Shreya Arora (Company Secretary ) 02 April 2012

Query related to entering into an agreement

Two companies i.e. A and B entered into a Business Agreement of Manufacturing and SellingFans in the yaer 2009. Now, both A and B including other thrid party being C and D want to enter into a fresh Business Agreement. Can A and B terminate the earlier Business Agreement datted 2009 by mutual consent and enter into the fresh Business Agreement with C and D ? or is tehre any compulsion on the parties to follow the termination clause as mentioned in the previous Business Agreement dated 2009?

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Adv.R.P.Chugh (Advocate/Legal Consultant (rpchughadvocatesupremecourt@hotmail.com)) 02 April 2012

Dear Ms.Shreya,

Whatever can be done by consent, can be UNDONE by consent as well. The Contract act allows the parties to replace the old contract with a new one. This is called novation of the contract. Other parties can also be added in the same as long as original parties agree. For more information - see : S.62 of the Indian Contract Act

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Adv.R.P.Chugh (Advocate/Legal Consultant (rpchughadvocatesupremecourt@hotmail.com)) 02 April 2012

Decisions that might help you : Lata Construction v. R.R.Shah (2000 SC)

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