Legal Advice on Execution of Agreements and Covenants for Foreign Corporations-Clothing & Apparel Industry: Best FDI Attorney in Delhi NCR

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“Execution of agreements, contracts and covenants is/are a very important task for any foreign corporation. Further, the same involves high degree of expertise and legal proficiency and should be only carried out by a good FDI attorney in India who is well versed with the business laws of India and the corporate laws of India. If the agreement or contract is not prepared in a watertight manner the same shall cause irreparable losses and injuries to the foreign investor. A weak agreement or contract cannot be properly enforced in the Court of law in India.”

Introduction
In case of Foreign Direct Investment in India, there will be a number of contracts and covenants which will be entered into between the parties who entered into the contract. Some of the common contracts which are dealt with between the parties are service agreements, Non-Disclosure Agreements (NDA), third party agreement, shareholder’s agreement, franchise agreement etc. The execution of some of those agreements are discussed below:

Executing a Third Party Agreements
A third person cannot claim for damages under an agreement to which he is not even a party, as per the doctrine of privity of contract. When a contract gives a third party the status of intended beneficiary, it not only implies that the performance must be produced to or for the advantage of the third party, but it also means that the contract expresses the intention to give the beneficiary an independent cause of action to implement the promise. The original contracting parties are both obligated to fulfil the contract after the beneficiary or the third parties’s rights have vested. At that time, any attempt by the parties to contract, i.e., promisor or promisee to revoke or amend the contract is void. Indeed, the third party has the power to sue the promisee for tortious infringement with the third party’s contractual rights. When a contract which is entered into for the profit of a third party is violated by the promisor’s failure to perform, the beneficiary, i.e, the third party, like any other party to the contract, can sue the promisor for the breach. Since the rights of the third party are specified by the contract between both the parties who entered into the contract, the promisor may raise any contract defenses that may be raised against the promisee against the beneficiary.

Execution of a Non-Disclosure Agreement (NDA)
The most typical practice in organizations is to establish a nondisclosure agreement (NDA) is to preserve the confidentiality of information exchanged with vendors or workers; nevertheless, it is critical to verify that the NDA is legally enforceable and contains all of the key terms of a legitimate contract. Employees must sign NDAs because they have access to crucial trade secrets and sensitive information that the company does not want disclosed with anyone else. Signing an NDA is pointless unless it is well-drafted and that it can be enforceable in a court of law. For a contract to be enforceable , it needs to produce it in court to show that you entered into it lawfully and that the conditions of the contract are legitimate.

Executing a Service Agreements
The service agreement lays forth the terms of the partnership between the investor and the provider. These contracts, mostly include standard terminology and clauses. Confidentiality, termination, modification, payment, choice of jurisdiction, law or dispute resolution, IP ownership, type of services offered, and liability insurance are among the essential terms to check for when entering into a service agreement. The scope of services portion specifies the services that will be provided to the firm. The payment section specifies the amount, timing, and manner in which the supplier will be compensated. The amendment section explains how the parties can modify the agreement, in case there is a change in the scope of services, throughout the partnership. The section on termination explains the ways through which parties can end their partnership and who is accountable in the event of a dispute.

Preparation of a Shareholders Agreement
A shareholder agreement establishes the connection between the firm and its shareholders. The agreement protects both majority and minority owners’ rights and duties, as well as ensuring that all shareholders are fairly dealt. A shareholders’ agreement is a legally binding contract, and the rules governing its enforceability, as well as the legal remedies in the event of a violation, will, in most situations, be standard contract law principles. The legal consequences of an infringement will largely depend on the facts of each scenario, but the four most probable and common outcomes are that the courts might order specific performance of the contract or of the violated provision, that the innocent party might well elect to cancel or affirm the contract, or when the innocent party may request an injunction to prevent a threatened breach, and that the damages may be recoverable by the innocent party.

Drafting and preparation of proper agreements and contracts including the vendor agreement, service agreement, third party agreements, licensing agreements, transfer of technology agreement, outsourcing agreement etc is to be prepared and vetted by a good FDI attorney in India.

Conclusion
The parties to contract should take reasonable precautions and draft the contract protecting the interest of both the parties to the contract and also by protecting the interest of beneficiaries, partners, shareholders etc. All agreements have a standard mode of execution and liabilities of parties depends on the clauses in the contract.
Authored By: Adv. Anant Sharma & Afsana Khan