoid performance.

Red flag: The contract uses "best efforts" for a party's primary obligations but "reasonable efforts" for the counterparty's corresponding obligations, creating an asymmetry. No definition or objective benchmark is provided for any efforts standard.

18. Third-Party Obligations Addressed

What to check: Identify any obligations that depend on third-party performance — subcontractors, vendors, regulatory bodies, landlords, licensors. Verify that the contract addresses what happens if the third party fails to perform, and who bears that risk.

Why it matters: Under Indian law, privity of contract means a third party cannot be compelled to perform, and typically cannot enforce, obligations under a contract to which it is not a party. If your client's performance depends on a third party's cooperation, the contract must allocate that risk expressly.

Red flag: A party's critical obligations are dependent on a subcontractor's performance, but the contract does not address subcontractor failure. No flow-down provisions require the subcontractor to meet the same standards as the primary contractor.

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D. Payment & Consideration (Checkpoints 19–23)

Payment disputes are the most common source of commercial litigation in India. Precision in payment terms prevents disputes before they arise.

19. Payment Amounts and Currency Specified

What to check: Verify that all payment amounts are specified in clear, unambiguous figures — both in numbers and words where appropriate. Confirm the currency (INR or foreign currency) and whether amounts are inclusive or exclusive of taxes.

Why it matters: Section 2(d) of the ICA requires consideration for a valid contract. Vague consideration — "appropriate compensation" or "market rate" — can lead to disputes about quantum and, in extreme cases, arguments that consideration was never agreed upon.

Red flag: The contract specifies a fee "as mutually agreed from time to time" without any base amount. Foreign currency payments are specified without addressing exchange rate risk or the applicable conversion date.

20. Payment Schedule and Milestones

What to check: Verify that the payment schedule clearly specifies when each payment is due — on signing, on delivery, on acceptance, monthly, quarterly. Link payment milestones to deliverable milestones. Ensure the payment trigger events are objectively verifiable.

Why it matters: An unclear payment schedule leads to cash flow disputes. If payment is linked to "completion" but completion is not objectively defined, the paying party can delay payment indefinitely by claiming work is incomplete.

Red flag: Payment is triggered by "client satisfaction" without defining an acceptance process or deemed acceptance timeline. No invoice-to-payment timeline is specified.

21. Late Payment Interest and Penalties

What to check: Verify whether the contract specifies a late payment interest rate, and whether that rate complies with applicable law. Check if the interest is simple or compounding. Assess whether any late payment penalty constitutes a penalty or liquidated damages under Section 74 of the ICA.

Why it matters: Section 74 of the ICA provides that when a contract specifies a sum to be paid on breach, the party complaining of breach is entitled to reasonable compensation not exceeding the stated amount. Indian courts (unlike English courts) do not distinguish between penalties and liquidated damages in the same way — but excessively high rates may be reduced by a court to "reasonable compensation."

Red flag: Late payment interest is set at 36% per annum or higher, which a court may reduce as penal. No late payment interest is specified at all, leaving the aggrieved party with only the statutory rate under the Interest Act 1978. Penalty clauses are one-sided.

22. GST and Tax Treatment

What to check: Verify that the contract clearly addresses Goods and Services Tax — whether fees are inclusive or exclusive of GST, which party bears the GST burden, the applicable rate and HSN/SAC code, and the obligation to issue compliant tax invoices. For cross-border transactions, check reverse charge mechanism applicability.

Why it matters: GST litigation is among the most common commercial disputes in India today. An ambiguous tax clause can result in one party bearing an unexpected tax burden, or both parties claiming the other is responsible for GST.

Red flag: The contract is silent on GST. Payment terms state "all-inclusive" without specifying whether GST is included. No obligation exists for the supplier to provide GST-compliant invoices. The contract does not address withholding tax (TDS) under the Income Tax Act 1961.

23. Audit Rights on Financial Provisions

What to check: Verify whether the contract grants audit rights over financial provisions — particularly in revenue-sharing arrangements, cost-plus contracts, or licensing agreements based on usage metrics. Check the scope, frequency, notice period, and cost allocation for audits.

Why it matters: Without audit rights, a party that depends on the counterparty's reporting for its revenue has no mechanism to verify accuracy. This is particularly critical in software licensing agreements where fees are based on user counts or transaction volumes.

Red flag: A revenue-sharing arrangement with no audit rights. Audit rights exist but are limited to once every three years or require 90 days' advance notice, rendering them practically useless. The audited party controls which records are produced.

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E. Intellectual Property & Confidentiality (Checkpoints 24–28)

IP and confidentiality provisions are among the most heavily negotiated — and most frequently misunderstood — clauses in commercial contracts.

24. IP Ownership Clearly Assigned

What to check: For any contract involving the creation of intellectual property — software, designs, content, inventions, brands — verify that ownership of the created IP is expressly assigned. Determine whether the assignment covers all forms of IP (copyright, patents, trademarks, trade secrets) and all territories.

Why it matters: Under the Copyright Act 1957, the default position is that the author owns copyright — not the commissioning party. Section 17 provides limited exceptions for employment relationships, but for independent contractors, express assignment is essential. Without it, your client may pay for work it does not own.

Red flag: The contract states that work product "shall belong to the Client" without a proper assignment clause. No assignment deed is contemplated. The contract is silent on moral rights under Section 57 of the Copyright Act.

25. Licence Scope and Limitations

What to check: Where IP is licensed rather than assigned, verify the exact scope — exclusive or non-exclusive, territory, field of use, duration, sublicensing rights, and whether the licence survives termination.

Why it matters: An overly broad licence effectively transfers ownership without calling it an assignment — and may not trigger the same protections (such as consideration for assignment). An overly narrow licence may prevent the licensee from using the IP for its intended purpose.

Red flag: The licence is described as "non-exclusive" but the licensor agrees not to license to anyone else in the same territory — this is effectively an exclusive licence with different tax and registration implications. No restrictions on sublicensing.

26. Background IP Carve-Outs

What to check: Verify that each party's pre-existing intellectual property (background IP) is identified and expressly carved out from any assignment or broad licence. Ensure that the contract grants appropriate licences to use background IP only to the extent necessary for the contract's purpose.

Why it matters: Without a background IP carve-out, a broad IP assignment clause could inadvertently transfer ownership of a party's core technology or brand assets. This is particularly dangerous in technology development contracts where the developer uses its own tools and frameworks.

Red flag: The IP assignment clause assigns "all intellectual property created in connection with this Agreement" without excluding background IP. No schedule of background IP is annexed. The developer's proprietary tools or open-source components are not addressed.

27. Confidentiality Definition and Exclusions

What to check: Verify that "Confidential Information" is comprehensively defined and includes appropriate exclusions — information already in the public domain, independently developed information, information received from a third party without restriction, and information required to be disclosed by law or regulation.

Why it matters: An overbroad confidentiality definition can paralyse a party's business operations by restricting the use of information it acquired independently. Missing exclusions can create liability for disclosures required by law — for instance, under SEBI disclosure requirements or RBI reporting obligations.

Red flag: The confidentiality definition includes "all information disclosed by or on behalf of the Discloser" with no carve-outs. The exclusions do not include a regulatory or court-ordered disclosure carve-out. Confidentiality obligations are entirely one-sided.

28. Survival Period for Confidentiality

What to check: Verify that the confidentiality obligation has an expressly stated survival period after termination or expiry of the contract. Common periods range from two to five years, though trade secrets may warrant indefinite protection.

Why it matters: Without a survival clause, confidentiality obligations may terminate when the contract terminates, leaving sensitive information unprotected. Conversely, an indefinite confidentiality obligation may be challenged as an unreasonable restraint.

Red flag: No survival period is specified. The survival period is unreasonably short (six months) for commercially sensitive information, or indefinite for routine business information. The survival clause does not specify which provisions survive termination.

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F. Liability & Indemnity (Checkpoints 29–33)

Liability and indemnity clauses determine who pays when things go wrong. These are the clauses that matter most when a dispute actually arises.

29. Limitation of Liability Cap

What to check: Verify whether the contract contains a limitation of liability clause and, if so, the cap amount. Common formulations include a fixed monetary amount, a multiple of fees paid, or fees paid in the preceding 12 months. Check whether the cap applies per claim or in aggregate, and whether certain liabilities are carved out.

Why it matters: Without a liability cap, a party's exposure is theoretically unlimited. Under Section 73 of the ICA, damages for breach must be those that "naturally arose in the usual course of things from such breach" or those that the parties "knew to be likely to result from the breach." A well-drafted liability cap provides certainty.

Red flag: No liability cap exists, exposing your client to unlimited liability. The cap is set at the total contract value even though the potential damages could far exceed that amount. All carve-outs are in favour of one party, making the cap meaningless for the other.

30. Exclusion of Consequential Damages

What to check: Verify whether the contract excludes liability for indirect, consequential, incidental, special, or punitive damages. Check whether the exclusion is mutual. Identify any carve-outs to the exclusion.

Why it matters: Under Section 73 of the ICA, a party can claim both direct damages and damages that the parties knew were likely to result from the breach. An exclusion of consequential damages is not automatic under Indian law — it must be expressly agreed. Without it, a party may face claims for lost profits, business interruption, and reputational damage.

Red flag: No consequential damages exclusion exists. The exclusion is only in favour of one party. The carve-outs to the exclusion are so broad (e.g., "breach of confidentiality, IP infringement, indemnity obligations") that the exclusion is effectively gutted.

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31. Indemnity Scope and Triggers

What to check: Identify every indemnity obligation in the contract. For each, verify the trigger (what event or breach activates the indemnity), the scope (what losses are covered — direct, indirect, third-party claims, regulatory fines), and any caps or limitations.

Why it matters: An indemnity is a contractual promise to hold another party harmless from specified losses. Under Indian law, an indemnity under Section 124 of the ICA requires a promise to save the other party from loss caused by the promisor's conduct or by the conduct of any other person. The scope of the indemnity determines whether it provides meaningful protection or is merely cosmetic.

Red flag: Indemnity triggers are vague — "any breach of this Agreement" without specifying which provisions. The indemnity scope includes losses arising from the indemnified party's own negligence. One party has broad indemnity obligations while the counterparty has none.

32. Indemnity Procedure (Notice, Control of Defence)

What to check: Verify that the contract specifies the procedure for claiming indemnification — notice requirements (timing and form), who controls the defence of third-party claims, the indemnified party's obligation to cooperate, and restrictions on settlement without the indemnifying party's consent.

Why it matters: An indemnity without a clear procedure is difficult to enforce. If the indemnified party settles a third-party claim without notifying the indemnifying party, the indemnifying party may argue that the settlement was unnecessary or excessive, and refuse to honour the indemnity.

Red flag: No indemnification procedure is specified. The indemnified party has sole control over the defence and settlement of claims, potentially exposing the indemnifying party to inflated or collusive settlements. No timeline for indemnification notice.

33. Insurance Requirements

What to check: Verify whether the contract requires either party to maintain insurance — professional indemnity, general liability, product liability, cyber liability, or other specific coverage. Check the minimum coverage amounts, policy terms, and whether the other party must be named as an additional insured.

Why it matters: Insurance is the ultimate backstop when things go wrong. If a party's liability exceeds the contractual cap and it has no insurance, the liability cap is meaningless because there are no assets to satisfy the claim. In technology contracts, cyber insurance is increasingly critical given the DPDP Act 2023's emphasis on data protection.

Red flag: No insurance requirements despite significant potential liabilities. Insurance amounts are nominal relative to the potential exposure. No requirement to provide certificates of insurance or notify the other party of policy cancellation.

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G. Termination (Checkpoints 34–37)

Every contract ends. The termination provisions determine whether it ends cleanly or catastrophically.

34. Termination for Cause Events

What to check: Identify every event that triggers the right to terminate for cause. Common triggers include material breach, insolvency, change of control, failure to meet performance standards, regulatory non-compliance, and force majeure continuation beyond a specified period. Verify that the triggers are objectively verifiable.

Why it matters: Termination for cause typically entitles the terminating party to remedies — damages, accelerated payments, return of property. If the triggers are vague, a party may terminate prematurely, exposing itself to a wrongful termination claim.

Red flag: Termination triggers are one-sided — one party can terminate for "any breach" while the counterparty can only terminate for "material breach." Insolvency triggers may conflict with the moratorium provisions of the Insolvency and Bankruptcy Code 2016.

35. Termination for Convenience Terms

What to check: Verify whether either party has the right to terminate without cause (termination for convenience). If so, check the notice period, any termination fee or wind-down payment, and whether the right is mutual or unilateral.

Why it matters: A unilateral termination for convenience right without adequate compensation can render the entire contract illusory — one party can walk away at any time without consequence. This is particularly problematic for the party that has made significant upfront investments in performance.

Red flag: Only one party has termination for convenience rights. No termination fee or wind-down payment compensates the other party for sunk costs. The notice period is unreasonably short relative to the nature of the engagement.

36. Notice Period and Cure Period

What to check: For termination for cause, verify that the defaulting party has a reasonable cure period — the opportunity to fix the breach before termination becomes effective. Verify the notice period for termination for convenience. Ensure notice requirements are specific (written notice, to a specific address, by a specific method).

Why it matters: Indian courts generally disfavour forfeiture and will look for evidence that the defaulting party was given a reasonable opportunity to cure. A contract that allows immediate termination without notice or cure may be seen as inequitable, particularly if the breach is minor or easily remedied.

Red flag: No cure period is provided for any breach, regardless of severity. The cure period is unreasonably short (3 days for a complex technical breach). Notice can be given by email but the contract does not specify valid email addresses.

37. Post-Termination Obligations (Return of Property, Transition)

What to check: Verify that the contract addresses what happens after termination — return or destruction of confidential information, return of property and equipment, transition assistance, accrued payment obligations, survival of clauses, and wind-down of ongoing matters.

Why it matters: The absence of post-termination provisions creates a dangerous vacuum. Without express obligations, a party may retain confidential information, refuse to cooperate on transition, or claim that payment obligations ceased at termination. Disputes during the transition period are among the most expensive and disruptive.

Red flag: No post-termination obligations are specified. No transition assistance is required despite the engagement being critical to the other party's operations. The survival clause does not specify which provisions survive termination.

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H. Dispute Resolution (Checkpoints 38–41)

How disputes are resolved can matter as much as the substantive rights. The wrong dispute resolution clause can trap your client in an expensive, inefficient process.

38. Governing Law Specified

What to check: Verify that the contract expressly specifies the governing law — the substantive law that will apply to the interpretation and enforcement of the contract. In domestic contracts, this is typically "the laws of India." In cross-border contracts, the choice of governing law requires careful analysis.

Why it matters: Without a governing law clause, courts will apply conflict of laws principles to determine the applicable law — an expensive and unpredictable exercise. In contracts between Indian parties, specifying "the laws of India" (as opposed to the laws of a specific state) avoids any argument about which state's laws apply to matters not covered by central legislation.

Red flag: No governing law is specified. The governing law clause is internally contradictory (e.g., "governed by the laws of India and the State of New York"). In a cross-border contract, the governing law is of a jurisdiction with no connection to either party or the transaction.

39. Jurisdiction/Seat Designated

What to check: Verify that the contract specifies the jurisdiction of courts that will have authority over disputes. In arbitration clauses, distinguish between the "seat" (which determines the curial law and the courts with supervisory jurisdiction) and the "venue" (the physical location of hearings). Ensure the chosen jurisdiction is appropriate.

Why it matters: The choice of seat in an arbitration clause determines which court hears challenges to the arbitral award under the Arbitration and Conciliation Act 1996. The Supreme Court in BALCO v. Kaiser Aluminium (2012) established that the seat is analogous to an exclusive jurisdiction clause. A poorly chosen seat can render an arbitration clause ineffective.

Red flag: The contract specifies "venue" but not "seat" of arbitration, creating ambiguity. The jurisdiction clause says "courts in India shall have jurisdiction" without specifying which courts. A foreign-seated arbitration is specified in a purely domestic contract without good reason.

40. Arbitration Clause Completeness (Seat, Rules, Arbitrators, Language)

What to check: For contracts with an arbitration clause, verify the following elements: seat of arbitration, institutional rules (if any), number of arbitrators, process for appointing arbitrators, language of arbitration, and whether the arbitration is ad hoc or institutional.

Why it matters: An incomplete or pathological arbitration clause is one of the most common drafting errors in Indian contracts. The Supreme Court in Duro Felguera SA v. Gangavaram Port Ltd (2017) emphasised that arbitration clauses must be clear and complete. An ambiguous clause may be deemed inoperative, forcing the parties into court litigation — defeating the entire purpose of including an arbitration clause.

Red flag: The clause says "all disputes shall be referred to arbitration" without specifying any other details. The appointment mechanism creates a deadlock scenario (e.g., each party appoints one arbitrator, and the two appointed arbitrators appoint a third — but no mechanism exists if they cannot agree). No provision for emergency arbitration.

41. Escalation Mechanism Before Formal Dispute

What to check: Verify whether the contract includes a tiered dispute resolution clause — typically requiring negotiation or mediation before arbitration or litigation. Check whether the escalation steps are mandatory or optional, and whether time limits are specified for each tier.

Why it matters: Tiered dispute resolution clauses can save significant time and cost by resolving disputes before they escalate to formal proceedings. However, Indian courts have had varying approaches to whether the escalation tiers are mandatory conditions precedent to arbitration. Clarity in drafting is essential.

Red flag: The escalation mechanism is so vague that it is unclear whether it is mandatory. No time limits are specified for the negotiation or mediation stage, allowing a party to delay formal proceedings indefinitely. The clause requires "amicable resolution" without defining what that means.

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I. Regulatory Compliance (Checkpoints 42–46)

Indian contracts operate within a complex regulatory landscape. Non-compliance does not just expose your client to regulatory penalties — it can render contract provisions unenforceable.

42. DPDP Act 2023 Data Protection Clauses

What to check: For any contract involving the processing of personal data, verify compliance with the Digital Personal Data Protection Act 2023. Check for: lawful basis for processing, data principal consent mechanisms, purpose limitation, data retention periods, data breach notification obligations, cross-border data transfer provisions, obligations of Data Fiduciaries and Data Processors, and data processing agreements where required.

Why it matters: The DPDP Act 2023 imposes significant obligations on Data Fiduciaries and Data Processors, with penalties of up to Rs 250 crore for non-compliance. Contracts that involve personal data processing without DPDP-compliant provisions expose both parties to regulatory risk.

Red flag: The contract involves personal data processing but has no data protection clauses at all. The contract pre-dates the DPDP Act 2023 and has not been updated. Data processing terms are limited to a vague statement about "complying with applicable data protection laws." Cross-border data transfer provisions are missing despite data being processed outside India.

43. GST Compliance Provisions

What to check: Verify that the contract addresses GST registration status of both parties, the applicable GST rate and SAC/HSN code, place of supply rules, input tax credit eligibility, and the supplier's obligation to file timely returns (which affects the recipient's input tax credit).

Why it matters: Under the GST regime, a recipient's ability to claim input tax credit depends on the supplier filing accurate returns. If the supplier fails to report the transaction, the recipient may lose its input tax credit — a significant financial impact. Contracts must allocate this risk.

Red flag: No GST clause exists. The supplier does not warrant that it will file timely GST returns. The place of supply determination is incorrect, potentially resulting in IGST being charged instead of CGST+SGST or vice versa. The contract does not address reverse charge mechanism applicability.

44. Stamp Duty Adequacy for Execution State

What to check: Verify that the contract is properly stamped under the Indian Stamp Act 1899 (or the relevant state stamp act). Determine the applicable stamp duty rate based on the nature of the agreement and the state of execution. Ensure that the stamp duty is paid before or at the time of execution.

Why it matters: An insufficiently stamped or unstamped contract is inadmissible as evidence in court under Section 35 of the Indian Stamp Act 1899. This means that even if your client has an airtight case, it cannot use the contract to prove it. Some states allow impounding and payment of duty with penalty, but this is not guaranteed.

Red flag: The contract is unstamped or inadequately stamped. The parties have executed the contract in a state with high stamp duty to avoid lower stamp duty in another state, but the contract's subject matter or performance is in the latter state. E-stamping has not been done where required.

45. Sector-Specific Compliance (RBI/SEBI/RERA as Applicable)

What to check: Identify whether the contract falls within a regulated sector and, if so, verify compliance with the relevant regulator's requirements. Common examples include: RBI regulations for financial services, lending, and foreign exchange; SEBI regulations for securities, investment advisory, and portfolio management; RERA requirements for real estate transactions; IRDAI requirements for insurance; and TRAI requirements for telecommunications.

Why it matters: Contracts that violate regulatory requirements may be rendered void or unenforceable. For instance, an investment advisory agreement that does not comply with SEBI (Investment Advisers) Regulations 2013 may be unenforceable. A real estate sale agreement that does not comply with RERA may attract penalties for the developer.

Red flag: A lending agreement does not comply with RBI's Fair Practices Code. A real estate agreement is not registered with RERA. A foreign investment is structured to circumvent FEMA regulations. The contract involves a regulated activity but makes no reference to the applicable regulatory framework.

46. Anti-Corruption and Anti-Bribery

What to check: Verify whether the contract includes anti-corruption and anti-bribery representations, warranties, and covenants. Check for compliance with the Prevention of Corruption Act 1988 (as amended in 2018) and, for cross-border contracts, foreign anti-corruption laws such as the US Foreign Corrupt Practices Act or the UK Bribery Act 2010.

Why it matters: The Prevention of Corruption Act 1988 (as amended in 2018) introduced the offence of giving a bribe (Section 8) and made commercial organisations liable for bribery by their associated persons (Section 9) unless they can prove adequate procedures were in place. Contractual anti-corruption provisions are a critical component of those "adequate procedures."

Red flag: No anti-corruption provisions despite the contract involving government procurement, public sector entities, or jurisdictions with high corruption risk. The contract involves agents or intermediaries but does not restrict facilitation payments. No audit rights over intermediary payments.

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J. Boilerplate & Execution (Checkpoints 47–50)

"Boilerplate" is a misnomer. These clauses are anything but routine. They control how the contract operates, evolves, and is enforced.

47. Force Majeure Clause Completeness

What to check: Verify that the force majeure clause is comprehensive and appropriate. Check the definition of force majeure events (natural disasters, pandemics, government actions, sanctions, war, cyberattacks), the notification requirements, the affected party's obligations during the force majeure period, and the consequences if force majeure continues beyond a specified period.

Why it matters: The Indian Contract Act 1872 addresses impossibility of performance under Section 56 (doctrine of frustration), but this is a narrow defence. A well-drafted force majeure clause expands protection beyond Section 56 by covering events that make performance impracticable or commercially unviable, not just impossible. Post-COVID, force majeure clauses have received intense judicial scrutiny.

Red flag: The force majeure clause is a generic two-line provision that does not list specific events. Pandemics, government lockdowns, and sanctions are not included (a critical gap post-2020). No obligation on the affected party to mitigate. No termination right if force majeure continues beyond a reasonable period.

48. Assignment and Novation Restrictions

What to check: Verify whether the contract restricts assignment (transfer of rights and obligations to a third party) and novation (substitution of a new party). Check whether consent to assignment is required, whether it can be unreasonably withheld, and whether assignment to affiliates is permitted without consent.

Why it matters: An unrestricted right to assign means your client may find itself contracting with an entirely different entity — one that may not have the same financial strength, capability, or reputation as the original counterparty. Under Indian law, assignment of obligations (as opposed to rights) generally requires consent, but this must be expressly addressed in the contract.

Red flag: No assignment restriction exists, allowing either party to freely assign the contract. The assignment clause permits assignment to "affiliates" without defining "affiliate." Change of control is not addressed as a trigger for consent or termination.

49. Entire Agreement and Amendment Provisions

What to check: Verify that the contract contains an entire agreement clause (confirming that the contract represents the complete agreement, superseding all prior negotiations and agreements) and an amendment provision (specifying that amendments must be in writing and signed by both parties).

Why it matters: Without an entire agreement clause, a party may argue that oral representations, email exchanges, or prior term sheets form part of the contractual arrangement, potentially expanding or contradicting the written terms. Without a written amendment requirement, a party may argue that the contract was orally varied — a claim that is difficult to disprove.

Red flag: No entire agreement clause exists. The amendment clause allows amendments "by written notice" from one party rather than requiring mutual written agreement. The entire agreement clause does not expressly exclude liability for fraudulent misrepresentation (which cannot be excluded).

50. Execution Formalities (Witnesses, Notarisation, Registration)

What to check: Verify that the contract complies with all execution formalities required under applicable law. Check: whether witnesses are required (and their signatures are obtained), whether notarisation is required, whether the contract must be registered under the Registration Act 1908, whether e-signatures are permissible under the Information Technology Act 2000 and the Indian Evidence Act 1872, and whether stamp duty has been paid.

Why it matters: Failure to comply with execution formalities can render a contract unenforceable. Under Section 17 of the Registration Act 1908, certain documents — including leases exceeding one year, transfers of immovable property, and certain partnership agreements — must be registered. Under Section 49, an unregistered document that is required to be registered is inadmissible as evidence.

Red flag: A lease for more than one year is not registered. The contract relies on electronic signatures but the type of e-signature does not meet the requirements of Section 3A of the IT Act 2000 for legal validity. Witnesses have not signed despite being required under the applicable stamp act. The contract is executed as a simple agreement when it should be executed as a deed.

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Your Contract Review Workflow: Putting It All Together

Now that you have the 50 checkpoints, here is how to integrate them into an efficient workflow:

Step 1: Initial Scan (10 minutes) Read the contract once without taking notes. Get a sense of the deal structure, the parties' respective bargaining positions, and the overall quality of drafting.

Step 2: Structured Review (60–90 minutes) Work through the 50 checkpoints methodically. Flag issues as red, amber, or green. Red issues require immediate attention. Amber issues require discussion. Green items are acceptable.

Step 3: Risk Matrix (15 minutes) Compile your flags into a risk matrix. For each red and amber issue, note the clause number, the risk, and your recommended action — accept, negotiate, or reject.

Step 4: Internal Review (30 minutes) Discuss your findings with the senior lawyer or client stakeholder. Prioritise issues based on commercial importance and negotiation leverage.

Step 5: Markup and Negotiate (variable) Prepare a redline version addressing all flagged issues. Present your proposed changes with explanations that balance legal protection with commercial pragmatism.

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Common Mistakes to Avoid

Even experienced lawyers fall into these traps during contract review:

1. Starting with boilerplate: Always start with the commercial terms. Boilerplate matters, but the deal terms are where the real risk lies.

2. Reviewing in isolation: A contract does not exist in a vacuum. Review it alongside the term sheet, prior agreements, board resolutions, and regulatory approvals.

3. Ignoring schedules and annexures: The operative clauses say "as set out in Schedule A" — but Schedule A is missing or contradicts the main body. Always verify.

4. Assuming symmetry: Just because a clause reads as mutual does not mean it operates equally. An indemnity triggered by "breach of any representation" may burden one party more than the other if that party has made more representations.

5. Neglecting execution formalities: The best-drafted contract in the world is worthless if it is inadmissible because of inadequate stamping or missing registration.

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Frequently Asked Questions

How long should a thorough contract review take?▾

For a standard commercial contract of 20–30 pages, a thorough manual review using this 50-point checklist takes approximately two to three hours. Complex contracts — M&A agreements, project finance documents, or multi-party joint ventures — can take significantly longer. AI-powered tools like LexiReview can reduce the initial triage to under a minute, allowing you to focus your manual review time on the flagged issues rather than reading every line.

What are the most critical checkpoints in a contract review?▾

While all 50 checkpoints matter, the highest-risk items are: liability and indemnity provisions (checkpoints 29–33), termination clauses (checkpoints 34–37), payment terms (checkpoints 19–23), and dispute resolution (checkpoints 38–41). These are the clauses that determine what happens when things go wrong — and things always go wrong eventually.

Is this checklist applicable to all types of Indian contracts?▾

This checklist is designed to cover commercial contracts generally — service agreements, licensing agreements, supply contracts, technology agreements, and similar. Specialised contracts (real estate transactions, employment agreements, financial instruments, M&A documents) require additional sector-specific checkpoints. However, the 50 points here form the foundation that applies across contract types.

How does the Indian Contract Act 1872 affect contract review?▾

The Indian Contract Act 1872 is the foundational statute governing contracts in India. Key provisions that directly affect contract review include: Section 10 (requirements for a valid contract), Sections 11–12 (capacity to contract), Section 23 (lawful consideration and object), Section 27 (restraint of trade), Section 56 (frustration), Section 73 (damages for breach), and Section 74 (liquidated damages). Every checkpoint in this list can be traced back to one or more provisions of the ICA.

What is the role of stamp duty in contract enforceability?▾

Stamp duty is a frequently overlooked but critical aspect of contract enforceability in India. Under Section 35 of the Indian Stamp Act 1899, an instrument that is not duly stamped is inadmissible as evidence in court. This means a perfectly drafted contract is unenforceable if it is not properly stamped. Stamp duty rates vary by state and by the nature of the instrument, making it essential to determine the correct duty at the time of execution.

Do I need to check for DPDP Act 2023 compliance in every contract?▾

Not every contract, but any contract that involves the collection, storage, processing, or sharing of personal data must be reviewed for DPDP Act 2023 compliance. This includes most technology services agreements, employment contracts, customer-facing agreements, vendor agreements involving data processing, and marketing arrangements. Given the breadth of modern business operations that involve personal data, it is safer to assume DPDP compliance is relevant unless the contract clearly involves no personal data whatsoever.

What is the difference between an indemnity and a limitation of liability?▾

A limitation of liability caps the total amount one party can claim from the other for breach of contract. An indemnity is a promise by one party to compensate the other for specific losses — often including third-party claims — regardless of fault. The two provisions work together: the indemnity defines what losses are covered, and the limitation of liability caps the quantum. In well-drafted contracts, indemnity claims are often carved out from the general liability cap, meaning they can exceed the cap. This is why both provisions must be reviewed together.

How should I handle arbitration clauses in Indian contracts?▾

Arbitration clauses require particular care under the Arbitration and Conciliation Act 1996. At minimum, specify: (a) the seat of arbitration (which determines the supervisory court), (b) the number of arbitrators (one or three), (c) the appointment mechanism, (d) the institutional rules (if any), and (e) the language of proceedings. Avoid pathological clauses that create deadlocks or ambiguity. For domestic disputes, institutional arbitration under bodies like MCIA, DIAC, or SIAC is increasingly preferred over ad hoc arbitration for its efficiency and procedural certainty.

Can AI tools fully replace manual contract review?▾

No — and any responsible AI platform will tell you that. AI tools like LexiReview dramatically accelerate the review process by flagging risks, identifying missing clauses, and checking compliance across 150+ parameters in seconds. But legal judgment — understanding the commercial context, advising on negotiation strategy, and making risk-benefit trade-offs — remains a human skill. The best approach is to use AI for comprehensive risk identification and then apply your expertise to the flagged issues. This hybrid approach is faster, more thorough, and more cost-effective than either pure manual review or unsupervised AI review.

How often should I update my contract review checklist?▾

Review and update your checklist at least annually, and immediately when significant legislative changes occur. Recent examples include the enactment of the DPDP Act 2023, amendments to the Arbitration and Conciliation Act, changes in GST regulations, and updates to SEBI and RBI circulars. Staying current is essential because a contract that was compliant when drafted may become non-compliant as regulations evolve.

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Final Thoughts

Contract review is not a luxury — it is the most fundamental risk management activity in legal practice. Every clause you miss is a risk your client carries unknowingly. Every ambiguity you overlook is a dispute waiting to happen.

This 50-point checklist gives you a systematic, repeatable process to ensure nothing falls through the cracks. Print it. Save it. Use it on every contract that crosses your desk.

But also recognise that even the most disciplined manual process has limits. Human attention flags after the third contract of the day. Time pressure forces shortcuts. Unfamiliar clause structures go unnoticed.

That is precisely why AI-assisted contract review exists — not to replace your judgment, but to ensure that every contract gets the same rigorous, 50-point review regardless of deadline pressure or volume.

This checklist covers 50 points. LexiReview checks 150+ → Start Free