By Prakhar Rai, Founder, My Legal Pal. Advocate, Bar Council of India. LL.B, NLSIU Bangalore. Master of Business Laws.
Quick answer: To draft a contract in India, write the deal on one page first, name the correct legal parties, choose the document type, write scope, money and timing in plain language, add the India-specific terms (courts or arbitration, GST, TDS), review it as if you were the other side, then stamp and sign it through an authorised person. A contract does not need to be long. It needs to be clear about who does what, by when, for how much, and what happens if it goes wrong.
Key takeaways
- Start from the deal, not a template. Five questions on one page (who, what, when, how much, what if it fails) do more for a contract than any clause library.
- Most drafting errors in India start with the wrong party name. A partnership firm, a sole proprietor and a company are three different things to sign with.
- Write numbers, dates and owners into the text. Words like “reasonable” and “promptly” are where disputes begin.
- Say how GST and TDS are handled in the payment terms. Founders leave this out and argue about it later.
- Choosing a court or arbitration seat is allowed. Trying to bar the courts altogether is not.
- Stamping and the right signatory are part of drafting, not paperwork to do afterwards.
Most founders do not draft a contract because they enjoy it. They draft because a client, vendor, partner or investor is waiting and a handshake is no longer enough. This guide is the practical sequence: what to do first, what to write, what Indian law adds, and when to stop and hire someone. It deliberately does not repeat the full clause list or the stamp duty rules. Where those have their own guides, we point to them once.
When a founder sends us a draft they wrote themselves, the structure is usually fine. The problems sit in three places: the party is named wrongly, the payment terms say nothing about tax, and the dates depend on words like “soon” or “on completion”. All three take minutes to fix before signing and weeks to fix after.
Step 1: Write the deal on one page
Before you open a document, answer these in plain sentences:
- Who is doing the deal, and who is signing for each side?
- What is being delivered, sold, licensed or done? Be specific about outputs, not effort.
- When does it start, when are the milestones, and when does it end?
- How much is being paid, in what instalments, and what tax is added?
- What if it fails: late delivery, poor quality, non-payment, or one side walking away?
Keep this page. It becomes your drafting brief, and if you later hire a lawyer, it saves them the first hour and you the bill for it. If you cannot answer one of the five, the contract is not ready to draft because the deal is not settled.
Step 2: Get the parties right
The most common drafting mistake in India is writing the party name the way people say it, not the way the law sees it.
| You are contracting with | Write | Check before signing |
|---|---|---|
| Private or public company | Full registered name, CIN, registered office | The company’s master data on the MCA portal |
| LLP | Full name including “LLP”, LLPIN, registered office | The same portal |
| Partnership firm | The firm name and the names of the partners | A firm is not a separate legal person, so the partners are bound |
| Sole proprietor | The owner’s own name, “carrying on business as” the trade name | A proprietorship is not a separate legal person either |
| Individual | Full name as on ID, address, and confirm they are an adult | Government ID |
Then confirm the person signing is authorised to bind that party, and ask for proof before you rely on the signature.
Step 3: Choose the right kind of document
Not every arrangement needs a full contract. A short agreement, a letter of engagement and a detailed master contract serve different deals, and the choice depends on value, duration and risk. If you are unsure how business contracts are classified and what the law expects of each, see our overview of commercial contracts in India.
One boundary matters. If the person will work for you as a staff member, you are in employment territory and different rules apply. That is a separate drafting job, covered in our guide to employment contracts in India.
Step 4: Write scope, money and time in plain language
This is where most of the drafting effort should go. Three rules help:
- Describe outputs, not effort. “Deliver a working mobile app with the features in Schedule A” can be checked. “Develop the app to the best of our ability” cannot.
- Put numbers and dates in the text. Not in an email thread that sits outside the contract.
- Give every obligation an owner. If a sentence says something “shall be done”, ask who does it.
Here is how the same payment term reads before and after:
| Weak | Better |
|---|---|
| “Client will pay on completion.” | “Client will pay INR 3,00,000 plus applicable GST within 15 days of receiving a valid tax invoice, issued after the client accepts Milestone 2 in writing. Client may deduct TDS as required by law and will provide the TDS certificate.” |
| “Vendor will deliver soon.” | “Vendor will deliver version 1 by 15 January 2027. If delivery is more than 10 working days late, Client may terminate by written notice.” |
| “Work to be of good quality.” | “Work must meet the acceptance criteria in Schedule B. Client will test within 7 days and send written feedback.” |
For the full list of clauses a business contract should carry, read what should be included in a business contract. This guide is about writing them well, not listing them.
Step 5: Add the terms Indian law and practice make necessary
These are the points a generic template, especially one written for another country, tends to miss.
| Topic | What to write | Why it matters in India |
|---|---|---|
| Courts | Name the city whose courts will hear disputes, under Indian law | Picking a court with a real connection to the deal is generally valid. A clause that bars the courts entirely is not |
| Arbitration (if you want it) | Seat, number of arbitrators, language, and the Arbitration and Conciliation Act 1996 | Vague arbitration wording is a frequent source of satellite disputes |
| Commercial disputes | A step for talks or mediation before a suit | Many commercial suits require an attempt at mediation first, unless urgent relief is needed |
| GST | Say whether prices are inclusive or exclusive of GST | Otherwise the argument about who bears it starts at the first invoice |
| TDS | Say who deducts, and that a certificate will follow | Missing certificates are a common payment dispute |
| Electronic signing | Decide whether you will sign electronically | Valid for most contracts, but some documents, such as wills and sale of immovable property, are excluded |
Step 6: Review it as if you were the other side
A draft always reads well to the person who wrote it. Reread it as the party who has to perform it, or the lawyer who will argue against you:
- Are the party names, dates and amounts the same everywhere they appear?
- Is every defined term used consistently, and is every term used actually defined?
- Is there any “reasonable”, “promptly” or “as required” that could be replaced with a number?
- Does every deadline say what happens if it is missed?
- Can the contract end, and does it say how and on what notice?
- Does anything feel one-sided? Check it against these five contract red flags.
If a contract is high-value, long-term, or involves equity or intellectual property, get an outside lawyer’s eyes on it. A contract review in India costs far less than a dispute, and if the other side has sent you their draft, negotiating the contract before you sign is cheaper than amending it afterwards.
Step 7: Stamp, sign and store
Stamping is state-specific and affects whether a document can be used in evidence. The rules, penalties and what the courts have said are covered in our guide on whether a contract is valid without stamp paper in India, so check that before you sign anything important.
For signing:
- Sign through the authorised person you confirmed in step 2, and initial each page for long documents.
- Most commercial contracts do not need witnesses by law, though some documents do. Add them if you want extra evidence.
- Give each side a complete signed copy, and keep one version as the master. Drafts floating in email are how people end up arguing about which one was signed.
Step 8: Keep the contract alive after signing
A signed contract still needs managing. Put milestones, payment dates and renewal or notice dates in a calendar. Record changes in writing, signed by both sides, not in chat messages. If the other side stops performing, you will need to know your options, which our guide on how to enforce a contract in India covers.
Mistakes founders make when drafting alone
| Mistake | What goes wrong | Fix |
|---|---|---|
| No named contact for notices and approvals | Arguments about who approved a change or who was told | Name a person and email address for each |
| Naming the brand, not the legal entity | The wrong party is bound, or none | Use the full legal name from the official record |
| Leaving tax out of the payment terms | Disputes about GST and TDS at the first invoice | State both in the payment clause |
| Agreeing terms by email, then signing a shorter contract | Most contracts say they replace earlier emails and talks, so points left out can be lost | Put every agreed point in the contract |
| Treating the draft as final because both sides nodded | Open points surface after signing | Do the step 6 read before sending |
When to draft it yourself and when to get help
A short, low-value, one-off agreement with a party you trust is a reasonable thing to draft yourself using the steps above. Get a lawyer when the value is high, the relationship is long, ownership of intellectual property or equity is involved, the other party is much larger, or you are signing something they drafted.
If you want it drafted or checked by lawyers who work with Indian founders every day, our team handles contract drafting and review in India. Send the one-page deal from step 1 and we will tell you what the document needs and what it will cost. Our guide on what lawyers charge to draft a contract in India shows typical ranges so you can plan.
Quick answers
Is a written contract mandatory in India? Not for every contract. An oral agreement can be valid, but it is hard to prove, and some transactions need a written, stamped or registered document. For anything of real value, write it down.
Can I draft a contract in India without a lawyer? Yes, for simple, low-value deals. For high-value, long-term, equity or IP-related contracts, or when you are signing the other side’s draft, have a lawyer draft or review it.
Do I need stamp paper for a contract in India? It depends on the type of document and the state. Stamp duty is state-specific, and an unstamped document can face problems when used as evidence until duty and penalty are paid. Check the state rules before you sign.
Can I sign a contract electronically in India? Generally yes under the Information Technology Act, 2000, for most commercial contracts. Some documents, such as wills and contracts for the sale of immovable property, cannot be signed this way.
Do I need witnesses to sign a contract? Most commercial contracts do not need witnesses by law, though some documents do. Witnesses are still useful as evidence of signing.
What language should the contract be in? Any language the parties understand. English is the safe default for business contracts. If you use more than one language, state which version prevails if they differ.
A note on who we are
My Legal Pal is an international team of contract lawyers. This article is general information and not legal advice on your facts. Have a lawyer qualified in the governing jurisdiction check the details before you act.
About the author. Prakhar Rai is an advocate enrolled with the Bar Council of India and the founder of My Legal Pal. He holds an LL.B from NLSIU Bangalore and a Master of Business Laws, and works on contract drafting, review and disputes for founders and businesses across borders. Full profile
