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Contracts and Agreements

 

There are tons of contracts that any startup would come across in its day to day life, to remind a few – Employees contract, Vendor Agreement, Logistics level contract, Service level contracts etc. Alarmingly 2017 has seen a massive increase in startups utilizing the opportunity of free contracts template, and a majority of these contracts are invalid and have opened up doors for legal disputes. Founders and decision makers of startups, areas of contractual control should be a focus for you this year. Why? Well the room for corporate governance has been boundless and the government is not going to back off, with this in effect to protect company and shareholder interests, companies need to be proactive in assessing their contract risks. With that as the abstract, let’s see How to manage contracts risk in a startup. 

 

First and foremost, you should have a clear understanding of the contract in depth and get it right while highlighting what could go wrong as a risk management initiative. 

 

Secondly, never treat all contracts alike, the reason being objective of each contract would be different. For instance, a contract drafted with a purpose to streamline inventory management in logistics would be much different from employee contract. 

 

Thirdly, Majority of times contract related problems arise from lack of transparency between parties, types of contract risks that can deduce the value of a contract:

 

  • Poor or perverse incentives
  • Bad planning
  • Bad Demand management
  • Ill-informed buying
  • Deliberate Contract Manipulation
  • Embedded options
  • Elaborate pricing structure
  • Miscommunication
  • Poorly managed knowledge transfer

 

In a recent study, by Contract Management Benchmark Report cited “Ineffective control and management of supplier contracts cost businesses $153B per year in missed savings opportunities and increased risks. With Globalization and the trend to outsource non-core business processes have also contributed to increasing use and importance of contracts, the number and complexity of contracts have increased, so has the volume of risks associated with those contracts.

 

Ways by which Contract Risks can be managed:

 

  1. At Contract Drafting Stage


              • Establish the scope of the contract review
              • Review and validate the universe of vendor relationships
              • Agree on objectives mutually
              • Understand Expectations
              • Developing contract review procedure
              • Establish a legally enforceable format
  2. At Contract Review Stage


              • Review of regulatory and business risk factors
              • Third party or contract risk profile
              • Areas of focus for monitoring procedures
              • Contract assessment reviews
              • Contract financial visibility assessment
  3. At Contract Improvement Stage


              • Implementation of changes in legal viability format
              • Highlight and leverage embedded options
              • Highlight for improvements

    At Post-Contract monitoring Stage


              • Compliance verification and validation procedures
              • Data extraction and Analysis
              • Trend Analysis
              • Industry Analysis
  4. At Communication or delivery stage


              • Contract Assessment reviews and reports
              • Coverage of client expectation
              • Compliance and monetary findings
              • Process and control improvement recommendation
              • Revision of contractual terms, termination of the relationship, contract enhancements etc.


We at Wazzeer have always delivered reliable consultation at all end to end services that business would require in its entire lifetime. We would be excited to help you, so let’s connect!

 

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Contracts and Agreement, Contracts and Agreements, Contracts and Agreements, Start up Lessons
Basically, vendor is someone who provides you with a service or goods. For instance, a person providing house cleaning services is a vendor, a person supplying raw material for renovating your office is a vendor. The Vendor Agreement is therefore an agreement between you and a vendor that you have selected for the services that such vendor has to provide to you or goods that such vendor has to supply to you.

An SLA, i.e. service level agreement is a contract between a vendor and the end user that defines the standard level or quality of service expected from such a vendor. An SLA or Service Level Agreement will define the service levels that have to be achieved by a vendor and may also provide for remedies and penalties in the event of non-fulfilment of such service levels. Let me explain a bit more with a day to day example. For instance, an EduTech startup (say XYZ), that is outsourcing the textbooks production to a service provider, gets an vendor agreement with SLA included in it, then the SLA ( Service Level Agreement) related clauses would involve the following:
  • Delivery timelines
  • Minimum quantity of delivery within a mentioned duration of time
  • Critical delivery items (as in threshold meeting)
  • Meet the Standard of packaging
  • Monitoring and measurement of timelines and delivery thresholds.
  • Penalties and remedies for default items is mentioned
  • Termination right of XYZ for a continued breach/default of SLAs
With the above example, now you would be in a better position to decide whether or not you require SLAs (Service Level Agreement) to be included in your Vendor Agreement or Service Agreement.

Startup entails complex procedures and many bureaucratic hurdles, entrepreneurs are better off using professional services. Hiring a virtual lawyer and virtual accountant can save time and help ensure that the process goes smoothly.

For any Legal and Accounting support, Happy to help you, let us talk at Wazzeer.

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Agreements, Contracts and Agreements, Franchise
Starting a Franchise in India is an old hat but that always work, Franchising, since the economic liberalization of 1991, many foreign companies with strong brand names have established a presence in India through franchising like Hertz, Radisson, Kentucky Fried Chicken (KFC), Domino’s Pizza, Thank God it’s Friday (TGIF), Pizza Hut etc., In fact, Indian companies with strong brand recognition are also using the franchising route like MRF, NIIT, Apollo Hospitals.

Yo bro, What’s franchising?
The Blacks Law Dictionary defines a franchise as a license from the owner of a trademark or trade name permitting another to sell a product or service under that name or mark. There are at least two parties involved: (a) the franchisor, who lends his trademark; and (b) the franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor’s.

Breaking down the Characteristic Features of business like this type:
(a) A franchise arrangement
(b) The franchisor should have developed a business system or format.
(c) The franchisee makes a substantial initial capital
(d) The franchisor trains the franchisee
(e) Once the franchisee’s business commences, the franchisor support available to the franchisee
(f) The franchisor also regularly supervises the franchisee’s business operations.
(g) Consideration is paid by the franchisee to the franchisor for the rights licensed

Enriching em with types of Franchising Agreements:
(a) Invention Licensing Agreement: Inventor (Franchisor) firstly patents the invention and license the patent and design rights and the manufacturing and marketing of the invention.
(b) Trademark Licensing Agreement: Franchisor (the owner) of a trademark can grant a license to another Franchisee to use the trademark on goods, which are associated with that trademark. This type of an agreement may be for the manufacture, preparation, marketing, presentation, and sale of goods.
(c) Character Merchandising Agreement: In such an agreement, the name of a famous entertainment or sports personality or probably a fictional or graphical character is licensed to be used on certain products.
(d) Dealer or Distributor or Marketing arrangements: Franchisee adopts the business operations model of the franchisor. Examples; in cases of dealerships with automobile companies, food and consumer goods, petrol pumps and gas stations.

What are the good to take stuffs in doing a business on franchise model?
Capitalizing and benefiting from the Franchisor brand name. Elimination of unnecessary expenses. Support from the franchisor while operating the business. Benefit from the franchisor’s advertising campaigns. Benefit from the franchisor’s negotiating and bulk purchasing power.

Alrighty, Any Trade-offs?
Imposition of controls and supervision by the franchisor. Heavy initial capital investment, in addition to consideration for using the franchisor’s brand. Franchisor’s policies that would be a directly applicable. 

Wazzeer is vouched by Entrepreneurs as the most reliable Legal and Accounting Partner. We would be super excited to see your startup kick starts seamlessly. Let’s Connect! ?
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Business Formation, Business Registration, Contracts and Agreements, Licenses, TAXATION
Bitcoin is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen. From a user perspective, Bitcoin can be considered to be cash for the Internet. Bitcoin can also be seen as the most prominent triple entry bookkeeping system in existence. While there are or have been at least 110 other digital currencies, Bitcoin accounts for 77% of the market value of all digital currencies and an even higher percentage of digital currency users (credits to Pantera capital). This article will help entrepreneurs who dream to start a Bitcoin Startup in India. Here are the rules and regulations that a Bitcoin Startup must follow:
  1. Business Registration: You can set up such business as a PVT. LTD. Or LLP or OPC company.
  1. KYC Norms: KYC Norms are the norms set by the RBI that require banks to continuously monitor their customers’ transactions.
  1. Abide by the principal laws concerning Bitcoin:
    1. The Constitution of India, 1950
    2. The Foreign Exchange Management Act, 1999 (FEMA)
    3. The Reserve Bank of India Act, 1934 (RBI Act)
    4. The Coinage Act, 1906 (Coinage Act)
    5. The Securities Contracts (Regulation) Act, 1956 (SCRA)
    6. The Sale of Goods Act, 1930 (Sale of Goods Act)
    7. The Payment and Settlement Systems Act, 2007 (Payment Act)
    8. Indian Contract Act, 1872 (Contract Act)
  1. Cross border transfer of Bitcoin: FEMA regulates all inbound and outbound foreign exchange related transactions, in effect regulating the capital flows coming into and moving out of the country. 
  1. Taxation of Bitcoin: In India, taxes are levied either by the central and the state governments. Taxes may be on income or expenditure. When taxation is on income, it may be on Bitcoin representing such income. On expenditure meaning cost of acquiring Bitcoin, such as Central Sales Tax, Value-Added Tax or Service Tax.
  1. Income Tax Taxation of income: In India income is governed by the provisions of the Income Tax Act, 1961 (ITA). Under the ITA, residents are subject to tax in India on their worldwide income, whereas non-residents are taxed only on income sourced in India.
  1. Central Sales Tax / Value Added Tax: For a Bitcoin transaction to be taxed under the CST Act, there should be a sale.
  1. Service Tax: Service tax is levied by the central government at 12.36% on all services provided in India except certain specified services. Service providers can take credit for service tax paid on input services utilized and for excise duty paid on inputs and capital goods (barring certain specified inputs). Services provided outside India are not subject to service tax in India. Typically, services are provided in India if the service recipient is in India. The 2015 Budget proposes to increase the rate of service tax to from 12.36% (inclusive of cesses) to 14%.
  1. Trademark: Trademark protection for the word marks that include the term Bitcoin, and various Bitcoin logos is essential for financial institutions dealing in Bitcoin transactions and online payment systems. Bitcoin platforms / Bitcoin exchanges represent marks with various visually or phonetically similar Bitcoin marks, by doing so you can trademark.
  1. Patent: Under Indian patent law, a mathematical or business method or a computer program per se or algorithms are not inventions and are hence not patentable in India.
  1. Copyright: Bitcoin is protocol and software that are published openly and any developer around the world can review the code or make their own modified version of the Bitcoin software. No exclusivity is generally claimed in open source software. Hence, it cannot be copyrighted.
  1. Privacy Policy: Abide by The IT Act, that protects items of sensitive personal data or information (SPDI).
  1. Terms of service: You are required to have the Terms of services document in place, that has all the required information about services like Age verification and other rules.
  1. FDI Regulations: Companies which only provide online services i.e.., Bitcoin may be categorized either under the automatic category or under the category of a non-banking financial services company.
  1. International criminal law: Due to financial security issues and to avoid cyber attacks, it is important that companies pay due considerations while doing business on international soil.
  For any Legal and Accounting support, Happy to help you, let us talk
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Contracts and Agreement, Contracts and Agreements, Start up Lessons
Every company doing business depends on goods and services which are being provided by other companies. So if you get into a disagreement with a client, it can lead to a loss in business, or worse, a costly lawsuit. Signing a vendor agreement in which the terms and conditions between a buyer and a seller are agreed up front, such as product delivery period and payment expectation, makes sure that both the parties are clear about each other and what is expected of them reducing the risk of legal disputes down the road.


Some of the key factors for most Vendor Agreement Goods and Services: In the agreement it should be clearly mentioned what are the goods and services you are paying for. Also if someone has promised you a certain quality of goods and services make sure that it’s mentioned in the agreement


Pricing: The pricing should be clearly mentioned in the agreement, that is whether it is fixed throughout the contract or it varies, if varies then why. 


Delivery Terms: After agreeing upon the pricing and goods you need to think about the delivery term. What will be the frequency of the deliveries, the particular time when the goods need to be delivered.


 Payment Terms: The time of payment should to mention in the Vendor agreement for the goods or services provided. And also how the payment should be made.


 What If Something Goes Wrong. What if the quality of the goods delivered are not up to the mark? What if the goods are wrongly delivered? Or the payment is late? All this issues should be addressed in the agreement


Termination: From the beginning the terms of termination should be mentioned. When the agreement can be terminated? What it takes to do so?


Who Owns What: Who owns the outcome of any services or products should be mentioned in the agreement so that something which was due to you cannot be given to someone else


Confidentiality: In the agreement it should be mentioned that the information provided by ay party should remain confidential.


Importance of Vendor Agreement Documents Terms of Agreement: Vendor Agreement documents all the terms for both the parties like delivery time, payment terms, ensuring no misunderstanding occurs.  


Clarifies Intent of both parties: Each party may believe that they understand what is required of them but when it come in writing it may differ, hence Vendor Agreement clarifies intent of both the parties.  


Prevents Disagreement down the line: As the Vendor Agreement clarifies the intent, and also the terms up front, it helps both the parties to know what to expect and hence prevents future disagreements.  


Settle Discrepancies: When both the parties put their terms for Vendor Agreement in writing, it may not line up. Solving those issues then and there helps in settling future disagreements.


Wazzeer is vouched by Entrepreneurs as the most reliable Legal and Accounting Partner. We would be super excited to help you. Let’s Connect! 🙂
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Agreements, Contracts and Agreement, Contracts and Agreements, Contracts and Agreements, Legal
Let us first understand what does a contract mean? A contract is written agreement, concerning vital fields like employment, sales, or tenancy, that is intended to be enforceable by law. We believe that the value of contract is not realised when things are hunky-dory, but the moment things go bad it is the contract that protects your interests. Hence it is important to draft a Contract/Agreement professionally so that it protects the interests of all the parties concerned. To draft a legally valid contract which protects the interests of all parties we need to first understand what are the essential elements of a Valid Contract.

1. Offer and Acceptance. In order to create a valid contract, there must be a ‘lawful offer’ by one party and ‘lawful acceptance’ of the same by the other party. Any contract has to have an offer from one party which has to be accepted by other party

2. Intention to Create Legal Relationship. This is stated in the definition of the contract. If the parties do not wish to create a Legal Relationship, there is no necessity of a contract and hence, it is not considered as a contract at all.

3. Lawful Consideration. Consideration is something which is paid by the offering party to the offered party. It may be time, money, knowledge, service etc. Without a Lawful consideration one cannot fight a case in the court.

4. Capacity of parties. The parties to an agreement must be competent to contract. If either of the parties does not have the capacity to contract, the contract is not valid. According the following persons are incompetent to contract. (a) Miners, (b) Persons of unsound mind, and (c) persons disqualified by law to which they are subject.
5. Free Consent. ‘Consent’ means the parties must have agreed upon the same thing in the same sense.
Consent is said to be free when it is not caused by-
  • Coercion
  • Undue influence
  • Fraud
  • Misrepresentation
  • Mistake
An agreement should be made by the free consent of the parties.

6. Lawful Object.
Object has nothing to do with consideration. It means the purpose or design of the contract. Thus, when one hires a house for use as an office for an e-Commerce company, the object of the contract is to run an e-Commerce Company.

The Object is said to be unlawful if- (a) it is forbidden by law; (b) it is of such nature that if permitted it would defeat the provision of any law; (c) it is fraudulent; (d) it involves an injury to the person or property of any other; (e) the court regards it as immoral or opposed to public policy.

7. Certainty of Meaning. Agreement the meaning of which is not Certain or capable of being made certain are void. A poorly drafted agreement which is ambiguous in nature is not legally valid.

8. Possibility of Performance. If the act is impossible in itself, physically or legally, if cannot be enforced at law. For example, Mr. A agrees with B to discover treasure by magic. Such Agreements is not enforceable. Hence all agreements need to be physically and legally enforceable.

9. Not Declared to be void or Illegal.?The agreement though satisfying all the conditions for a valid contract must not have been expressly declared void by any law in force in the country. For example an agreement to form a cartel to curb competition is illegal in India.

10. Legal Formalities. An oral Contract is a perfectly valid contract, except in those cases where writing, registration etc. is required by some statute. In India writing is required in cases of sale, mortgage, lease and gift of immovable property, negotiable instruments; memorandum and articles of association of a company, etc. Registration is required in cases of documents coming within the scope of section 17 of the Registration Act.

Now that we have understood the essentials of a Contract, can you draft your own contract? This article like many other Do-it-Yourself templates available on internet to draft a contract is aimed at giving you some knowledge on the legalities involved in drafting a Legal contract. But facts of the every case is unique and we recommend a consultation with a trustworthy Lawyer is required. Only such a lawyer can give you proper advice on proper drafting of a legally valid contract which protects the rights of all the concerned parties. 


Wazzeer
 is vouched by Entrepreneurs as the most reliable Legal and Accounting Partner. We would be super excited to help you. Let’s Connect! 🙂

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Contracts and Agreement, Contracts and Agreements, property

Rental agreement is an important document which defines the legally binding relationship between the tenant and the landlord. Usually, a broker is involved in carrying out the initial transaction between the two parties. However, both the parties can also take help of a lawyer to draw the rental agreement.

A rental agreement is a legal document which lays down the conditions on which relationship between the landlord and the tenant is determined. Seeking a home for rent and settling down on one may turn out to be a matter of contention on many grounds. The tenant may not pay up the rent on time or there may be disputes with the land lord on numerous matters.


Rental agreement details 
would determine how disputes are to be handled and how both parties would carry out their respective duties.

 

Here are few facts that you should keep in mind to make the agreement legally binding and valid.

Always insist on presence of two non-beneficiaries while the rental agreement is being signed between the two parties. The rent agreement ought to be signed by the two non-beneficiaries to make it a valid one. You can register the rental agreement by paying a stamp duty.
Registering the rental agreement would mean that it would have more power invested in it, rather than being just a valid document. In order to make it a smart rent document, it should contain the duties and responsibilities of all the parties concerned. A smart rental agreement would also include names of all the people living in the building. If the agreement contains names of everybody living under the same accommodation, then it lays down the ground for the usage of common property among all the tenants.


The agreement should contain the tenure of tenancy. Specific dates from which date to which the lease of the agreement would be valid have to be mentioned. The rental amount has to be clearly mentioned in the document, along with the amount deposited in the account. The agreement must contain details related to terms of deduction and return of the deposit money. The agreement should also include due date of payment of rent and the grace period. It also should contain the mode of payments through cash or cheque or draft. The agreement should detail the procedure for rent escalation every month for example, many owners raise the rent by 5% every year. It is the duty of every tenant to keep the rented place clean and undamaged. Hence, maintenance and repairing responsibilities should be mentioned in the rent agreement.


Alongside the rent value, maintenance fee payable every month and the payment date should also be in the agreement. While minor repairments are to be handled by the tenant, major repairments are taken care of by the land owner.


The landlord may have some restrictions regarding movement, parking usage or may have particular usage of property resources. These decorum details are to be recorded in the rent agreement so that there arises no disputes between the parties. Some rented properties may require certain society rules to be adhered by the tenant or some land lord may not allow certain activities on his/her compound. All these should be in a documented form. Every tenancy agreement should contain details as to how to renew the agreement. The terms and procedure of renewal of the rent agreement as well as the notice period the tenant would have to serve before leaving the rented home have to be recorded in the rent agreement.


The rental agreement’s rules and conditions lay invalid if any or both the parties do not adhere by them. Hence, it is of extreme importance that the agreement contains notice period. Important sections to cover in rental agreements Rental agreements need to be written in a stamp paper and signed by tenant and landlords. Here are some common agreements or conditions that need to be included in an agreement for keeping property in good condition and make prompt pay of monthly rents.

  • List of things: List of things is facilities or appliance provided by a landlord to tenants along with property for rent. Things include appliances like number of fan, geyser, light fittings and so on. These things cannot be taken with them by tenant when leaving property.
  • Due date: The date for paying each month?s rent and the date when it is considered as late payment. If there is any charge for late payment and time to take action when continues default.
  • Right to enter: The date or time from which?propertyis let to rent. Tenant need to inform prior to landlord from when he starts using the property or building.
  • Garbage: Need to specify orally or in written where to keep garbage for collection by garbage collector and how to dispose garbage. The improper dispose of garbage creates problem for fellow tenants and for it become health problem
  • Policies: Policies regarding parking vehicle and whether pets are allowed in the premises or not. These have to be clearly mentioned in rental agreement than become problem in future.
  • Notice period: Tenant should give at least one month notice prior to leaving and demanding for deposit. Landlord must ask a reasonable time for giving back deposit.
  • Restoration: Conditions which need to restore the dwelling place or building. It includes repairs and paintings, plumbing if required and so on.


A landlord should ask identity of person who are using the property. Remember not to give your property or building for people who have criminal background or do not allow continuing if you doubt on their action or if they involved in some anti-social activities.

 

For a trustworthy Professional advice on this matter Contact us.

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