DPC II

1. Agreement of Sale
Definition: Section 4(3) in the Sale of Goods Act, 1930 defines it as, "where the transfer of the
property in the goods is to take place at a future time or subject to some condition thereafter to be
fulfilled, the contract is called an agreement to sell."
An agreement of sale constitutes the terms and conditions of sale of a property by the seller to
the buyer. These terms and conditions include the amount at which it is to be sold and the future
date of full payment.
IMPORTANCE : A sale agreement is the most important agreement which both parties should
go through it before any important deal. After drafting a genuine sale agreement the seller and the
buyer can confidently proceed without worrying about fraudulent or doubtful transactions.
A sales agreement is always advantageous as it protects both parties in the event of legal action.
The purpose of a sales agreement is legally binding for both parties buyer and seller involved in
the exchange of money for goods & services or properties.
FORMAT
AGREEMENT FOR SALE THIS AGREEMENT is made at …………on this …………day of……….
BETWEEN Mr. A aged……..s/o……….r/o….. (hereinafter referred to as the VENDOR which
expression shall, unless repugnant to the context or meaning thereof shall mean and include his heirs,
executors, administrators and assigns of the FIRST PART). AND Mr. B aged ……….s/o……….r/o…..
(hereinafter referred to as the VENDEE/PURCHASER which expression shall, unless repugnant to the
context or meaning thereof shall mean and include his heirs, executors, administrators and assigns of
the SECOND PART). WHEREAS the Vendor is the absolute owner of the property bearing
no…….admeasuring….situated at………(hereinafter referred to as the said property).
AND WHEREAS the Vendor has agreed to sell the said property to the Vendee at the price and on the
conditions mentioned hereinafter. NOW IT IS AGREED BETWEEN THE PARTIES AS FOLLOWS: 1. The
Vendor hereby agrees to sell, transfer and convey the said property in favour of the Vendee. 2. That
the consideration of Rs….is to be paid by the Vendee to the Vendor. Rs…..is to be paid at the execution
of this agreement as earnest money. Rs….on…..(date) and lastly Rs….at the time of final sale deed. 3.
The Vendor acknowledges the payment of Rs….as earnest money paid in cash/cheque/dd no…drawn
on ……(Bank name and Branch) by Vendee. 4. The Vendor shall make out a marketable title to the said
property free from encumbrances and reasonable doubts. 5. The Vendor shall deliver to the Vendee
the title deeds relating to the said property in his possession and power on execution of these presents
for inspection and investigation of the title by the Vendee or his advocate. 6. The Vendor agrees to
apply for, obtain and furnish unto the Vendee all such permissions as may be necessary under the laws
for registration of Sale Deed. 7. The Vendor and the Vendee hereby agree that the sale will be
completed within six months from the date hereof. 8. All the taxes, levies etc due and payable against
the said property shall be paid by the Vendor till the completion of sale and thereafter it will be the
responsibility of the purchaser. The Vendor shall handover all the tax receipts etc. duly paid to the
Vendee at the time of completion of sale. 9. The Vendor agrees to handover actual, physical and vacant
possession of the said property unto the Vendee at the time of sale deed. 10. That the expenses
towards the payment of stamp duty, registration charges and all other incidental expenses for
agreement for sale and sale deed shall be borne out by the Vendee. 11. If the Vendor fails to make out
the clear marketable title to the said property as aforesaid then the Vendee will have the right to cancel
this agreement by giving atleast fifteen days notice to the Vendor and after the expiration of fifteen
days the agreement shall stand terminated and the Vendor agrees to return the earnest money to the
Vendee. 12. If the Vendee fails to perform his obligations under this agreement within the time
stipulated then the Vendor shall be entitled to cancel this agreement by giving atleast fifteen days
notice in writing to the Vendee. On termination the Vendor will be entitled to forfeit the earnest money
paid by the Vendee. SCHEDULE OF PROPERTY Details of the property to be mentioned. IN WITNESS
WHEREOF parties hereunto have signed this document on the date and place first above written in the
presence of following witnesses.
VENDOR
VENDEE
WITNESSES: (1)
(2)

2. What is a sale deed?

The sale deed is the main legal document by which the seller transfers his
absolute ownership over the property to the buyer or purchaser in exchange
for a price paid or consideration. A sale deed becomes a mandatory legal
document, accompanied by a proper registration process and stamp duty, for
obtaining absolute rights in a property.

A sale deed is also known as a title deed, final deed, or conveyance deed. It
is a valid proof of ownership of immovable property and provides legal
recognition of the transaction of property between the parties. The rights and
obligations of the parties are clearly stated in the sale deed. In case of any
future disputes over the property, the sale deed can be used as evidence.

IMPORTANCE :A sale deed serves as the primary legal document confirming the
sale and transfer of property ownership from the seller to the buyer. It also serves as
the essential document for the buyer’s subsequent sale because it establishes his
proof of ownership of the property. The sale deed is signed after the sale agreement
is signed, and after the buyer and seller have agreed to the terms and conditions
mentioned in the sale agreement.

Advantages of a Sale Deed

It is an important instrument that allows you to carry out the sale of an immovable
asset, that transfers rights from one person to another is a lifetime. One cannot claim
rights to any property without a sale deed.

The benefits of the Sale Deed document are as follows:

 It is a legal document that is enforceable by law.

 It allows Sale transactions to be carried out in a stable and comfortable manner.
 It protects the rights of both parties involved in the contract.
 It mentions clearly the rights and duties of the Purchaser and Vendor.
 It clearly defines and describes the property.
 A well-drafted deed can avoid ambiguity and minimize risks.
 The whole process of the sale is now stamped and registered.


What is the difference between agreement for sale and sale

deed?
An agreement for sale is a promise in future, that the property will be transferred to the
rightful owner while sale deed is the actual transfer of property ownership to the buyer.
 3. What is called a partnership deed?
Partnership deed is a written legal document that contains an agreement made between two individuals
who have the intention of doing business with each other and share profits and losses. It is also called a
partnership agreement.

Importance :A few important advantages of a well-drafted deed are listed:

 It controls and monitors the rights, responsibilities and liabilities of all the partners
 Avoids dispute between the partners.
 Avoids confusion on profit and loss distribution ratio among the partners.
 Individual partner’s responsibilities are mentioned clearly.
 Partnership deed also defines a remuneration or salary of the partners and working partners.
However, interest is paid to each partner who has invested capital in the business.

4. What is Simple Mortgage Deed?

A mortgage is a transfer of interest in certain immovable property in order to secure
loan advanced or to be advanced in the future. A mortgage deed is a document
through which the mortgagor transfers an interest in real estate to a mortgagee for
the purpose of providing a mortgage loan. The mortgage deed is the evidence of the
interest transferred to the mortgage holder. It determines the terms and conditions
between mortgagee and mortgagor.

Why is Simple Mortgage Deed required?

A mortgage deed is required when an individual is loaning money from another

person/business and is required to transfer interest in a property to such person.
A mortgage deed is essential as it consists of the obligations, terms and conditions
between the mortgagor and the mortgagee. It determines the parties to the deed, the
rights of the lender, the extent of interest and title over the property, states the loan
amount along with rate of interest and of course, evidences that interest in the
property has been transferred to the lender/mortgagee.
There are several kinds of mortgage in India. In a Simple mortgage, the property can
be mortgaged without delivering its possession and the morgager binds himself
personally to pay the mortgage-money, and in the deed agrees that in case the
mortgager fails to pay in accordance with the deed/contract, the mortgagee will have
a right over the mortgaged property. The latter can even sell this property.

5. What is a ‘lease’?
As per Section 105 of the Transfer of Property Act, the definition of ‘Lease’
can be understood as a transfer of a right to enjoy property for a certain time
or in perpetuity; in consideration of a price paid or promised or of money, a
share of crop, service or any other thing of value to be rendered periodically
or on specific occasion to the Lessor by the Lessee who accepts the transfer
on such terms.

What is a Lease Deed?

A lease deed is a written legal document/instrument through which a lease agreement is
executed. A lease deed is necessary for legal authenticity of a lease between two parties so as
to be recognized in a court of law in case of a dispute. A lease deed has to be registered under
the registration Act, 1908 if the tenure of the lease exceeds 1 year.
Why should Lease Deeds be registered?
The basic tenets of laws relating to transfer of immovable property and the registration act cover
the legal implications that non-registering of a lease deed can cause but the important and
positive thing to note is that registering of such deeds (if they are made for over 1 year) gives a
legal backing to the agreement between the parties thus creating a cause of action in case of
disputes and helps protect the interests of the parties. So in short,

 It protects the interests of the parties to a lease agreement

 It provides legal backing and conformity to the deal by making a registered deed an
admissible court document as well as collateral transactions.

It is important to note that as per Section 107 of the Transfer of Property

Act, 1882 and Section 19 (1) (d) of the India Registration Act, 1908 it is
mandatory to register the lease of an immovable property for a term
exceeding one year or system of yearly payment of rent. (The Transfer of
Property Act, 1982) (The Registration Act, 1908). A lease deed that needs to
be mandatorily registered is void if not registered (Usha Ranjan Ray Burman
vs Sova Das, AIR 1990 Cal I).

6. What is a ‘Exchange Deed?’

As per provisions contains in Section 118 of Transfer of Property Act, when two
persons mutually transfer the ownership of one thing for the ownership of another,
neither thing or both the things being money only, such a transaction is called an
exchange. This definition is not restricted to immovable property only.
This type of exchange transactions can be reduced into writing in the form of
Property Exchange Deed. This Exchange Deed document for transfer of property
rights need to be registered with the jurisdictional sub Registrar’s Office by paying
prescribed stamp duty. While drafting the exchange deed and its registration
including the document execution, its presentation and admission utmost care need
to be taken, since this is a complex process.
IMPORTANCE: When property owners desire to trade ownership of their
property with another to take possession of it, they establish a deed of exchange. A
deed of exchange will be used to carry out such a transfer. By executing a deed of
exchange, parties can swap money and other assets in addition to immovable
property. The transaction will not qualify as an exchange and will constitute a sale if
one party pays money for something that is not money.
 7. WHAT IS A BOARD RESOLUTION?
A board resolution is a record of decisions made by the Board of Directors during a board
meeting. It is a formal document that identifies the roles of all corporate officers and their votes
over a particular decision concerning the welfare of a company. It is used to pen down every
minute detail of the board meeting. It is usually certified by the appointed chairperson and duly
signed by all board members present at the meeting. It is maintained along with the Board
meeting minutes and is a legally binding decision of every Corporation

IMPORTANCE :First, it is important to remember that directors are fiduciaries to the

corporation and are legally obliged to avoid conflicts of interest. Board resolutions document
directors’ decisions on important corporate matters and serve as a written record to show if
directors successfully fulfilled these duties. Second, board resolutions can be used as
evidence in court cases that concern the corporation.
Third, and most importantly, given that corporations manage large sums of money, board
resolutions are necessary to keep a written, legally-binding record of how directors manage
these funds and the corporation’s other financial and non-financial resources.

8. What is a ‘Gift Deed ?

gift deed is a statutory document that encloses the details about the asset being
transferred to the beneficiary from the donor in the form of a gift. A gift deed is
executed between the donor and the donee. Though it is not mandatory to
implement a gift deed while transferring the property, it does act as a valid
documentary record. The gift deed can be used to transfer both movable and
immovable property. A gift deed acts as a legal declaration stating the donee as an
absolute owner.

 IMPORTANCE: A Gift Deed is of evidentiary value before the Courts in the event
of any future disputes that may arise.
 A Gift Deed serves as statutory protection to the concerned parties in the event of
any contradictions that may prompt up in the future.
 The agreement legalizes the entire transaction.

Advantages

Legalize The Gifting Process :Executing a gift deed will legalize the process of
gifting. Typically a gift deed encloses complete details regarding property and the
candidates involved in the agreement thus; leaving no scope of dispute that may
 arise in the future.Act As A Legal ProofThe parties involved in the enactment of
a gift deed is less likely to confront legal dispute as it acts as sole proof of the transfer
of the asset. It generally empowers the parties to use the legal right to opt for the
court proceeding in case of legal dispute. Tax ExemptionAnother biggest
advantage of Gift deed is that it won’t attract taxes to a certain limit. The tax
authority shall not impose any taxes on the gift recovered by the donee during a year
if the total worth of the gift lies under the threshold limits i.e. Rs 50,000. Also, the gift
of any property (movable or immovable) made to relatives is exempted from income
tax, without any upper limit. Freedom Of RevocationThe gift deed can be
canceled by its owner with an immediate effect. Transfer of Property Act, 1982[1],
under Section 126 allow the involved parties to revoke the deed whenever they
want, provided the clause for the same mentioned in the deed. Similarly, the gift
deed can be irrevocable in nature, which is probably the most
enticing.Advantages Of Gift Deed RegistrationEnsure Absolute
OwnershipAs soon as the owner transfers the property to the concerned relatives
through a gift deed, it ensures the absolute ownership to the donee.Quick
Transfer Of The Property Transfer via gift deed is the viable option in case if
you wish to transfer the property on an immediate basis. Unlike Will, where the
property transfer takes place after the death of the owner, the gift deed cannot be
executed in the absence of the donor and donee.

9. What is a leave and license

agreement?
A leave and license agreement is a legal document that enables one party to allow
another party to use their immovable assets, i.e., property, for a specific period
without any change in the ownership of the asset. Leave and license
agreements are commonly used among landlords and tenants in India, especially in
the rental housing segment. In the commercial realty segment, however, the use of
lease agreements is more common.

Differences between lease and leave and

license agreement
 A lease creates an interest in the property, unlike a leave and license agreement.
 A lease grants a tenant with exclusive possession, while a leave and license
agreement only grants permission to occupy the property.
 Licenses are revocable; leases are not.
 Leases are not determined by the grantor, while licenses are.
 Leases are transferable while licenses are not.
 A lease creates inheritable rights, unlike licenses.
definition:While various courts have, from time to time, elaborated on
the legal concept, the basis of the leave and license agreement is found in
the Indian Easements Act, 1882.“Where one person grants to another, or to
a definite number of other persons, a right to do, or continue to do, in or upon
the immovable property of the grantor, something which would, in the absence
of such right, be unlawful and such right does not amount to an easement or
an interest in the property, the right is called a license,” reads Section 52 of
the Indian Easements Act.

10. What is a Franchise agreement?

franchise agreement is a legal agreement that is binding on the
franchisor and the franchisee. The contract details the franchisor’s
expectations from the franchisee, how the business must be
operated, and so on. It is an agreement where the franchisor
(business) consents to grant the enterprise name or company system
to the franchisee (individual or entity).

The benefits of the franchise agreement are as follows:

 Defines the relationship

The agreement specifies the relationship between the franchisee and the
franchisor, including both parties’ benefits and the restrictions.

 Better control to the franchisor

The agreement ensures that the franchisor, as the business owner, has
better control over the business’s operations.

 Brand management

The agreement provides scope for defining how the franchisee adopts the
business and branding. The penalties for mismanagement or violation of
business branding are defined to protect the brand’s image and reputation
at all times.

Franchise agreements must be in line with the provision of the Indian

Contract Act, 1872. Subject to this condition, franchises may include the
disclosure requirements as a part of the contract.

11. What is an Indemnity bond?

As per Section 124 of the Indian Contract Act of 1872, an Indemnity bond
refers to an agreement between two persons or parties, where one person
promises to make payment for the losses and damages of another person
caused by his/her conduct or by another party. In other words, it is a
financial contract drawn between two parties that promise financial security
to a person as the aggrieved party can claim monetary compensation if the
contract is breached. The Indemnity bond is primarily used in the mortgage,
accounting, law, IT, and insurance industries.

Importance of Indemnity bonds

The Indemnity bonds promise financial compensation in case there is any
breach of contract due to any illegal activities
 The primary purpose of drawing an Indemnity bond is to safeguard
either of the parties from the promised loss
 Surety bonds are also a kind of Indemnity bond, wherein the
guarantor pays the promised amount if the commitment is not met
 12. What Is a Memorandum of
Understanding (MOU)?
A memorandum of understanding is an agreement between two or more
parties outlined in a formal document. It is not legally binding but signals
the willingness of the parties to move forward with a contract.

Advantages and Disadvantages of an MOU

A memorandum of understanding allows all parties to clearly state all of
their objectives and goals. This makes for less uncertainty and prevents
future unexpected disputes to occur. Furthermore, by clearly laying out
what each party expects of the other, an MOU provides a blueprint for any
contract both parties may or may not wish to draw up in the future.

The biggest drawback, of an MOU, however, depending on your point of

view, is that it is not legally binding. While in some cases this may be a
benefit, since neither party is required to do what they say in the MOU,
they can simply walk away or change their expectations. MOUs can take
significant time and planning to create and if one party completely changes
its requirements, creating the MOU was a big waste of resources.
 13. What Is a Non-Disclosure Agreement
(NDA)?
A non-disclosure agreement (NDA) is a legally binding contract that
establishes a confidential relationship. The party or parties signing the
agreement agree that sensitive information they may obtain will not be
made available to any others. An NDA may also be referred to as a
confidentiality agreement.

Non-disclosure agreements are common for businesses entering into

negotiations with other businesses. They allow the parties to share
sensitive information without fear that it will end up in the hands of
competitors. In this case, it may be called a mutual non-disclosure
agreement.

Advantages and Disadvantages of Having an NDA

The primary benefit of an NDA is that sensitive information regarding your
company is kept secret. This can be anything from research and
development (R&D), possible future patents, finances, negotiations, and
more. Signing an NDA is a way to protect private information from
becoming public.

NDA agreements are also clear. They specify what and what cannot be
disclosed to avoid any confusion. NDAs can also be created at a low cost
as they are really just a signed piece of paper. This is one of the most
cost-effective ways to maintain private information.
NDAs also outline the consequences of disclosing prohibited information,
which should prevent any leaks. Furthermore, NDAs are a good way to
maintain comfort and trust in a relationship.

One of the primary disadvantages of an NDA agreement is that it starts a

relationship off on the idea of mistrust. This can set the tone of the
relationship and may not always result in a positive one. Employee NDAs
can also prevent top-tier talent from joining your firm, knowing they'd be
limited in discussing their job in the future.

Similarly, asking current employees to sign NDAs when working on special

projects may sour their experience of working for the company as they will
feel less trusted. NDAs can also result in potential lawsuits if breached,
becoming a headache for everyone involved.