Drafting of Deeds, Commercial Agreements and Corporate Documents — Practice

Question 1

Name three clauses a Joint Venture Agreement and a Shareholders' Agreement typically share.

Accepted Answer

Any three of: board composition/rights, reserved matters, confidentiality, exit mechanisms, termination, governing law/dispute resolution.

Question 2

Name two standard carve-outs from the definition of 'confidential information' in an NDA.

Accepted Answer

Any two of: information already in the public domain, information independently developed without reference to the disclosed information, information the recipient is legally compelled to disclose.

Question 3

Which document actually transfers ownership of immovable property, as distinct from a power of attorney?

Accepted Answer

A registered sale deed.

Question 4

Distinguish pre-emption rights from tag-along rights, stating whose interest each protects.

Accepted Answer

Pre-emption rights give existing shareholders a right of first offer or first refusal before shares are sold to an outsider, protecting existing shareholders from unwanted dilution or an unwanted new co-owner. Tag-along rights give a minority shareholder the right to join a majority shareholder's sale on the same terms, protecting the minority from being left behind when the majority exits favourably.

Question 5

State the essential clauses of a mortgage deed.

Accepted Answer

The type of mortgage created (simple, English, equitable, etc., under the Transfer of Property Act), the amount secured, a redemption clause, and the mortgagee's power of sale on default.

Question 6

What is a sale deed's covenant of title and indemnity, and why does its absence weaken the buyer's position?

Accepted Answer

It is the seller's confirmation of good title to the property and an agreement to indemnify the buyer if that title later proves defective. Its absence weakens the buyer's position because the buyer would have a weaker contractual basis to claim compensation from the seller specifically if a title defect emerges after the sale.

Question 7

A 50-50 joint venture agreement has no deadlock resolution mechanism. Explain the risk this creates and how such a clause typically addresses it.

Accepted Answer

Without a deadlock resolution mechanism, neither 50% joint venturer has a tie-breaking majority vote, so the venture could become genuinely unable to make any major strategic decision if the partners disagree and neither concedes — a real operational risk for the ongoing business. A deadlock resolution clause typically addresses this through an escalation process (referring the matter to senior representatives), an independent swing vote or mediator, or ultimately a forced buy-sell mechanism where one partner must buy out the other at a formula-determined price if the deadlock cannot otherwise be resolved.

Question 8

Explain the Supreme Court's holding in Suraj Lamp & Industries regarding powers of attorney, and its practical drafting implication for a transaction where a property owner wants an agent to handle the sale on their behalf.

Accepted Answer

The Supreme Court held that a power of attorney cannot itself convey title to immovable property — only a registered sale deed can transfer ownership — specifically disapproving of the earlier informal practice of treating a POA (sometimes combined with an agreement to sell) as a substitute for a proper registered conveyance. The practical drafting implication is that if a property owner wants an agent to handle a sale, the POA should be drafted to authorise the agent to execute a registered sale deed on the owner's behalf (among other specifically enumerated powers), but the actual transfer of ownership still legally occurs only when that sale deed itself is executed and registered — the POA is an authorisation mechanism, not a conveyance instrument in itself.

Practice — Drafting of Deeds, Commercial Agreements and Corporate Documents

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