A letter of intent is an instrument by which an individual or an entity expresses its intention to enter into a contract with another individual or entity for any contemplated transaction. It is neither an offer or a promise to carry out the contemplated transaction, nor does it form a legally binding contract. It is an instrument laying out the basic terms and conditions that shall be applicable to a contemplated transaction if carried out. However, a letter of intent does not express the certainty of the transaction but informs the interested parties of their obligations, terms and conditions which may be applicable if the transaction is carried out.

A letter of intent can be used for different types of transactions and is named differently for convenience. The employer issues the letter of intent to hire prospective employees; most government companies enter into a memorandum of understanding with the party they intend to transact with; and even the private equity investors issue letter of intent, known as ‘term sheet’, for laying out the basic terms to be incorporated in the final transaction document. 

FAQs 

1. Is a letter of intent binding on the parties, can I file suit for its enforcement?

According to various judgments, a letter of intent has been held as non-binding on the parties. However, where the letter of intent incorporates the following clauses, the parties may be bound by it    

1.1 All the elements of a valid contract

1.2 Detailed rights and liabilities of the parties

1.3 Do not refer to a future agreement

1.4 Each party acts on the representation of the other party

Hence, depending on the facts and circumstances of the case and language used thereto, a letter of intent may bind the parties. It is therefore advisable to seek legal advice to protect your interests. 

2. When is a letter of intent preferred?

A letter of intent is preferred where the terms and conditions of the contemplated transaction are uncertain and the parties are unsure as to the performance of the specific activity. It is an instrument for negotiation and is used to capture the essential terms of the transaction. 

3. By what other names can a letter of intent be referred to?

A letter of intent can also be referred to as: 

3.1 Intent to Purchase Letter

3.2 Side letters

3.3 Letter of Interest

3.4 Term Sheet

3.5 Memorandum of Understanding

3.6 MOU

3.7 Assurance Letter

3.8 Framework Letter

4. Which transactions require the use of a letter of intent?

While there is no hard and fast rule for issuing a letter of intent, they are typically issued for the following purposes 

4.1 Employment and recruitment

4.2 Bulk sale and purchase of goods and services

4.3 Private Investments

4.4 Government contracts

4.5 Institutional financing

A board resolution is a decision made by the Board of Directors of a company. Under the Companies Act 2013, various corporate actions such as, the payment of a dividend; alteration of share capital; approval of related party transaction; and other matters related to the operation of the company require the board approval, which is given through a board resolution(s) passed at the board meeting.

A board resolution is signed on a letterhead of the company. While in India there are no guidelines for a valid letterhead of a company, however, in some countries there are strict guidelines for the same. Accordingly, it should, at least, contain the name of the company, company identification number (CIN), registered and corporate office address and contact details.

Frequently Asked Questions

1. Are there any restrictions on passing a board resolution?

Under section 179 of the Companies Act 2013, the Board of Directors are entitled to exercise all such powers and do all such acts and things, as the company is authorized to do. However, these powers and actions are subject to express provisions contained in the Companies Act 2013, Memorandum of Association, Articles of Association, including the regulations made by the company in general meeting. 

2. When is a board resolution considered passed?

The passing of a board resolution depends on the conditions set out in the Articles of Association. The Companies Act 2013 states that a board resolution is deemed to be passed when the majority of directors affirm the decision. In case of equal votes, for and against the resolution, the vote of the chairman of the board shall be the tiebreaker. 

3. Can a board resolution only be passed at a board meeting?

Under Section 175 of the Companies Act 2013, a board resolution can also be passed by circulation of the resolution, together with the necessary documents, in addition to the board meeting. 

4. Can a nominee director vote on a resolution?

A nominee director may be allowed to vote on a resolution subject to the provisions of the Articles of Association of the company. 

5. Can an alternate director vote on a resolution?

An alternate director may be allowed to vote on a resolution subject to the provisions of the Articles of Association of the company.
 

A gift deed is an instrument through which a person may confer on another person his interests in a property, whether immovable or movable, without any consideration. A valid gift deed requires the following elements to be present in the transaction: 

1. The donor should freely consent to transfer the property;

2. There should be no consideration for the transfer of property; and

3. The Donee should express his acceptance to receive the gift during the lifetime of the donor, while the donor still has ownership over the property.

Frequently Asked Questions 

1. Does a gift deed require registration? 

If the value of the property being gifted is above Rs.100/-, the gift deed requires compulsory registration as provided under section 17(1)(a) of the Registration Act 1908. The gift deed needs to be signed by the Donor and the Donee and should be attested by at least 2 witnesses. 

2. Can a gift deed be revoked?

As per section 126 of the Transfer of Property Act 1882, a gift once made cannot be revoked, except on the occurrence of an event as specified in the gift deed, not being in the control of the donor. 

3. Can a gift be made of property that might be acquired in the future?

As per section 124 of the Transfer of Property Act 1882, a property which the donor does not have title to in the present or may attain title in the future, cannot be transferred as a gift.  

4. Can I accept only a few of the properties being gifted to me as a Donee?

As per section 127 of the Transfer of Property Act 1882, a donee is required to accept all the gifts being transferred through a single gift deed or not accept the transfer at all. However, where the transfer is executed through separate and independent transfers, the donee may choose the gifts he wishes to accept. 

5. Can all property of a person be transferred through a gift?

Under section 128 of the Transfer of Property Act 1882, the gift may consist of the donor’s whole property, however, in such instances, the donee is personally liable for all the debts due by the donor at the time of the gift to the extent of the property compromised therein.
 

A will is a legal declaration by a person, the testator, providing directions for the disposal of his personal property on his demise. A will deed ensures that the disposal of a person’s property is according to his wishes, thereby, preventing any future dispute between the heirs. A will is a unilateral document that takes effect after the death of the testator. It can be revoked or altered by the testator at any time when he is competent to dispose of his property.

Frequently Asked Questions

1. Who can make a will?

Section 59 of the Indian Succession Act 1925, provides that every person of sound mind and above 18 years of age can make a will, provided it has been made without coercion. However, Muslims cannot bequeath their property through a will and are required to follow the Muslim law of succession. 

2. Does a will need to be registered? When can it be registered?

Section 18 of the Registration Act 1908, provides that the registration of the wills is optional. However, it is advisable to register a will to avoid future family disputes, as a registered will has a higher evidentiary value. Section 40 of the Registration Act 1908 states that the testator, or after his death any person claiming to be an executor or otherwise under the will, may present it to any Registrar or Sub-Registrar for registration. 

3. What are the advantages of a will?

The following advantages are enjoyed on the execution of a will 

3.1 Avoidance of family disputes;

3.2 Willful disposal of assets after death;

3.3 Prohibits encroachment;

3.4 Prevents interruptions in business by proper disposal of business interests; and

3.5 Eases and quickens the probate process on the execution of the will.

4. Can a will be revoked or altered?

Section 62 of the Indian Succession Act 1925, mentions that the testator may revoke or alter his will. Further, Section 70 of the Indian Succession Act 1925 provides that a will is automatically revoked if the testator gets married after creating the will. 

5. Can revoked will be revived?

Section 73 of the Indian Succession Act 1925 provides that a person can revive a revoked will by re-executing it. 

6. I am a Hindu who is a coparcener of a Hindu undivided family; can I bequeath my property through a will?

Yes, a Hindu Coparcener may bequeath his property through a will under section 59 of the Indian Succession Act 1925. Further, a will is protected under section 5 of the Hindu Succession Act, 1956.  However, the coparcener shall only be capable to bequeath his self-acquired property and not the ancestral property.

 

An appointment letter intimates the prospective employee of the basic terms and conditions of his employment, including his designation, date of joining, annual CTC (cost to company), reporting manager, etc.

Appointment Letter often acts as a cover letter to the employment contract and gives the prospective employee a broad overview of the designation and benefits being offered to him.

Frequently Asked Questions

1. Is appointment letter binding on the employer? / Can a prospective employee sue a person on the basis of the appointment letter alone?

Appointment letter alone is usually not binding on the employer or prospective employee as it does not constitute a valid contract between the parties and is used to express the intention of the employer to enter into a separate employment agreement. 

2. Is there any restriction on companies to issue an appointment letter?

There are no specific restrictions placed on the issuance of appointment letters by a company. However, while appointing a director or a key managerial personnel, the company should ensure that the provisions of the Companies Act 2013 are duly complied with.

A Non-Disclosure Agreement (NDA), also known as Confidentiality Agreement, is entered between 2 or more parties to preserve and protect the confidential information (such as cost and pricing, projected capital investments, inventory, marketing strategies, customer lists, trade secrets, amongst others) received in the course of transaction, from further disclosure. NDAs can be categorized as: 

1. Unilateral NDAs, where only one party discloses the confidential information to the other(s).

2. Bilateral NDA, where both the parties disclose certain confidential information to each other and such information is prohibited from any further disclosure to a third party.

3. Multilateral NDAs, where all the parties to the agreement disclose the confidential information to each other and such information is prohibited from further disclosure to any other party.

FREQUENTLY ASKED QUESTIONS 

1. Are NDAs binding and enforceable?

An NDA is a valid agreement under the Indian Contract Act 1872. There have been various cases where both the Supreme Court as well High Courts have issued injunctions against former business associates to prevent disclosure of information covered under the agreement. 

2. What kind of information can be protected under an NDA?

While there is no certain law which states what information is considered confidential, the following have been held to be confidential information as per the Indian courts 

2.1 Trade Secrets

2.2 Client lists

2.3 Industrial drawings

2.4 Intellectual Property

2.5 Prototype products

2.6 Proprietary documents

2.7 Manufacturing processes

3. Can an employee be bound by an NDA post-termination of employment?

Yes, an employee can be bound by NDA post his termination. The same has been upheld by the Delhi as well by the Bombay High court. 

4. Are there any exceptions to the disclosure of confidential information?

While there are no express exceptions towards the disclosure of confidential information protected through NDAs, however, a person may disclose confidential information under the following circumstances 

4.1 Where the disclosure is required under law or by a statutory authority;

4.2 Where the information has been disseminated into the public domain; or

4.3 Such disclosure is permitted by the owner of the confidential information

Full and final settlement is a procedure to settle the dues payable by the employer to the employee.

A full and final settlement statement (the “statement”) is a formal declaration by the employee that all outstanding dues payable, have been paid to him in full. The statement also outlines the obligations of the employee post-termination of the employment, thereby protecting the employer from breach of the confidentiality obligations, intellectual property or any litigious action that may be initiated by such former employee on the grounds of non-payment of dues.

Frequently Asked Questions 

1. Can all claims be barred by a full and final settlement statement?

While most claims can be waived by an employee under the statement, however, any claims arising out of express provisions of the law can be recovered by the employee. Such claims include 

1.1 Payment of gratuity under the Payment of Gratuity Act 1972 cannot be waived pursuant to section 14 of the same;

1.2 Compensation payable under the Workman’s Compensation Act 1923 cannot be waived under Section 17 of the same.

2. Does the full and final settlement statement bar the employer from pursuing legal action against the employee?

While the statement waives the rights of the employee to pursue legal action, the employer is free to initiate legal action against the employee for any dues that arose out of the employment or for violation of the binding obligations. 

3. Is a full and final settlement statement binding on the employee?

Yes, a full and final settlement statement is binding on the party signing it, as it is a written declaration towards the settlement of all claims. 

4. As an employer what should I keep in mind before getting a full and final settlement statement signed by my employee?

The following points should be kept in mind when getting the statement signed: 

4.1 All statutory dues payable to the employee are accounted for;

4.2 Any deductions that have been made towards the indemnification, for damages caused by the employee, the same should be acknowledged  by the employee as a fair and equitable deduction; and

4.3 Employee consents that the terms and implications of the statement have been understood by him.

A lease deed is an instrument to transfer the right to possession and enjoyment, though not the title, of an immovable property, from the transferor to the transferee, in consideration of a price in the form of rent or premium. The transferor is called the Lessor and the transferee is called the lessee.

A commercial lease deed is executed between two or more parties where the property in question is being leased for commercial activities, like office operation, warehousing, manufacturing, amongst others. With the ever growing and dynamic real estate market, it is important that the interests of both the Lessor and the Lessee are adequately protected for their mutual benefit.

Frequently Asked Questions

1. Can restraints be placed on the use of the property by the lessee?

Section 108(o) of the Transfer of Property Act 1882 provides that the lessee may use the leased property as a man of ordinary prudence would use them if they were his own; but the lessee must not use, or permit another to use, the property for any other purpose other than for which it was leased. The Lessee cannot use the leased property in violation of the lease deed or any activity that may cause destruction to the property. 

2. Can the property be transferred by the Lessor if it is leased?

Under section 109 of the Transfer of Property Act 1882, the Lessor can transfer the leased property to another person (the “transferee”), who shall then be subject to the rights and liabilities as of the Lessor, post the transfer. The original lease continues to subsist in case of such a transfer and it is not necessary to enter into a new deed. However, in order to avoid any disputes between the Lessee and the transferee it is prudent to enter into a ‘Deed of Attornment’, wherein the Lessee and the Lessee recognize each other’s rights. 

3. Does leasing the property to the Lessee allow the Lessee to further lease/sub-lease the property?

Under section 108(j) of Transfer of Property Act 1882, the lessee may sub-lease, mortgage or assign his interest in the leased property, however, the lessee by not, by reason of such transfer, cease to be the subject to any of the liabilities attaching to the lease. this right of the lessee is subject to the terms of the lease deed, which may place restraints on the lessee. 

4. Can the Lessor access the property during the tenure of the lease?

Under section 108(m) of the Transfer of Property Act 1882, the Lessor or his agents may enter and access the property and inspect the condition of the property at reasonable times and by providing reasonable notice to the Lessee. 

5. Does the lease deed need to be registered?

Section 17 of the Registration Act 190 provides that the registration of a lease deed of immovable property is mandatory if the lease period is for a duration exceeding 12 months. However, lease deed below a year are not required to be registered. Registration, however, is advisable as a registered lease deed has a higher evidentiary value in the courts of law.

A lease deed is an instrument to transfer the right to possession and enjoyment, though not the title, of immovable property, from the transferor to the transferee, in consideration of a price in the form of rent or premium. The transferor is called the Lessor and the transferee is called the lessee.

A residential lease deed is executed for the purpose of allowing the Lessee to possess and reside at the premises for a certain period of time in return for rent. A Lease Deed protects the interest of the Lessor by placing restraints on the Lessee, and also of the Lessee by providing them legal rights to enjoy the peaceful possession of the premises.

Frequently Asked Questions 

1. Is registration of the lease deed mandatory?

Section 17 of the Registration Act 190 provides that the registration of a lease deed of immovable property is mandatory if the lease period is for a duration exceeding 12 months. However, lease deed below a year is not required to be registered. Registration, however, is advisable in both cases as a registered deed has a higher evidentiary value in the courts of law. 

2. Can restraints be placed on the use of the property by the tenant?

Section 108(o) of the Transfer of Property Act 1882 provides that the lessee may use the leased property as a man of ordinary prudence would use them if they were his own; but the lessee must not use, or permit another to use, the property for any other purpose other than for which it was leased. The Lessee cannot use the leased property in violation of the lease deed or any activity that may cause destruction to the property. 

3. Can the property be transferred by the Lessor if it is leased?

Under section 109 of the Transfer of Property Act 1882, the Lessor can transfer the leased property to another person (the “transferee”), who shall then be subject to the rights and liabilities as of the Lessor, post the transfer. However, such transfer of leased property can be limited as per the terms of the lease deed executed between the Lessor and Lessee. 

4. Does leasing the property to the Tenant/ Lessee allow them to further lease the property?

Under section 108(j) of Transfer of Property Act 1882, the lessee may sub-lease, mortgage or assign his interest in the leased property, however, the lessee by not, by reason of such transfer, cease to be the subject to any of the liabilities attaching to the lease. This right of the lessee is subject to the terms of the lease deed, which may place restraints on the lessee. 

5. Can the Lessor access the property during the tenure of the lease?

Under section 108(m) of the Transfer of Property Act 1882, the Lessor may enter and access the property and inspect the condition of the property at reasonable times. 

6. I am renting an apartment to a family member, should I enter into a lease deed?

While there is no law that mandates the requirement of entering into a lease deed when renting an apartment to a family member, it is advisable that a deed is executed to protect the interests of the parties.
 

An eviction notice is a notice issued by the Lessor to the lessee, or vice versa, communicating his decision to terminate the lease agreement entered between them. This notice can be issued prior to the expiry of the lease or on its expiry. It is issued for the protection of the interests of Lessor and the lessee.

An eviction notice is a mandate of law in India for both residential and commercial property. Section 106(1) of the Transfer of Property Act, 1882 dictates a mandatory notice period for the termination of lease agreement, so as to provide the lessee with adequate time to vacate the property or raise objections against such eviction, if any.

Frequently Asked Questions

1. What if the notice period is not mentioned in the agreement?

Section 106(1) of the Transfer of Property Act 1882 provides that in the absence of a notice period in the lease agreement or a similar agreement, a notice period of 15 (fifteen) days is mandatory. Where a commercial property is being used for manufacturing or agricultural activities, the notice period shall be 6 (six) months. 

2. Will a notice be required if there is no written rent/lease agreement?

In the absence of a written agreement, it is mandatory under section 106(1) of the Transfer of Property Act, 1882 to provide a 6 (six) months’ notice where an immoveable property is involved in manufacturing or agricultural activity and a 15 (fifteen) day notice where the property is leased for any other purpose. 

3. What is the effect of non-issuance of eviction notice?

An eviction notice is a prerequisite under the applicable laws for eviction of a lessee. Any suit filed for repossession of property in the absence of such notice maybe liable for dismissal if an eviction suit is filed prior to expiry of the lease agreement. 

4. Who should send the eviction notice?

An eviction notice should be sent in the name of the property owner. Where there are co-owners, any one may unilaterally opt to send the notice. In case of a Hindu Undivided Family (HUF), an eviction notice can be sent in the name of the Karta. 

5. Would an oral eviction notice suffice?

While an oral notice is sufficient, it is advisable to send a written notice through a licensed advocate, as it would otherwise be very difficult to prove the presence and establish the contents of such oral notice, in case a litigation issue arises and would unnecessarily prolong the process. 

6. Can the Lessor collect rent for the duration of the notice period?

The Lessor is permitted under law to collect the rent during the notice period and may continue to collect it after the termination of the lease agreement if the lessee has not vacated the premises.