CENTER FOR FINANCE,

ACCOUNTABILITY, CORPORATE
GOVERNANCE AND TRANSPARENCY

CONTRACT
DRAFTING
ESSENTIALS
RESOURCE PERSON - SHRESTH VIDYARTHI
In house legal counsel at Amara Raja
Energy & Mobility Limited.
 INTRODUCTI
ON TO
MOU’S
DEFINITION
A Memorandum of Understanding (MOU)
is a formal agreement between two or
more parties outlining their mutual goals
and responsibilities.

PURPOSE
• To articulate the intentions and understandings
of the parties involved.
• To provide a framework for future legally binding
agreements.

DISTINCTION
MOUs are typically non-binding, serving more as a
declaration of intent
 non-binding
Generally, not legally
nature as it outlines
enforceable
the intent of the parties.

KEY FORMAl
Formal
ity
means of

CHARACTE
communication, where it is
more formal than a
handshake but less formal

RISTICS OF than a contract.

MOU’S flexibilit
Allows for flexibility in terms
y can be adapted or
and
revised as necessary.

clarity of
Clearly defines the mutual
intent
goals and responsibilities of
both parties.
ESSENTIAL
COMPONENTS OF
TITLE

MOU
Memorandum of Understanding

INTRODUCTION

Identification of the parties involved and the purpose of the MOU.

OBJECTIVES
Specific goals and objectives to be achieved through the MOU

ROLES AND
RESPONSIBILITIES
Detailed description of the roles and responsibilities
of each party
ESSENTIAL
COMPONENTS OF
DURATION

MOU
Effective time period, including start and end dates, and
conditions for renewal or termination of the MOU

CONFIDENTIALITY
Any confidentiality requirements or clauses, if applicable

SIGNATURES
Signatures of authorized representatives from each
party
 BENEFITS OF MOU
1.CLEAR
COMMUNICATION
Ensures all parties
understand their roles and 3. FLEXIBILITY
expectations
Can be easily modified or
terminated if
2. FOUNDATION FOR circumstances change
FUTURE AGREEMENTS

Provides a basis for more

detailed and legally 4. NON - BINDING
binding contracts. NATURE
Allows parties to express
their intentions without
legal commitment
 BUSINESS PARTNERSHIP
Joint ventures, collaborations,
and strategic alliances between
companies.

ACADEMIC
INSTITUTION
Research collaborations, exchange
programs, and joint projects
between institutions

USES OF MOU
GOVERNMENT AGENCIES
Inter-agency cooperation, public-
private partnerships, and regulatory
agreements between governmental
agencies

NON-PROFIT
ORGANIZATION
Community projects, resource
sharing, and joint initiatives
between Non-Profit Organization
 MOU VS.
BASISCONTRACT
MOU CONTRACT
LEGAL BINDING Typically non- Legally binding with
binding, serves as a enforceable terms
statement of intent

FORMALITY Less formal, often More formal with

written in detailed legal
straightforward language
language

PURPOSE Outlines intentions Defines specific

and broad goals legal obligations
without detailed and terms
legal commitments
 BE SPECIFIC
Clearly articulate goals, roles, and
expectations.

AVOID AMBIGUITY

DRAFTING AN Use precise language to prevent

misunderstandings

EFFECTIVE
MOU CONSULT LEGAL
ADVICE
Though MOU is not legally binding, it is still a
formal agreement between two parties. Hence,
legal review will help in avoiding ambiguity

ENSURE MUTUAL
UNDERSTANDING
All parties should fully understand
and agree to the terms
 INITIATION
Identify the purpose for
an MOU and potential
parties

NEGOTIATION
Discuss and negotiate
terms and conditions

PROCESS DRAFTING
OF Prepare a draft outlining

CREATIN
agreed terms

G AN REVIEW

MOU
Review the draft with all
parties involved

FINALIZATION
Finalize and sign the MOU
 CASE STUDIES
A.
INVESTMENTS
AMARA RAJA AND GOVERNMENT OF
TELANGANA
Amara Raja and Government of Telangana sign
MoU for state’s first Lithium-ion Battery
Gigafactory. The proposed facility is located at
Mahbubnagar district in Telangana. It will have a
Lithium Cell Gigafactory with ultimate capacity up
to 16 GWh and a Battery Pack Assembly unit up to
5 GWh. Amara Raja Batteries intends to invest INR
9,500 crores in the region over the next ten years.
 CASE STUDIES
B. BUSINESS
COLLABORATIONS
AMARA RAJA AND PIAGGIO INDIA
Amara Raja has signed a Memorandum of
Understanding (MoU) with Italian motor
vehicle manufacturer Piaggio India to develop
and supply LFP (Lithium Iron Phosphate)
Lithium-Ion (Li-ion) cells and chargers for its
electric vehicles.
CASE STUDIES
B. BUSINESS
COLLABORATIONS
AMARA RAJA AND ATHER ENERGY
Amara Raja Advanced Cell Technologies (ARACT), a
wholly owned subsidiary of Amara Raja Energy &
Mobility (ARE&M), one of India’s leading battery
manufacturers, has signed a Memorandum of
Understanding (MoU) with Ather Energy. As part of this
agreement, Amara Raja will collaborate with Ather to
develop and supply NMC (Nickel Manganese Cobalt) and
LFP (Lithium Iron Phosphate) Lithium-Ion (Li-ion) and
other advanced chemistry cells, produced locally at their
upcoming Gigafactory in Divitipally, Telangana.
 MISUNDERSTANDING
Ambiguous terms of agreement can
lead to different interpretations and

COMMON cause misunderstandings

CHALLENGES CHANGE IN
SCOPE
Adjustments may be needed as
circumstances evolve

LACK OF
ENFORCEMENT
Since MOUs are non-binding, there is no
legal enforcement in cases of disputes
 REGULAR
Periodically review and
REVIEW
update the MOU as
required.

BEST DOCUMEN
PRACTICES Maintain thorough
TATION of
records all

FOR MOU’S communications

changes
and

CLEAR
Ensure all parties have
COMMUNICATI
a shared understanding
ON
of the terms and
objectives.
 INTRODUCTI
ON TO
NDA’S
DEFINITION
A Non-Disclosure Agreement (NDA) is a
contract that protects confidential
information shared between parties.

PURPOSE
• To prevent unauthorized disclosure of sensitive
information
• To establish a legal framework for handling
confidential data.
 TYPES OF NDA’S
1.UNILATERAL NDA

One party discloses confidential information to

another party who agrees to keep it confidential

2. BILATERAL NDA (Mutual

NDA)
Both parties disclose confidential information to
each other and agree to protect it

3. MULTILATERAL NDA
More than two parties are involved, and all
agree to protect the shared information
KEY COMPONENTS
OF NDA
DEFINITION OF CONFIDENTIAL
INFORMATION
Clear description of what constitutes confidential
information

OBLIGATIONS OF THE REVIEWING PARTY

Duty of the party who receives information to protect it
and restrict its use

EXCEPTIONS TO CONFIDENTIAL
INFORMATION
Information that is already known or publicly
available and not covered by the NDA
KEY COMPONENTS
OF NDA
TERM OF CONFIDENTIALITY
Duration for which the information must be kept
confidential

RETURN OR DESTRUCTION OF INFORMATION

Procedures for returning or destroying confidential
information after the termination of the NDA

CONSEQUENCES OF BREACH

Legal remedies and penalties for violating the NDA

 PROTECTS SENSITIVE
INFORMATION
Safeguards business secrets,
intellectual property, and proprietary
data

BUILDS TRUST
Facilitates open communication
between parties by ensuring

PURPOSE confidentiality

AND LEGAL PROTECTION

Provides a legal basis for seeking

BENEFITS remedies in case of information leaks

or misuse

OF NDA CLARIFIES EXPECTATIONS

Clearly outlines what comes under
confidential information and the
responsibilities of each party
 BUSINESS
NEGOTIATIO
NS
During discussions of

COMMON mergers, acquisitions,

or partnerships

USES OF between companies

NDA’S EMPLOYMEN
T
To protect company
AGREEMENT
secrets when hiring
S
employees
 INTELLECTU
AL
When sharing
PROPERTY
inventions or

COMMON creative works with

potential partners
USES OF
NDA’S CONSULTING
AGREEMENT
To ensure
S
consultants do not
disclose proprietary
business information
 IDENTIFY THE
PARTIES
Clearly state who is disclosing
and who is receiving
confidential information

DRAFTING
DESCRIBE CONFIDENTIAL
INFORMATION

AN NDA Be specific
information is
about what
considered
confidential

DEFINE
RESPONSIBILITIES
Detail the responsibilities of the
receiving party to protect the
information
 DEFINE EXCLUSIONS
Specify what information is
excluded from confidentiality

DRAFTING
INCLUDE TERMS AND
CONDITIONS
Specify the duration of the

AN NDA NDA and

termination
conditions for

REVIEW LEGAL
REQUIREMENTS
Ensure compliance with relevant
laws and regulations
 ENFORCING AN NDA
LEGAL
REMEDIES
Potential remedies for breach, including injunctions and
damages

DISPUTE
RESOLUTION
Mechanisms for resolving disputes, such as arbitration
or mediation

DOCUMENTATION
Importance of maintaining records of the NDA and
any related correspondence
 AMBIGUITY
Vague definitions or
unclear terms can lead to
disputes

OVERLY RESTRUCTIVE TERMS

Terms that are too broad or

restrictive may be

COMMON unenforceable

CHALLEN INADEQUATE COVERAGE

Failure to cover all relevant

GES AND types of information or

scenarios

PITFALLS
ENFORCEMENT ISSUES
Difficulty in proving a breach or
enforcing the NDA in different
jurisdictions
BEST PRACTICES FOR
NDA’S1.BE SPECIFIC

Clearly define what

constitutes confidential 3. CONSULT LEGAL
information EXPERTS
Work with legal
professionals to ensure
the NDA is legally sound
2. KEEP IT SIMPLE
Avoid overly complex
language and terms
4. REVIEW REGULARLY
Periodically review and
update NDAs to reflect
changes in business needs
or legal requirements
 INTRODUCTI
ON TO TERM
SHEETS
DEFINITION
A term sheet is a non-binding
document outlining the key terms
and conditions of a proposed deal
or investment

PURPOSE
• ·To provide a framework for detailed negotiations
and drafting of formal agreements.
• ·To align the expectations of all parties involved
before committing to a final contract.
 CLARIFIES KEY
Summarizes the main
TERMSof the deal,
aspects
ensuring all parties are
aware and in agreement
with the same

IMPORTAN FECILITATES
CE Provides a basis for
NEGOTIATION
OF detailed discussions
and revisions

TERM SAVES TIME

SHEETS Helps avoid extensive
AND COST
negotiation and drafting
if the basic terms are
not agreed upon
KEY COMPONENTS OF
A TERM SHEET
PARTIES INVOLVED
Identification of all parties with legal names and addresses.
TRANSACTION OVERVIEW
Summary of the deal or investment, including purpose
and nature
FINANCIAL TERMS

Pricing, payment terms, and financial

arrangements
EQUITY OWNERSHIP
Details on equity shares, ownership percentages,
and valuations
TIMELINESS
Key dates and deadlines for completing
the transaction
KEY COMPONENTS OF
A TERM SHEET
GOVERNANCE AND CONTROL
Management rights, decision-making authority, and
governance structure

CONDITIONS PRECEDENT

Requirements that must be met before finalizing

the transaction

CONFIDENTIALITY
Obligations to keep certain information confidential

EXCLUSIVITY

Terms regarding the exclusivity of negotiations

or agreements
 TYPES OF TERM
SHEETS
1.
INVESTMENT TERM SHEET
• Used in venture capital or private equity deals
to outline investment terms
• Venture capital refers to the funding given to
startup companies and private equity refers to
investments in companies that are not publicly
listed
2. MERGERS AND ACCQUISITIONS
• Mentions the terms and conditions for
mergers, acquisitions, or business
combinations
3. PARTNERSHIP TERM SHEET
• Specifies the terms for business partnerships
or joint ventures
4. REAL ESTATE TERM SHEET
• Outlines key terms for real estate
transactions, including lease agreements
 DEFINE THE SCOPE
Clearly outline the nature of the
transaction and objectives
DETAIL FINANCIAL TERMS
Include pricing, payment structures, and
financial arrangements
SPECIFY RIGHTS AND
DRAFTING OBLIGATIONS
Outline the rights, responsibilities, and

A TERM
obligations of each party

INCLUDE CONDITIONS PRECEDENT

SHEET List conditions that must be fulfilled before

finalizing the agreement

CONSULT FINANCIAL AND LEGAL

ADVISORS
Ensure the term sheet is comprehensive and
legally sound by seeking expert advice
NEGOTIATION
PROCESS
INITIAL DRAFTING
Draft the term sheet based on initial discussions and
terms
REVIEW

Parties review and negotiate terms, making necessary

revisions

AGREEMENT

Finalize the term sheet after resolving key issues

and obtaining agreement

NEXT STEPS
Use the term sheet as a basis for drafting and
negotiating the final binding agreement
 NON-BINDING
Term sheets are typically
NATURE
non-binding, except for
certain provisions like
confidentiality or
exclusivity

LEGAL
LEGAL Clarify which terms
IMPLICATION
CONSIDER
are binding and which
are not to avoid

ATIONS
misunderstandings

DRAFTING
Avoid ambiguous
PRECautions
language and ensure
clarity on all terms
COMMON
CHALLENGES
AMBIGUITY
Vague terms can lead to disputes and misunderstandings
between parties

COMPLEX LANGUAGE
Overly technical or complex language can obscure
meaning

INCOMPLETE TERMS

Missing essential terms or provisions can result in an

incomplete agreement
COMMON
CHALLENGES
INCONSISTENT TERMS
Inconsistent terminology or definitions can create
misunderstandings and confusion

LACK OF REVIEW

Failure to review the term sheet thoroughly can result

in overlooked errors
 BE CLEAR AND SPECIFIC
·Use clear, precise language and
define all terms to avoid ambiguity.

ENSURE MUTUAL
UNDERSTANDING
·Confirm that all parties have a
shared understanding of the terms.

BEST CONSULT

PRACTICES PROFESSIONALS
·Work with legal and financial

FOR TERM
advisors to ensure accuracy
and compliance.

SHEET DOCUMENT NEGOTIATION

·Maintain records of
negotiations and changes to the
term sheet.
 CASE STUDY
A. AMARA RAJA INVESTMENT IN INOBAT
AS, NORWAY

·Amara Raja Energy & Mobility Limited, India’s

leading battery manufacturer, has further invested
€ 20 million, which includes a subscription for an
additional 4.5% equity stake in InoBat AS, Norway.
With the above, Amara Raja Energy & Mobility
Limited’s total holding will be around 9.32% of its
equity stake in InoBat AS, including its previous
investment of € 10 million.
QUESTION
AND
ANSWER
SESSION