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P- 07
DR. RAM MANOHAR LOHIYA NATIONAL LAW UNIVERSITY
DR. R.K. YADAV MOOT COURT COMPETITION
Before, THE HON’BLE HIGH COURT IN THE MATTER OF- XYZ CORPORATION …. PLAINTIFF V. ABC ENTERPRISES ...DEFENDANT MEMORIAL ON BEHALF OF THE PLAINTIFF
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TABLE OF CONTENTS
TABLE OF ABBREVIATIONS ................................................................................................ 4
INDEX OF AUTHORITIES ...................................................................................................... 5
STATEMENT OF JURISDICTION .......................................................................................... 6
STATEMENT OF FACTS ......................................................................................................... 7
SUMMARY OF ARGUMENTS ............................................................................................... 8
ADVANCED ARGUMENT ...................................................................................................... 9
[ISSUE 1] WHETHER THE CONTRACT IS VALID AND ENFORCEABLE UNDER THE INDIAN
CONTRACT ACT ...................................................................................................................... 9
[I] Contract Between Xyz Corporation And Abc Enterprise Will Be Considered As A Valid And Enforceable Contract Under Sec 10 Of The Indian Contract Act 1872 ..................... 9 [II] Contractual Precision Having A Clear Offer, Unambiguous Acceptance Aligned With Legal Precedents .............................................................................................................. 10 [III] The Triad of Consideration, Unfettered Consent, And A Legitimate Objective In The Contract Between XYZ And ABC ................................................................................... 10 [IV] Ensuring Contractual Integrity Between XYZ Corporation And ABC Enterprise Under Sections 14, 23, And 2(D) Of Indian Contract Law ............................................. 11 [ISSUE 2] WHETHER THE FAILURE OF ABC ENTERPRISES TO PROVIDE THE AGREED-UPON FUNDING CONSTITUTES A BREACH OF CONTRACT .............................................................. 12 [I] Time Is Essence of Contract Between ABC Enterprises and XYZ Corporation. ....... 12 [II] ABC’s Promise to Provide the Agreed- Upon Funding Was Not Impossible To Perform. ........................................................................................................................... 14 [III] ABC’s Financial Hardship Does Not Constitute the Defence Of Force Majeure. ... 15 [ISSUE 3] WHETHER XYZ CORPORATION IS ENTITLED TO SEEK SPECIFIC PERFORMANCE OR DAMAGES FOR THE ALLEGED BREACH ................................................................................ 16 [I] ABC Enterprises Had Conducted a Breach Of Contractual Obligations .................... 16
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TABLE OF ABBREVIATIONS
¶ Paragraph AIR All India Reporter Anr. Another Ors. Others v Versus SCC Supreme Court Cases SC Supreme Court Hon’ble Honourable & And
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INDEX OF AUTHORITIES
Cases Balram v Natku AIR 1928 PC 75 ............................................................................................ 18 Bhagwandas Goverdhandas Kedia v M/s Girdharilal Parshottamdas & Co 1966 AIR 543. ... 10 Bishamber Nath Agarwal v. Kishan Chand AIR 1990 ALL HC 65 ......................................... 14 Chinnaya v Ramayya ILR (1876-82) 4 Mad 137 .................................................................... 11 Gherulal Parakh v Mahadeodas Maiya 1959 AIR 781 ............................................................ 13 Kamal Kumar v Premlata Joshi & Ors (2019) 3 SCC 704 ...................................................... 18 Lalman Shukla v Gauri Dutt 1913 XL ALJR 489 ................................................................... 12 M/S Citadel Fine Pharmaceuticals v M/S Ramaniyam Real Estates P.Ltd.& Anr AIR 2011 SC 3351 ...................................................................................................................................... 14 Mahatma Gandhi Sahakra Sakkare Karkhane v National Heavy Engg Coop Ltd. and Ors. AIR 2007 SC 2716....................................................................................................................... 16 Mohori Bibee v Dharmodas Ghose 1903 UKPC 12 ................................................................ 11 Satyabrata Ghose v Mugneeram Bangur & Co 1954 SCR 310 ............................................... 19 Satyabrata Ghose v Mugneeram Bangur & Co. 1954 SCR 310 .............................................. 19 Satyabrata Ghose v Mugneeram Bangur and Company and Ors., AIR 1954 SC 44 ............... 15 Standard Retail Pvt. Ltd. and Ors v GS Global Corp and Ors. MANU/MH/0528/2020 ......... 16 Vijay Kumar & Ors v Om Prakash AIR 2018 SC 1913 ........................................................... 18 Statutes Indian Contract Act 1782, Sec 56 ............................................................................................ 15 Indian Contract Act 18712, sec 10 ........................................................................................... 13 Indian Contract Act 1872, sec 2(h) .......................................................................................... 13 Indian Contract Act 1872, Sec 39 ............................................................................................ 14 Indian Contract Act, Sec 55 ..................................................................................................... 14 Indian Contract Act, Sec 73 ..................................................................................................... 19 Online Sources Contract Formation in India: Law and Practice ....................................................................... 11 Implications of covid-19 pandemic on the Contractual Disputes ............................................ 16 The Impact of Covid-19 on Construction & Building Materials: GEP ................................... 14
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STATEMENT OF FACTS
The Plaintiff, XYZ Corporation, is a well-established software development company. The Defendant, ABC Enterprises, is a multinational corporation specializing in hardware solutions. The parties had a history of successful collaborations in the past. The software developed by XYZ Corporation is cutting-edge and has significant market potential. They have 30% market share. The parties entered into negotiations for a joint venture to develop and market an innovative software-hardware integration system. After several rounds of discussions, both parties arrived at a mutually agreeable contract (the "Contract") that outlined the terms and conditions of their collaboration. Clause 3 of the Contract stipulates that ABC Enterprises would contribute a specified amount of funding within 30 days of signing the Contract, and XYZ Corporation would deliver the first phase of the software development within 120 days from the date of receiving the funds. ABC Enterprises claims unforeseen financial difficulties as the reason for the delay in providing funding. ABC enterprises also cites reason of Pandemic of COVID-19. ABC enterprises says that Software testing was to be done by FCS Software but they did not do it due to payment issues.
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SUMMARY OF ARGUMENTS
[ISSUE 1] WHETHER THE CONTRACT IS VALID AND ENFORCEABLE UNDER
THE INDIAN CONTRACT ACT
The plaintiff contends that the contract between XYZ Corporation and ABC Enterprise meets the requirements of the Indian Contract Act, 1872, for validity and enforceability. They argue that the offer and acceptance were clear and unconditional, aligned with legal precedents. Additionally, they assert the presence of valid consideration, free consent, and a lawful objective, ensuring the contract's integrity under relevant sections of the Act. Overall, the plaintiff maintains that the contract should be upheld by the court based on its adherence to legal standards. ISSUE 2: WHETHER THE FAILURE OF ABC ENTERPRISES TO PROVIDE THE AGREED-UPON FUNDING CONSTITUTES A BREACH OF CONTRACT. The core of the dispute arises from ABC Enterprises' failure to provide the agreed funding within the specified timeframe, constituting a clear breach of contract under Section 73 of the Indian Contract Act, 1872. Despite citing unforeseen financial difficulties and the COVID- 19 pandemic as justifications for the delay, ABC Enterprises cannot evade their contractual obligations. The principle of pacta sunt servanda, which dictates that agreements must be kept, is fundamental to contract law, leaving ABC Enterprises liable for breaching their obligations. Consequently, XYZ Corporation is entitled to legal remedies for the breach. ISSUE 3: WHETHER XYZ CORPORATION IS ENTITLED TO SEEK SPECIFIC PERFORMANCE OR DAMAGES FOR THE ALLEGED BREACH. In light of ABC Enterprises' breach of contract, XYZ Corporation is entitled to seek remedies to redress the harm caused. Under the Specific Relief Act of 1963, Section 10 empowers courts to enforce specific performance of contracts in certain cases. In this instance, specific performance—compelling ABC Enterprises to provide the agreed-upon funding—remains the primary relief sought by XYZ Corporation. This remedy is not only just but also equitable, as it restores XYZ Corporation to its position if the breach had not occurred. Alternatively, if specific performance is not feasible, XYZ Corporation seeks monetary compensation for the damages suffered due to the breach in accordance with Section 21 of the Specific Relief Act.
10 | P a g e In Mohori Bibee v. Dharmodas Ghose^2 , the Privy Council held that an agreement entered by a minor is void ab initio, emphasizing the importance of valid acceptance for the formation of a contract. In the present case, ABC Enterprises, being a competent party, provided a valid acceptance of XYZ Corporation's offer, as required by Section 10. [II] Contractual Precision Having a Clear Offer, Unambiguous Acceptance Aligned With Legal Precedents There were no counteroffers or modifications proposed by ABC Enterprises that would indicate a rejection of XYZ Corporation's initial offer. Instead, ABC Enterprises accepted the terms proposed by XYZ Corporation without any material alterations, further solidifying their acceptance of the offer. The way XYZ Corporation's offer was made and accepted by ABC Enterprises aligns with established legal precedents and principles governing offer and acceptance under Section 10 of the Indian Contract Act. Courts have consistently upheld contracts where clear offers were made and unambiguously accepted by the parties involved^3. The terms of the Contract were clearly outlined and unambiguous, leaving no room for misunderstanding or misinterpretation. Both parties had a clear understanding of their respective rights, obligations, and responsibilities as outlined in the Contract. XYZ Corporation, as the offering party, clearly communicated its intention to collaborate with ABC Enterprises on the development and marketing of a software-hardware integration system. This intention was conveyed through detailed discussions, presentations, and written proposals exchanged between the parties during the negotiation phase. [III] The Triad of Consideration, Unfettered Consent, And A Legitimate Objective In The Contract Between XYZ And ABC In Chinnaya v. Ramayya^4 , the Madras High Court emphasized that consideration may consist of a promise to do something or abstain from doing something. In the present case, XYZ Corporation promised to deliver software expertise, and ABC Enterprises promised to provide funding, thus constituting valid consideration under Section 2(d). (^2) Mohori Bibee v Dharmodas Ghose 1903 UKPC 12. (^3) ‘Contract Formation in India: Law and Practice ’ (Academic.oup.com) https://academic.oup.com/book/26793/chapter/195737624 accessed 16 February 2024. (^4) Chinnaya v Ramayya ILR (1876-82) 4 Mad 137.
11 | P a g e In the Indian Contract Act 1872, consideration is clearly defined under the interpretation clause ( Section 2(d) ). This section outrightly declares that consideration can be moved by “the promisee or any other person.” The express wording of this section makes it clear that the intention of the legislature is to not follow the English doctrine of privity of consideration and that any stranger to the contract can pay the consideration in a contract. The Contract is supported by valid consideration from both parties, as defined under Section 2(d) of the Indian Contract Act. XYZ Corporation agreed to provide its cutting-edge software expertise, while ABC Enterprises committed to providing funding for the joint venture. This exchange of promises constitutes valid consideration under the Indian Contract Act. The consideration provided by each party confers a benefit upon the other party. XYZ Corporation stands to benefit from the financial support provided by ABC Enterprises, which is crucial for the development and marketing of the software-hardware integration system. Similarly, ABC Enterprises will benefit from XYZ Corporation's expertise in software development, enhancing the overall value proposition of the joint venture. The Contract exhibits mutuality of obligation, which is a fundamental aspect of consideration under Section 2(d) of the Indian Contract Act. Both XYZ Corporation and ABC Enterprises have made promises to each other, creating a reciprocal relationship where each party is bound to perform its obligations under the Contract. [IV] Ensuring Contractual Integrity Between XYZ Corporation And ABC Enterprise Under Sections 14, 23, And 2(D) Of Indian Contract Law In Lalman Shukla v. Gauri Dutt^5 , the Privy Council held that consent obtained by misrepresentation is not free consent and renders the contract voidable. In the present case, there is no evidence of misrepresentation or coercion, and both parties voluntarily entered into the Contract, thereby satisfying the requirement of free consent under Section 14. Both parties entered into the Contract with free consent, as required under Section 14 of the Indian Contract Act. There were no indications of coercion or undue influence, and both parties had a voluntary agreement to be bound by the terms of the Contract. (^5) Lalman Shukla v Gauri Dutt 1913 XL ALJR 489.
13 | P a g e In the case of Bishamber Nath Agarwal v. Kishan Chand^9 , it was held by the Allahabad High Court that when a contract contains specific guidelines, actions must be taken accordingly, and the obligations must be fulfilled accordingly. Clause 3 of the Contract clearly stipulates that the Defendant shall provide funding within 30 days of signing the Contract. The Defendant was, therefore, under a legal obligation to provide the funds within the agreed timeline. However, despite repeated reminders by Plaintiff, Defendant failed to do so, thereby committing a breach of Contract as per Section 39, refusal of party to perform.^10 read with Section 55 of the Indian Contract Act^11. When a contract is not fulfilled within the allotted Time, it is considered a breach of Contract. The nature of the Contract is to be considered, as parties intended to consider the "time" as the fundamental element of the agreement when they entered the Contract. The Time is generally considered to be of the essence in the Contract, where: i. the parties have expressly agreed to treat Time as the essence of the Contract. ii. any delay would operate as an injury to the opposite party and iii. the nature of the Contract requires it to be so construed.^12 Here, the parties said the Time is essential, as it is clearly mentioned in clause 3 of the Contract. Therefore, it is a breach. In the judgment of M/S Citadel Fine Pharmaceuticals^13 on, the issue of the significance of the Time of performance, the Supreme Court of India held that, based on the nature and terms of the Contract and the surrounding circumstances, it is clear that the parties were willing to consider the Time as essence because clause 30 of the Contract mentioned 30 days for performing the Contract on the stipulated Time. (^9) Bishamber Nath Agarwal v. Kishan Chand AIR 1990 ALL HC 65. (^10) Indian Contract Act 1872, Sec 39. (^11) Indian Contract Act, Sec 55. (^12) ‘The Impact of Covid-19 on Construction & Building Materials: GEP’ (Contact Us, 18 March 2016) <https://www.gep.com/blog/strategy/the-impact-of-covid- 19 - on-building-materials> accessed 16 February
(^13) M/S Citadel Fine Pharmaceuticals v M/S Ramaniyam Real Estates P.Ltd.& Anr AIR 2011 SC 3351.
14 | P a g e [II] ABC’s Promise to Provide the Agreed- Upon Funding Was Not Impossible To Perform. In the present case, providing the agreed funding was a vital contractual obligation of Defendant, without which Plaintiff could not commence the software development work as contemplated under the Contract. Hence, the unjustified failure of the Defendant to provide timely funding goes to the root of the Contract and amounts to a substantial breach on their part. The excuse for not providing the funding within 30 days due to Covid 19 does not make the Contract impossible to perform. What is impossible is defined in the landmark case of Satyabrata Ghosh vs Mugnareem Bangur & Co.^14 , as impossibility does not mean a literal interpretation, but it implies two elements: a) The Supervening event should destroy the foundation/ subject matter of the Contract and b) Therefore, continuing a former contract is impractical and unreasonable because the object or purpose of the Contract is already frustrated and cannot be achieved further. In case of supervening impossibility mentioned under Section 56 of the Contract Act, party to the Contract is exempted from performance. This Section narrates three situations where the party can consider the Contract as frustrating and excused from performance. a) If the nature of the agreement entered by the parties is such that it is impossible to perform, it is void. b) A contract becomes impossible to perform because of some unforeseen event that the promisor could not prevent, or if performed, it would be considered an unlawful act, and then such agreement also becomes void. c) Where one party to the Contract knows or has reason to believe that the performance is impossible or unlawful but induces the other party to enter the Contract, then the party so induced can declare the contract void and the inducer party must compensate the other party for any loss sustained by the innocent party.^15 (^14) Satyabrata Ghose v Mugneeram Bangur and Company and Ors., AIR 1954 SC 44. (^15) Indian Contract Act 1782, Sec 56.
16 | P a g e Therefore, it is humbly submitted that Defendant's wilful and unjustified failure to provide the contractually agreed funding within the stipulated Time despite repeated reminders amounts to a breach of Contract on their part. In light of the above facts, circumstances and well-settled legal position, Plaintiff prays that this Hon'ble Court may be pleased to hold that Defendant has committed a breach of Contract by failing to provide the agreed funding within the stipulated timeline. [ISSUE 3] WHETHER XYZ CORPORATION IS ENTITLED TO SEEK SPECIFIC PERFORMANCE OR DAMAGES FOR THE ALLEGED BREACH It is humbly submitted that the XYZ Corporation is entitled to seek specific performance or damages for the alleged breach conducted by ABC Enterprises. The arguments are justified in the following prongs: [I] ABC Enterprises Had Conducted a Breach Of Contractual Obligations It is submitted that when a contractual party breaches the contract the other party has a number of legal remedies for the loss caused by such breach including lawsuits and arbitration. But when the crux of the contract is performance specific or of a unique transaction and no amount of money can compensate the aggrieved party, then Specific Performance of Contract comes as a legal remedy for the aggrieved party. Specific performance of a contract is a remedy used by the Courts when in the breach of a particular contract the Court sees no other remedy (monetary) to compensate the aggrieved party. However, there are few conditions before enabling specific performance of a contract. These conditions are stated in Section 10 of the Specific Relief Act, 1963. This section states that at the discretion of the Court, the specific performance of a contract can be enforced under two conditions: A. “When there exists no standard for ascertaining actual damage caused by the non- Performance of the act agreed to be done; or B. “when the act agreed to be done is such that compensation in money for its non-performance would not afford adequate relief.” It is submitted that the damage of goodwill and reputation that has been caused to XYZ Corporation from the non-fulfilment of contractual obligations by ABC Enterprises cannot be ascertained in monetary terms. It needs to be noted that XYZ corporation was required to
17 | P a g e deliver the first phase of the software development within 120 days from the date of receiving the funds. However, the same could not happen due to lack of funding. This resulted in several logistical and other issues to XYZ corporation that could not have been sorted out in monetary terms, Thereby, the specific performance by ABC enterprises becomes a necessity. [II] The Necessity to Ensure Specific Performance Of Contract It is humbly submitted that the current situation of the Covid-19 pandemic, a lot of contracts have been troubled. The Business of XYZ corporation has also been facing difficulty in obliging their contractual obligations which is due to the default in providing timely and adequate money or monetary payment for the purpose of fulfilment of delivery of the first phase of the testing software. This conduct of ABC Enterprises comprises a clear breach of contract. Now, with the pandemic being a temporary thing, the contract between ABC Enterprises and XYZ Corporation cannot be held void forever. Before filing the suit, the party also has to make sure that the specific performance suit meets the statutory requirements mentioned in sections 16 (c), 20, 21, 22, 23 of the Specific Relief Act, 1963. This was held by the Hon’ble Supreme Court in case^19 where it was further explained that only after these requirements are presented in the Court proceeding by both the parties with evidence, the Supreme Court can grant or reject the specific performance claim. It is also essential for the party claiming for specific performance of contract to prove that he/she had the willingness to perform the contract or had performed his/her side of the contract. This was held by the Hon’ble Supreme Court.^20 Section 16(c) of the Specific Relief Act, 1963 emphasizes the terms “readiness and willingness”. The plaintiff submits that all these requirements have been adequately fulfilled by them. For a contractual party to claim specific performance of a contract, a suit must be filed by that party. Before filing the suit, the party must make sure that the contract is a valid contract. A valid contract consists of consideration, consent, lawful object, competent parties, etc. This requirement has been adequately fulfilled in the present case. 21 Impossibility of performing a contract does not mean mere physical or literal impossibility. It can also mean impossibility in the present situation with the advent of an unanticipated event. This was held in the case, where (^19) Kamal Kumar v Premlata Joshi & Ors (2019) 3 SCC 704. (^20) Vijay Kumar & Ors v Om Prakash AIR 2018 SC 1913. (^21) Balram v Natku AIR 1928 PC 75.
19 | P a g e It is submitted that the damage of goodwill and reputation that has been caused to XYZ Corporation from the non-fulfilment of contractual obligations by ABC. It needs to be noted that XYZ corporation was required to deliver the first phase of the software development within 120 days from the date of receiving the funds. However, the same could not happen due to lack of funding. This resulted in several logistical and other issues to XYZ corporation. Thereby, in the event, the court denies specific performance, it shall ensure that monetary damages are adequately paid to XYZ Corporation to make good the losses resulted due to non-performance of contractual obligations by ABC Enterprises.
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PRAYER
Wherefore, in light of the issues raised, arguments advanced, reasons given and authorities cited, it is most humbly contented on behalf of the Plainitff that the High Court be pleased to:
- DECLARE, that the Contract between XYZ Corporation and ABC enterprises is valid and enforceable
- DECLARE, that the specific performance of the Contract, compelling ABC Enterprises to provide the agreed-upon funding.
- DECLARE, that monetary compensation for the damages suffered be awarded due to breach of contract. AND/OR Pass any other order it may deem fit, in the interest of Justice, Equity and Good Conscience. And for this, the counsel on behalf of the Plaintiff as is duty bound, shall forever humbly pray. AND FOR THIS ACT OF KINDNESS, THE PLAINTIFF SHALL DUTY BOUND FOREVER PAY. SD/- COUNSEL FOR Plaintiff
