Drafting and review of the commercial agreements a business runs on — supply, services, distribution, vendor, and collaboration contracts — built under the Indian Contract Act, 1872 to be clear today and to hold if they are ever tested.
Quick Summary
A commercial contract is the document that turns a business arrangement into enforceable terms — what each side will do, by when, for how much, and what happens if something goes wrong. Most disputes between businesses are, at their root, disputes about a contract that was unclear, unbalanced, or never properly written down. A well-drafted contract does the opposite: it makes the bargain precise, allocates risk deliberately, and gives each side certainty. Governed by the Indian Contract Act, 1872, a sound commercial contract is the quiet foundation of almost every business relationship.
The work covers the full range of agreements a business uses — supply and purchase, services, distribution and agency, vendor and subcontractor, and partnership or collaboration contracts — whether drafting one from scratch, reviewing a counterparty's draft before signing, or negotiating terms. Luke & Luka drafts and reviews commercial contracts to be clear, balanced, and enforceable, with the clauses that matter most — payment, liability, termination, and dispute resolution — written deliberately rather than left to a template.
Key references: Indian Contract Act, 1872 (India Code) · Ministry of Corporate Affairs · Last reviewed: June 2026
Every business runs on agreements — with suppliers, customers, vendors, partners, and service providers. A commercial contract is what turns one of those arrangements from a conversation or a quotation into enforceable terms: a record of what each side will do, by when, for how much, and what happens if something does not go to plan.
The value of getting it right is easiest to see in what happens when it goes wrong. Most disputes between businesses are, at root, disputes about a contract — one that was vague about scope, silent on payment or termination, unbalanced in who carried the risk, or never properly written down at all. When the relationship is working, the contract sits unread in a drawer; when it stops working, it is the only thing that matters.
A well-drafted contract is built for that second moment. It makes the bargain precise, allocates risk deliberately rather than by accident, and gives both sides certainty about where they stand. Under the Indian Contract Act, 1872, it is the foundation on which a sound business relationship rests.
Businesses use a wide range of commercial contracts, each governing a different kind of relationship:
Each follows the same underlying contract principles, but each carries its own commercial risks — and the value of careful drafting is in addressing the risks specific to the arrangement, not just filling in a generic template.
Most of a commercial contract is uncontroversial. A handful of clauses, though, decide what actually happens when the relationship is tested — and these are where careful drafting earns its value.
The clause that defines exactly what is being supplied or done. Vague scope is the single most common source of commercial disputes, because it lets each side genuinely believe something different was agreed. Precision here prevents most arguments before they start.
How much, when, and on what conditions payment is due — including milestones, advances, and the consequences of late or non-payment. Clear payment terms are what make a debt recoverable without argument about whether it was owed.
Who bears the cost when something goes wrong, and who must compensate whom for particular failures. These clauses allocate risk between the parties, and they are often where a contract is most heavily negotiated.
A cap on how much one party can be required to pay — for example, limited to the contract value, and excluding indirect or consequential losses. Without it, exposure under a contract can far exceed the value of the deal, which is why it is one of the most consequential clauses to get right.
How and when each side can bring the contract to an end — for convenience, for breach, or on certain events — and what happens on exit. A contract with no clear exit is one a party can find itself trapped in.
What information must be kept confidential, and who owns the intellectual property created or shared under the contract. In services and technology arrangements especially, IP ownership is a clause that should never be left ambiguous.
What happens when events outside either party's control — disaster, disruption, a change in law — prevent performance. The clause determines whether non-performance in those circumstances is a breach or an excused suspension.
Which law applies, and how disputes will be resolved — usually by arbitration, which keeps the matter private and is generally faster than litigation. This is the clause that decides how, where, and how expensively a disagreement gets settled.
Commercial contract work comes in two forms, and both matter. Drafting a contract from scratch lets the terms be built around the actual arrangement and the client's position. Reviewing a contract the other side has prepared is, if anything, the more common need — and the more important to do carefully, because a counterparty's draft is written to protect the counterparty.
A review is not a formality. It identifies where the terms tilt toward the other side — open-ended liability, payment terms that favour them, a termination right they hold but you do not, a dispute clause that sends any disagreement to an inconvenient forum — and sets out what to negotiate before signing. The cost of that review is small against the cost of discovering the imbalance only when the contract is invoked.
Whichever form it takes, the aim is the same: that the client signs knowing exactly what each clause commits them to.
The failures that turn into disputes are familiar, and almost all of them are failures of drafting:
Each is avoidable in the drafting. A contract written carefully at the outset is far cheaper than the dispute a careless one invites.
The firm drafts, reviews, and negotiates commercial contracts across the range a business uses:
The aim is a contract that is clear while the relationship is working and reliable if it is ever tested. Subject to the applicable law and the specific facts, each contract is drafted to reflect the actual bargain and to allocate risk deliberately — not a generic form.
Under the Indian Contract Act, 1872, an agreement is an enforceable contract when it has the essential elements: an offer and its acceptance, lawful consideration (something of value passing between the parties), the free consent of parties competent to contract, and a lawful object. A contract missing one of these — for example, where consent was obtained by coercion or misrepresentation, or where the object is unlawful — may be void or voidable. A well-drafted commercial contract is built to satisfy these requirements clearly, and to set out the parties' obligations precisely enough that they can be enforced if one side does not perform.
A contract drafted by the other party is written to protect their interests, and it is worth having it reviewed before signing rather than assuming it is balanced. The review identifies where the terms favour the counterparty — on payment, liability, termination, or dispute resolution — and what should be negotiated. Whether to use the counterparty's draft or prepare your own depends on the situation and the relative bargaining position, but the more important point is that no commercial contract should be signed without understanding what each clause actually commits you to.
A limitation of liability clause caps the amount one party can be required to pay the other if something goes wrong — for example, limiting liability to the value of the contract, and excluding certain indirect or consequential losses. It matters because, without it, a party's exposure under a contract can be open-ended and far larger than the value of the deal itself. It is one of the most negotiated and most consequential clauses in any commercial contract, and one that should be considered deliberately rather than accepted as drafted.
In principle, yes — the Indian Contract Act does not require most contracts to be in writing, and a verbal agreement that has the essential elements of a contract can be binding. The difficulty is practical: a verbal agreement is hard to prove, because there is no record of what was actually agreed, and disputes turn into one party's word against the other's. Certain contracts are also required by law to be in writing or registered. For any commercial arrangement of value, a written contract is not just safer — it is what makes the terms provable if they are ever questioned.
A contract is intended to create binding legal obligations that can be enforced. A memorandum of understanding usually records an understanding or intention between parties — the shape of a proposed arrangement — without necessarily being legally binding in itself. The distinction depends on the wording and the parties' intention rather than the title: an MOU can be binding if it has the elements of a contract and the parties intended it to bind, and a document called a contract can leave certain matters non-binding. What controls is whether the language shows an intention to be legally bound, which is one of the things careful drafting makes clear.
The firm drafts, reviews, and negotiates commercial contracts for businesses in India — supply, services, distribution, vendor, and collaboration agreements — built to be clear, balanced, and enforceable. Matters are handled for clients in Kerala and across India.
luka@lukeandluka.in+91 96057 61330