Contract review

How to review a contract in India: a practical checklist

Published 5 July 2026 · by Vora

Reviewing a contract is simply reading it carefully, clause by clause, to work out what each side has promised, where the risk sits, and what has been left out. You do this before signing, not after. In India, the clauses that most often cause trouble are payment terms, liability, indemnity, data protection, termination, and how disputes get resolved. Here is a checklist you can run through on almost any commercial contract.

The checklist

1. Parties and authority. Check the exact legal names, and make sure the person signing actually has the authority to bind their company. A small mistake here can make the whole agreement hard to enforce.
2. Scope of work. Deliverables, timelines, and what counts as acceptance should be spelled out. Vague scope is the single biggest cause of later disputes.
3. Payment terms. Look at the amounts, GST, how invoices are raised, and when payment is due. If you are a registered micro or small enterprise, the MSME rules give you a right to be paid within 45 days.
4. Limitation of liability. Find the cap on each side's liability. Ask whether it applies to both parties, whether it is a sensible multiple of the contract value, and what sits outside the cap.
5. Indemnity. Work out who has to compensate whom, and for what. A one-sided indemnity that also covers indirect losses is worth pushing back on.
6. Intellectual property. For services and software especially, the contract should say clearly who owns the work product once it is paid for.
7. Confidentiality and data. Check the confidentiality obligations, and where personal data is involved, whether the terms line up with the Digital Personal Data Protection Act, 2023.
8. Term and termination. Note the length, renewal, notice periods, and exit rights. Make sure you can get out too, not just the other side.
9. Dispute resolution. Look for the governing law and a clear arbitration clause, with a seat, the number of arbitrators, and the language, under the Arbitration and Conciliation Act, 1996.
10. The boilerplate. Do not skip force majeure, assignment, notices, and the entire-agreement clause. These quietly decide what happens when things go wrong.

Red flags worth stopping for

• A liability cap that protects only the other party, or unlimited liability for you.
• Automatic renewal with a long notice period and no easy way out.
• Payment terms stretched well beyond 45 days where the MSME rule should apply.
• Intellectual property that stays with the supplier even after you have paid in full.
• An indemnity that reaches indirect or consequential losses.

Frequently asked questions

What does it mean to review a contract?

It means reading the agreement clause by clause before you sign, to understand what each side must do, where the risk falls, and what is missing. The point is to catch unfair or unclear terms while you can still change them.

What is the MSME 45-day payment rule?

Under the MSME Development Act, 2006, a buyer must pay a registered micro or small enterprise within the agreed period, and within 45 days at the latest, from when it accepts the goods or services. Late payment carries compound interest at three times the RBI notified bank rate.

Does a commercial contract in India need an arbitration clause?

Most do benefit from one. A good arbitration clause sets the seat, the number of arbitrators, and the language, under the Arbitration and Conciliation Act, 1996. It is usually quicker and more private than going to court, but it has to be drafted precisely to hold up.

What is a limitation of liability clause?

It sets the most one party can be made to pay if something goes wrong, and usually excludes indirect losses. Check that the cap applies both ways, that it is a fair multiple of the contract value, and what carve-outs sit outside it.

Can AI help me review a contract under Indian law?

Yes, for a fast first pass. A tool like Vora can read a contract in minutes, point out risky or missing clauses, and suggest changes based on Indian law. Treat it as a strong starting point, and have a qualified professional confirm anything important.