ASSIGNMENT OF CONTRACT DRAFTING COURSE

Q.1. What is the Contract? Explain the types of Contract with Examples or illustrations?

A. 1 A contract is a type of agreement where there is an exchange of legally enforceable promises

between parties. To create a legally-binding contract, there must be 6 essential elements:

1. There must be an offer where one party is willing to enter into an agreement with another party.

2. There must be an acceptance where one party signifies their willingness to enter into a contract
with the party making the offer. An offer can be accepted by words or actions.

3. There must be consideration given by each party. Consideration is a right, interest, profit or benefit
experienced by one party with some detriment, forbearance, loss or responsibility experienced by
another party. An example of consideration between parties is one party paying money and the other
party providing a service.

4. Parties to a contract must intend for the agreement to become binding when it is accepted by the
other party.

5. Generally, only parties who are privy to (named in) a contract can sue or be sued on the contract.
Third party rights are usually not recognized except in specific circumstances. 6. There must be
certainty of terms between the parties to the contract. Each party must know what the terms of the
contract are.

TYPES OF CONTRACT

Contracts may be classified on the basis of enforce-ability, mode of creation, extent of execution or
the form of the contract as follows: Contracts on the basis of enforce-ability:

a contract on the basis of enforce-ability can be of the following kind:

1. Valid contract

2. Voidable contracts

3. Void agreement

4. Unenforceable contract

5. Illegal agreement

Contract on the basis of mode of creation: a contract on the basis of mode of creation can be of the
following kind

1. Express contract

2. Implied contracts
3. Quasi contract

Contract on the basis of extent of execution: a contract on the basis of extent of execution can be of
the following kind:

1. Executed contracts

2. Executory contract

3. Unilateral contract

4. Bilateral contract

Contract on the basis of form: a contract on the basis of form can be of the following kind

1. Ordinary contract

2. Standard contract

Q.2. State the basic points which should be kept in mind while drafting a Contract?

A.2 While drafting a contract one needs to keep in mind the following points-

1 Be clear… Be clear as to what the document means to say, does not mean to say and need not say.
Make your self well-versed with various provisions of laws the legal document deals with.

2. Remove the ambiguity… Try to clear all the ambiguous instances from the document. The
statements made in the documents should not communicate more than one concept…

3. Be precise… The matter to be covered by a draft should be precise and concise. It must convey the
complete message for which it is prepared. The reader should feel inspired by it.

4. Clarity… There must be clarity and preciseness not only in each sentence but also in the overall
presentation of the draft. There must be a nexus between sentences and different paragraphs. The
draft shall be in sequence and relevant to the subject matter.

5. Unilateralism… be prepared for vetting, review without necessarily accepting casual and non-
contextual suggestions. Clarity as to the bare minimum contents you require for protecting and
safeguarding your interest has to be adhered to.

6. Remember the chronology… If the document is supplementary to any other master document/s
make sure to comply with master documents and other supplements as well. If needed, draft the
details of the other documents in a chronological order.

7. Define important things… Include a chapter of definitions to define and explain the important
technical concepts relating to the document. Make sure to adhere to the definitions throughout the
document. The chapter containing the definitions is placed at the beginning of the document.

8. Adaptability… The matter to be included in a draft must be adaptable to the factual position, to the
circumstances of the case and feasible/suitable to the enforcement.
9. Lucidity… The language and words used while drafting must be lucid, simple and appropriate to
the situation. There should not be longer sentences or paragraphs. It must convey the message
involved in it to a person of ordinary prudence. The language must be polite and make the other side
form a good opinion.

10. Be Logical… So that the risk of omission and repetition is minimized. Comply with incidental
mandatory requirements… such as stamping of documents, registration, vetting, etc. Respect
precedent and forms… without converting yourself into a mechanical follower, so that allegations
like “nonapplication of mind” or “cut and paste” technologist can be avoided

Q.3. State any four Important Clauses which should be incorporated in a Contract? (It can be
any four upon your understanding)

A.3. Clauses to be included in the contract are mentioned below

1. Title of agreement- It is necessary to name the agreement. The title of the agreement denotes
nature or type of agreement.
2. Names of the parties-The parties are provided with a particular name that is used to refer them in
the entire agreement.
3. Recitals-This clause gives the background of the parties and the purpose of entering into the
agreement. If it is a supplementary (additional) agreement then the reference of the main
agreement is provided under this clause.
4. Definitions-There are certain terms used in the agreement which have a technical meaning. Such
terms should be defined under this clause of the agreement that makes interpretation accurate.
5. Representation and Warranties-This clause provides an underlying statement of fact by the parties
(for example, Mr. X is sole owner of the property, the property is free from encumbrances). In
future, if it is proved that the other party has misrepresented the facts, the party has the right to
seek compensation from the guilty party.

Q.4. Draft a Proper Legal Notice? (You can assume your own facts and Circumstances but
kindly follow the format)

A.4

NOTICE UNDER SECTION 138 OF THE NEGOTIABLE INSTRUMENTS

ACT, 1881

AJIT GUPTA Advocate Ch. No. 234676,

Delhi High Court New Delhi.
Ph.011- 2338XXXX
 REGD A/D / U.P.C.

Dated: 16.06.2021

To,

Sh. Nirmal Bhang

R/o , 12/B Connaught Place

New Delhi - 110011

And also at: #44, Hari Nagar, Sonipat, Haryana.

SUB: LEGAL NOTICE UNDER SECTION 138 OF THE NEGOTIABLE

INSTRUMENTS ACT, 1881
Dear Sir,

Under the instructions from and on behalf of my client Sh. Narayan Surana,
R/O 14/3 Amar Colony, New Delhi-110065 (hereinafter referred to as ‘my
client’), I serve you with the following notice:

1. That my client is engaged in the business of Stock and Share Trading.

During the ordinary course of business you addressee had seeked a personal loan

from my client the said personal loan was issued via a cheque bearing no345639

dated 15.03.2021 of Kotak Bank A/C 9728758, Khanpur, New Delhi-110062 for

a sum of Rs. 5,00,00,000(Indian Rupess Five Crore Only), as part payment towards

discharge of your liability which you addressee had incurred by the personal loan

sought.

2. That the above-mentioned cheque was deposited by my client with his banker

HDFC Bank, Karol Bagh , New Delhi, for encashment on 15. 03. 2021.

3. That the said cheque was returned to my client with an endorsement “Dishonoured

for insufficiency of funds.” That the dishonored cheque along with the cheque

returning memo of bank dated 07.06.2021 was returned to my client.

5. That for the first time my client came to know about the dishonoring of the

said cheque on 07.06.2021.

6. That on account of the dishonoring of the cheque you addressee are guilty of

committing offences punishable u/s 138 of the Negotiable Instruments Act 1881 (as

amended up to date).
Now through this legal notice I hereby call upon you addressee to make the

payment of 5,00,00,000(Indian Rupess Five Crore Only , amount of the said

dishonored cheque, within fifteen days of the receipt of this notice, failing

which my client shall be constrained to take legal action against you by way of

civil as well as criminal proceedings, at your risk as to cost and consequences

resulting there from.

Ajit Gupta,
Advocate, Delhi High Court
Jangpura Extn. New Delhi-
110019 Ph.011- 2437XXXX
Yours Sincerely

Advocate Copy kept in my office for future reference and use.

*****