Doing Business in India For Dummies®

Contract Conundrums

Putting the details in writing is standard procedure pretty much throughout the world. India is no exception. Take care that whenever you come to an agreement or seal a deal with Indian colleagues you have the specifics set out in a contract. In this section, I explain the ins and outs of contracts in India, and let you in on a few possible problems that you may encounter.

Contracts aren’t always binding

Even though contracts are important to record your business dealings, any Westerner looking to do business in India must understand that a contract doesn’t mean everything. In India, just putting something down in black and white doesn’t mean that it’s going to be honored down to the last letter! I must warn you here that there have been cases where contracts have been blatantly breached.

Indians have a relaxed view of contracts. That’s because they’re used to constant changes in the environment and have a tradition of giving more weight to personal relationships than the written word. As far as Indians are concerned, only in a controlled set of conditions can a contract be binding. If the conditions change in any way—if the infrastructure disappears or breaks down or there’s a change in government policy—then the conditions set out in the original deal are subject to renegotiation. As a Westerner who may be used to contracts being the final word on a business ...