Writing and Reading a Legal Contract?!

This article is to simplify The Contract for the layman and help him to avoid the hazards of signing a contract without understanding the rudimentary laws that apply in structuring it… A Series of articles will be following this one detailing structures of contracts and what one should look for specifically when dealing with International Contracts for BPO’s and the examples used will be of BPO Contracts which is an area of specialization in itself.

A contract is a legally enforceable agreement between two or more parties with mutual obligations. Mutual Obligations could simply be explained as - defined services that need to rendered to a client. The services are usually for a limited schedule and in return something of value is paid by the client in exchange for the services rendered by the service provider.

The Basic Elements of a Contract

The first step in a contract question is always to make sure that a contract actually exists. The basic components that must be present for a legally binding contract to be in place are the following…

* An offer: an expression of willingness to contract on a specific set of terms, made by the offeror with the intention that, if the offer is accepted, he or she will be bound by a contract.

* Acceptance: an expression of absolute and unconditional agreement to all the terms set out in the offer. It can be in any format - oral or in writing.

Besides the above components which form the foundation of a contract, the following are essential in order for it to be complete and legal (U.S. Format) explained in more detail.


1. Agreement - An offer and an acceptance are included in an agreement to form a contract. As explained above.

2. Consideration - Something of value passing from one party to another in return for a promise to do something i.e. Money paid for Services Rendered.


3. Contractual Capacity - the parties must be legally capable of entering into a contractual relationship i.e Age, Citizenship, Authorization, Registrations as per law, etc

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4. Legality - The object or the purpose of the contract must be legal and not against public policy i.e. since gambling is illegal in India, it isn’t possible for an Indian Company to partner with an International Company to provide Services in respect to any form of gambling.

5. Voluntary Consent - the consent of the parties must be genuine. The contract must be a genuine expression of the intentions of the parties.


6. Form - the contract must be in whatever form the law requires.

The contract is an important document as it declares the guidelines of any relationship between multiple parties. It is most important that the relationship between the parties be defined as clearly as possible in terms of the services to be rendered, the time frame and the delivery mode and similarly in exchange what is expected as value for services rendered and in what time frame? A contract can be as brief as a few words exchanged (verbal) or as simple as an email or a hand written letter of offer and its acceptance or as complex as you should wish to make it based on the purpose at hand.

In a BPO, a contract would be a Memorandum of Understanding between the Client and the BPO Vendor. The contract would consist of an agreement, offer and acceptance, purpose of the contract, delivery schedule/s, payment terms and subsequent service level agreement/s which need to be decided upon before entering into any relationship/agreement or contract. The contract should also mention its applicability zone – region where it would be enforced and in case of any dispute – where dispute resolution should take place and in context of the laws of which region or country?

So the next time you sign the dotted line, read it first and then question what you don’t understand?

Raj Sukheja

Mr. Raj Sukheja is the CEO of Anthem Consulting Pvt. Ltd., which is an outsourcing company and is a regular contributor towards BPO related subjects and specializes in advisement of Cyber Laws, Legal & Debt Recovery Solutions for small and mid-sized BPO’s. Mr. Sukheja can be reached at raj@anthem247.com