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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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 3 Replies

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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SURESH KUMAR PATRA (ADVOCATE MEDIATOR & TAX CONSULTANT)     02 April 2012

I am totally in agreement with the reply of Adv. Bharat Chugh.

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