BUSINESS MISTAKE
Kashmir is undergoing an exciting economic transformation. With projections estimating business growth at INR 1,750 crore for FY 2024–25, local enterprises are making a mark in global markets. From Sozni and Kani embroidery becoming international fashion highlights to hand-knotted carpets gracing homes worldwide, and Pampore saffronsavored across continents, the Valley’s artistry is telling stories far beyond its borders. Fueled by this surge, wholesalers, distributors, and retailers from India and abroad are increasingly partnering with Kashmiri businesses. Large consignments are being ordered directly, and yet this momentum is shadowed by a significant legal lapse: agreements are often not put into writing.
As Kashmir integrates with global supply chains, informality is becoming a liability. International buyers, investors, and partners expect due diligence, transparency, and written accountability. When those are absent, even high-quality products or services lose credibility.Foreign businesses work within ecosystems where compliance and contract culture are standard. A missing agreement can signal risk and unreliability, even when the intention is good. For Kashmiri firms to sustain long-term relationships with global partners, transitioning to a professional businessframework is imperative.
Trust is Good but a Contract is Better
In Kashmir, trust and personal relationships are sacred. But in business, as the stakes grow, so must the tools. It doesn’t replace trust; it reinforces it. A written agreement provides security, clarity, and accountability. As Kashmir’s business climate evolves and expands, especially into international arenas, written contracts are no longer optional, they are essential.
From apple exports to carpet consignments, handshake deals remain commonbut risky. Human memory is unreliable, disputes are frequent, especially when crores are at stake, and without written documentation, there’s no clear way to recover payments, assign liability,or resolve conflicts. In today’s market, trust alone is not enough, contracts are essential.
Imagine renting out heavy machinery without a contract, then facing delayed payments, or worse, the other party denying the rental altogether or disputing the number of days it was used. Without written terms, you’re left directionless, unsure how to recover your dues or prove your claims. When reconciliation fails, litigation is often the only resort, increasing costs and draining business energy.
All of this can be avoided with a single well-drafted contract that includes a dispute resolution clause like arbitration or mediation. A supplier delivers electronics or clothes that arrive damaged, how do you prove who’s responsible? What if a natural calamity or a war delays shipping? A force majeure clause covers it.
The WhatsApp Contract Culture is a Trap
As commercial lawyers, we’ve seen too many high-stake business deals sealed over WhatsApp chats or vague verbal promises. These informal agreements, while convenient, lack the legal teeth to protect businesses when things go wrong.
Recent cases underline this issue starkly
A Kashmiri carpet supplier engaged for the FIFA World Cup in Qatar suffered significant financial losses when sub-contractors, from whom he had sourced smaller batches of carpets, backed out at the last moment. With no formal contract in place, there was no way to hold them accountable. As a result, he failed to fulfill the order, incurred penalties, and suffered heavy losses.
Exporters dealing in walnuts, saffron, and apples frequently face challenges such as spoilage during transit or withheld payments by distributors or buyers, often without the protection of a written contract. In the absence of clear payment terms, liability clauses, or insurance provisions, they are left with no recourse when things go wrong.
A promising deal between a Dubai-based business chain and a Kashmiri consulting agency collapsed due to ambiguity over commission terms. The disagreement wasn’t about quality or capability, but the absence of clearly defined payment arrangements.
A Srinagar-based businessman shipped goods worth crores to an international distributor based solely on a verbal agreement. The payment was never made, and his only proof is a WhatsApp voice note and a few vague messages, hardly enough to hold up in court.
Worldwide, commercial contracts are very essential, whether the deal is worth a few thousand or millions. Why? Because contracts help avoid disputes, assign accountability, and offer remedies. Yet in Kashmir, many entrepreneurs particularly start-ups and small vendors avoid documentation to move quickly. Deals are struck over trust, credibility, and goodwill. But trust, while valuable, is not a legal remedy.
Are Oral Contracts Even Valid in India?
Yes, under the Indian Contract Act, 1872, oral contracts are valid as long as there is offer, acceptance, consideration, and lawful object. However, the challenge lies in proving them. In court, vague WhatsApp messages like “payment sent” or “delivery soon” rarely establish a clear contract. Multiple interpretations arise. There’s no documentation of obligations, scope, timelines, or penalties. Without a clear written agreement, even valid contracts can become unenforceable. Legal remedies like specific performance suits drag on, with little relief.
What Creative Artists, Startups and Small Businesses Must Know
Kashmir’s booming creative economy comprising artists, musicians, filmmakers, influencers, and designersis witnessing unprecedented exposure and opportunities. However, this sector is particularly vulnerable due to the widespread absence of legal safeguards.Many collaborations and deals are initiated informally, often sealed through quick phone calls, WhatsApp chats, or social media DMs. While these methods may feel efficient, they leave creatives exposed to exploitation, especially when projects cross borders or involve larger entities.
Real-world examples from the Valley are telling that a local musician’s track was used in a foreign advertisement without credit or compensation, a fashion brand was invited to showcase its work on an international platform, only to be denied payment later on the pretext that it was merely an “opportunity” and/or an artisan’s original designs were sold internationally without any royalty arrangement or intellectual property acknowledgment.These cases are not isolated. Without written contracts, creative professionals are left with limited or no legal recourse. Verbal assurances or digital messages rarely hold up in disputes, especially across jurisdictions.
Many small vendors and new startups worry that contracts are only for large businesses. But that’s a myth. In fact, small businesses are often more vulnerable to losses, and therefore have more to gain from basic contractual protections. A basic agreement doesn’t require a full legal department, it just needs clarity.Even one-page contracts with clear terms, signatures, and timelines can be enforceable.
What Every Business Contract Should Include
A contract need not be a 50-page document or need not even have fancy legal jargons to make it enforceable. However, it is important to have a clear picture of what the terms between the contracting parties are.
Credentials of the parties: It is important to clearly define who the parties are to determine who the contract is between? Further, it must also include the proper and correct addresses of the parties for the purposes of serving notices. Whether the contract can devolve among the successors or assignees? This ensures clear accountability in case of default by either of the parties.
What the contract is about? Details of the contract can include setting of the background of the contract, the business of the parties, the purpose behind the contract, the reciprocal rights and obligations of the contracting parties.
Duration of the contract: It is important to predetermine the lifecycle of the contract to know whether it is for a fixed period or renewable or terminable on certain established grounds. If so, mention the process of renewing or termination.
Timely delivery of the work: Lay out a well-defined time frame for the performance of the contract and the underlying purpose of the contract. Sometimes the parties have shifting obligations, so delay on one side shouldn’t lead to a collapse. The parties must be aware of the purpose of the contract so that the work is delivered on time and suits the purpose it is being met for.
Terms of payment: It’s important to mention the precise amount in numbers as well as words with currency to avoid any confusion, the frequency or dates of payment whether the amount is to be paid at once or in instalments, if so, on what date. Will the amount be a gross up amount inclusive of applicable taxes?
Dispute Resolution mechanism: Make clear your preferred resolution option like mediation or arbitration or litigation. This becomes extremely important in transnational contracts where parties reside in different countries or even different states because eventually if the dispute goes to courts, then which court will have jurisdiction?
Sub-contracting or Assignment terms: Reduce it into writing if you want to keep the contract or rights arising out of it transferrable, or whether it can be done freely or with consent of the other party. If the contract gets sub contracted to third parties, who will be responsible for major breaches like non-delivery of work, payment defaults etc.
Insurances: From the point of dispatch to the point of delivery, if anything goes wrong during the transit, who will look after the damages? Insurances like transit insurance or general product liability insurances are ways to secure the parties from any unforeseen losses or damages that may occur.
In order for a contract to be enforceable in a court of law, it is equally important that the contract is duly executed by all the parties concerned and is properly notarized. Further, it must be ensured that proper stamp duty on the agreement is paid for to make it legally enforceable. Yes, it might cost a few thousand bucks but isn’t it still better than losing lakhs in a transaction that has no legal proof?
Conclusion
In Kashmir’s rapidly evolving business landscape, relying solely on verbal agreements, handshakes, or WhatsApp messages is no longer sustainable especially when the stakes involve crores in goods, services, or international partnerships. While trust remains the foundation of any business relationship, a well-drafted written contract strengthens that trust and provides clarity, accountability, and legal recourse when things go wrong.
Whether you’re a small vendor or a growing exporter, investing time in a basic contract can save you from costly disputes, delays, and irreparable losses. In today’s market, having a contract is not just smart business, its essential business.
(Romaan Muneeb is a corporate lawyer and partner at IMR Law Offices, Srinagar, J&K. He co-authored this article along with Mushtaq Dar, corporate lawyer and Zuha Beigh, Legal Trainee. For queries or feedback, the authors can be reached at: [email protected])
