Legal & Commercial Knowledge Base
Commercial & Legal Terms Glossary
Plain-English explanations, Indian statutory validity, and standard drafting clause examples for founders, legal teams, CAs, and finance professionals.
Contract Law
Indemnity Clause
An indemnity clause is a contractual commitment where one party (the indemnifying party) promises to compensate and hold harmless the other party (the indemnified party) for specified losses, legal claims, damages, or liabilities arising out of a breach or specific event.
Limitation of Liability (LoL)
A contractual risk-allocation provision that caps the maximum financial damages one party can recover from the other in the event of a breach, and excludes indirect, punitive, or consequential damages.
Liquidated Damages
A predetermined, genuine pre-estimate of loss agreed upon by the contracting parties at the time of signing, payable as compensation in the event of a specific contractual breach (such as delivery delay).
Force Majeure Clause
A contract clause that excuses a party from performing contractual obligations due to unforeseen, unavoidable events outside their reasonable control (e.g., war, natural disasters, epidemics, statutory bans).
Non-Compete Clause
A restrictive covenant in an employment or commercial contract prohibiting one party from engaging in a competing business or working with a competitor after termination.
Dispute Resolution
Arbitration Clause
A dispute resolution clause in which contracting parties agree to submit future commercial disputes to private arbitration rather than litigating in public civil courts.
Section 138 (Negotiable Instruments Act)
The primary statutory criminal provision in India penalizing the dishonour of cheques issued in discharge of legally enforceable debts or liabilities.
Compliance & Tax
Section 43B(h) (Income Tax Act)
An anti-delay tax provision enacted by the Indian Parliament disallowing business expenditure deductions for any payments owed to Micro and Small enterprises if not paid within statutory MSMED Act timelines.
MSME 45-Day Payment Rule
The statutory mandate under Section 15 of the MSMED Act 2006 requiring buyers of goods or services to make payment to registered MSME suppliers within a maximum of 45 days.
Stamp Duty on Commercial Contracts
A statutory tax levied by Indian state governments on commercial documents and agreements to grant them evidentiary legal validity in courts of law.
GSTR-2B Reconciliation
The monthly process of matching purchase bills in an enterprise's accounting books against the government-generated auto-drafted GSTR-2B statement to claim Input Tax Credit (ITC).