Knowledge Resources › Key Clauses in a Contract
Last updated: 20 August 2026
A well-drafted contract records clearly what each side has agreed, and reduces the room for later disputes. This note outlines the basic requirements for a valid contract and the clauses commonly found in commercial agreements.
When is an agreement a valid contract?
Under the Indian Contract Act, 1872, an agreement is a contract when it is made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and is not expressly declared void (section 10). In broad terms, this requires:
- an offer and its acceptance;
- free consent (not caused by coercion, undue influence, fraud, misrepresentation or mistake);
- parties competent to contract — of the age of majority, of sound mind, and not disqualified by law (section 11);
- lawful consideration and a lawful object; and
- that the agreement is not one the Act declares void.
Clauses commonly found in a commercial contract
- Parties and recitals — who is contracting, and the background/purpose.
- Scope of work / obligations — what each party must do.
- Term and termination — how long it lasts and how it can be ended.
- Fees and payment — amounts, timing, taxes, and late-payment terms.
- Confidentiality — how each side must treat the other’s confidential information.
- Intellectual property — who owns, and who may use, the IP involved.
- Data protection — obligations where personal data is handled (see Data Processing Agreements).
- Warranties and representations — the assurances each side gives.
- Limitation of liability and indemnity — caps on liability, and who bears specified losses.
- Force majeure — relief where events outside a party’s control prevent performance.
- Governing law and dispute resolution — the applicable law, and how disputes are resolved (courts or arbitration).
- Boilerplate — notices, assignment, entire agreement, amendment, and severability.
Which clauses matter most, and how they should be drafted, depends on the specific transaction. This page is a general overview and is not legal advice.