You can ensure guarantee of the advance payment and quality of various spare parts and necessary specification of the machine by signing the Sale and Purchase Agreement (SPA) for this you can hire a lawyer who will help you in drafting the agreement and get it stamped appropriately as per the Indian Stamp Act, 1899. To keep yourself in the safer side you can incorporate the following clauses in the SPA.
- Key Transaction
- Conditions Precedent
- Representation and Warranties
- Indemnity
- Mode of Payment
- Obligation of the Parties
- Breach of Agreement
- Quality Standard
- Warranty
- Governing laws and Jurisdiction
The SPA will be signed by both the parties and you can safeguard yourself from all the future losses, if occurred. Check the appropriate rate of depreciation on the plant for correct accounting compliance. In the clause “Mode of Payment” write the Bank Draft number so that in the agreement there will be proof that you have made payment through Bank draft for this specific transaction which (i.e. purchase of machinery)
In the clause “Quality Standard” state the quality which have been promised by the seller. Also, state “if in case the seller unable to fulfill the promised standard then in that case he will replace that part of the machinery without any extra charges”. Further, under the clause “Warranty” the seller will ensure that the machine will manufacture certain amount of product in a year and there will be no technical issue in the machinery for certain period, in case of non-performance or under performance then the seller has right to get the machine replaced.
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over 4 years ago