Contract, Partnership and IP Disputes: Questions and Answers

In most cases, you do. Section 73 of the Indian Contract Act, 1872 pays for loss that flowed naturally from the breach, or loss both sides knew was likely when they signed. You prove it on paper. The higher price you paid elsewhere, the orders that got cancelled, money spent for nothing. If the contract names a sum, Section 74 allows reasonable compensation up to that figure, and the Supreme Court said in Kailash Nath Associates v. DDA (2015) that proof can be dispensed with only where loss is genuinely hard to prove. There's more on our page about breach of contract claims.

You do. The Explanation to Section 73 says the means that existed of remedying the inconvenience caused by the breach must be taken into account. Put plainly, you can't sit back and watch the losses grow. If a buyer cancels, try to resell. If a supplier lets you down, buy elsewhere at a fair price. The court will knock off whatever part of the damages you could reasonably have avoided. Write down what you did to limit the loss, and keep the quotations and emails. The defendant's lawyer will raise it.

That's the usual measure, yes. Section 57 of the Sale of Goods Act, 1930, read with Section 73 of the Contract Act, lets a buyer claim the gap between the contract price and the market price on the date of breach. Buying replacements quickly, at a fair price, is the best evidence of what that market price was. Keep the purchase orders and invoices. Get quotations from at least two vendors. Any advance you'd paid the defaulting supplier comes back to you on top of that.

It can be. The Contract Act wants offer, acceptance, consideration and free consent. A signed paper isn't on that list. Section 10A of the Information Technology Act, 2000 also recognises contracts formed through electronic records. The tougher question is whether the chats show agreement on the essential terms: price, quantity, delivery, payment. "Let's finalise next week" isn't acceptance. If you're relying on WhatsApp, keep the full thread on the original phone, and be ready with a certificate under Section 63 of the Bharatiya Sakshya Adhiniyam when you file.

It can stop dealing with you, but it'll usually owe you damages. Say the contract allows termination on 90 days' notice. A sudden termination is then a breach, and the normal measure is the profit you'd have earned during the notice period. Not for the rest of the term. When a termination letter lands on Advocate B.K. Singh's desk, he first checks the ground it gives against the termination clause, and checks whether any cure period was allowed. A letter that relies on a ground the contract doesn't list is easier to challenge.

Often, provided time really was meant to matter. Under Section 55 of the Contract Act, you can avoid the contract if the other party misses the date and the parties intended time to be of the essence. Writing the phrase into the contract helps. It isn't conclusive. A court looks at the whole document and at your own conduct; if you've happily taken late deliveries before, or pushed dates back, you may have waived it. One more trap. If you do accept late performance now, Section 55 says you must give notice at that moment, or you'll lose the claim for delay compensation.

Often, at least in part. Section 64 of the Contract Act says a party who rescinds a voidable contract has to restore any benefit it got under it, and Section 65 deals with benefits received under agreements that fail. You're allowed to set off your own provable loss and any earnest money that was properly forfeitable. What you can't safely do is sit on the whole advance with no accounting at all. That's a common way for a terminating party to end up facing a counter claim bigger than its own.

Only if it's genuine earnest money and keeping it is reasonable. In Kailash Nath Associates v. DDA (2015), the Supreme Court applied Section 74 to a forfeiture of earnest money and refused it, because the seller hadn't suffered any loss. A modest token paid to bind the deal can usually be forfeited when the buyer walks away. A big chunk of the price that the agreement just calls "earnest" gets treated more like a penalty. Whatever label the agreement uses, it doesn't settle the question.

Generally yes, between commercial parties who negotiated the terms. Indian courts usually respect limitation of liability clauses and exclusions of indirect or consequential loss. They'll read them strictly against whoever relies on them, though. A cap may not protect a party guilty of fraud or wilful default. Nor will it help where it was pushed through an unconscionable standard form on a far weaker party. Read the cap together with the indemnity clause. That clause is often drafted to sit outside it.

Rarely. In commercial breaches, Indian courts compensate financial loss you can show, not hurt feelings or a general dent in reputation. Loss of goodwill is recoverable only if it can be proved as money lost (named customers who left because of the breach, for instance) and if that loss was within the parties' contemplation. A round figure pleaded for reputation usually gets thrown out. Don't bother with it. Build your claim from accounts, lost orders and correspondence.

Usually not. A rise in cost, however sharp, doesn't make performance impossible. The Supreme Court held in Energy Watchdog v. CERC (2017) that an unexpected jump in fuel prices neither triggered the force majeure clause nor frustrated the contract under Section 56. Unless the clause expressly covers price escalation or a named supply failure, the supplier's stuck: it has to perform or pay damages. The real protection is a price variation clause. And that's something you negotiate before the dispute starts, not after.

Most do. A typical clause asks the affected party to tell the other side within a set number of days, describe the event, explain how it's stopping performance and take steps to reduce its effect. Courts treat these conditions as part of the bargain. Skip the notice and you risk losing the protection altogether. If you're the one relying on force majeure, write promptly, with dates and documents. If it's the other side claiming it, ask for proof of the event and of how it actually hit this particular contract.

Since the 2018 amendment, yes. Section 20 of the Specific Relief Act, 1963 lets the party hit by a breach get the work done through a third party or its own agency and recover the cost from the defaulter. First, though, you've got to give at least 30 days' written notice asking the defaulter to perform. Once you go down this route, specific performance is off the table. Before the new contractor starts, record the state of the work with photographs and a joint measurement. There's more on construction disputes.

Yes, if you can prove them. Owner-side delay (handing over the site late, drawings that arrive weeks behind, approvals that crawl) can ground claims for idle labour, idle machinery, extended overheads and escalation. Most such claims fail on records. Advocate B.K. Singh's first request on a contractor's delay claim is the hindrance register, plus the letters protesting each delay when it happened. Rebuilding the claim from memory once the project's over rarely works. Check the extension of time clause as well. Some contracts give only more time. Not money.

You can. Section 32 of the Partnership Act, 1932 lets a partner retire with the consent of all the other partners, under the terms of the deed, or by written notice if it's a partnership at will. The others carry on the firm. To stop being liable for debts the firm runs up later, give public notice of retirement under Section 72, in the Official Gazette and a local newspaper, and intimate the Registrar of Firms if the firm's registered. Exit and accounts are covered on our page on partnership disputes.

Their share of the value, yes. Control, no. Section 42 of the Partnership Act says a partner's death dissolves the firm, unless the deed says something different. Either way, the legal heirs get the deceased partner's share of the firm's assets, valued as on the date of death. Suppose you carry on using that share without settling accounts. Section 37 then lets the heirs choose between a share of the profits and interest at 6 percent a year. What they don't get is automatic entry as partners.

In the order Section 48 of the Partnership Act lays down. Losses come first out of profits, then out of capital, and then from the partners individually in their profit-sharing ratio. The firm's assets go first to outside creditors, then to repaying partners' advances (as distinct from capital), then to returning capital. Whatever's left is shared in the profit-sharing ratio. The fights are usually over undisclosed withdrawals and goodwill. That's why courts often appoint a local commissioner or a chartered accountant to take the accounts.

Within limits. Section 27 of the Contract Act strikes down agreements in restraint of trade, but the Partnership Act makes room for exceptions. Under Section 36(2), an outgoing partner may agree not to run a similar business within specified local limits or for a specified period, so long as the restraint's reasonable. Section 54 permits the same kind of agreement on dissolution. A ban for life, covering all of India? That won't survive. Two years, same city, has a far better chance.

Between the shareholders who signed it, usually. Against the company, not always. In V.B. Rangaraj v. V.B. Gopalakrishnan (1992) the Supreme Court refused to let share transfer restrictions that weren't in the articles bind the company. Section 58(2) of the Companies Act, 2013 now makes agreements between shareholders on transferring a public company's securities enforceable as contracts. The practical fix is easy. Put the SHA rights you care about into the articles too. Oppression claims belong before the NCLT, while a plain contractual breach can come to a commercial court as an SHA dispute.

Reasonable notice. Where an ongoing distributorship has no fixed term and no termination clause, courts generally imply that either side can end it on reasonable notice. What's reasonable depends on how long the relationship ran, what the distributor put in, and how long it'll take to wind down stock, staff and credit. A one-line email ending things the same week usually falls short. The company may then owe you profit for a fair notice period. See our page on franchise and distributor disputes.

That depends on the agreement. If there's a buy-back clause, the company has to follow it, often at invoice price less a handling charge. If the agreement's silent, there's no general duty to buy back stock you bought outright. Goods supplied on consignment, or on sale or return, are different. They stay the company's property and must be taken back or paid for. And stock that expired because the company stopped supporting the product can go into a damages claim for wrongful termination.

Possibly, at least some of it. The initial franchise fee is usually described as non-refundable, and courts give that clause weight. But if the franchisor didn't provide what it promised (training, supplies, software, marketing), you can claim damages for breach, and those may include wasted fit-out costs and fees. Brochures and sales emails from before signing matter, especially any projected earnings. Want the agreement and those papers looked at? Share them with Advocate B.K. Singh's team through the contact page.

It is. Under Section 109 of the Transfer of Property Act, 1882, whoever buys leased property steps into the landlord's shoes and takes it subject to your lease. The new owner can collect rent and hold you to the lease terms. What it can't do is put you out before the term ends, except as the lease allows. Your security deposit stays the old landlord's liability, unless you elect to treat the buyer as liable for it. Write to both and ask who's holding it. More on shop and office lease disputes.

The tenancy exists. Whether the deed's terms can be enforced is another matter. Any lease from year to year, or for more than a year, needs registration under Section 107 of the Transfer of Property Act and Section 17 of the Registration Act, 1908. Without it, the deed can't be used to prove terms like the five-year period or a lock-in, though it may still be looked at for collateral purposes. Courts then usually treat the tenancy as month to month. On lock-in clauses in unregistered deeds, the case law isn't uniform. Get advice before you lean on one.

You can't just stop paying. But you may be able to repair and deduct. Section 108(f) of the Transfer of Property Act says that if the landlord, after notice, fails within a reasonable time to make repairs it's bound to make, the tenant may get them done and take the cost, with interest, out of the rent. Lots of commercial leases alter this rule, so check your repair clause first. Then send written notice, give it a reasonable time, and keep bills and photographs. Withholding rent without that paper trail is how tenants end up facing an eviction suit for default.

Don't treat it as only a contract problem. It's trademark infringement and passing off. After the licence ends, any continued use of a registered mark infringes under Section 29 of the Trade Marks Act, 1999, and an unregistered mark is protected through a passing off action. Start with a cease and desist notice. Then gather evidence: photos of the signboard, their invoices, screenshots of online listings. File for an injunction. Courts usually act fast against a former licensee, since it can hardly claim it didn't know whose mark it was. See our page on trademark infringement suits.

Often the earlier user does. Section 34 of the Trade Marks Act protects someone who's continuously used a mark from a date before the registered owner's use or registration. In S. Syed Mohideen v. P. Sulochana Bai (2016), the Supreme Court held that a prior user's passing off rights aren't displaced by a later registration. You'll need proof of use right from the start: old invoices, advertisements, sales figures and GST records that show the brand. You can also apply to have the registration cancelled.

Often, yes. If it's a registered trademark or a copyright being infringed, Section 134 of the Trade Marks Act and Section 62 of the Copyright Act allow you to file where you yourself carry on business. A pure passing off claim works differently. There, Section 20 CPC governs, and Delhi courts look at whether the seller's website is aimed at Delhi buyers, which is usually proved with a test purchase delivered to a Delhi address. Banyan Tree Holding v. A. Murali Krishna Reddy (2009), decided by the Delhi High Court, is where most lawyers begin. Hold on to the invoice and packaging from the test order.

Usually it is. The Copyright Act, 1957 treats photographs as artistic works. If your business commissioned the shoot and paid for it, Section 17 generally makes you the first owner, unless it's been agreed otherwise. A rival lifting those images for its catalogue or a marketplace listing is infringing. And if the copied photos suggest the goods are yours, there's a passing off angle too. Keep the original files with their metadata, and the photographer's invoice. Most marketplaces will pull a listing once notified. A copyright suit is for the copier who keeps at it.

You can. The Delhi High Court routinely issues John Doe orders, sometimes called Ashok Kumar orders, against unnamed defendants in IP suits. Anyone later caught selling the fakes is bound. The court's also passed dynamic injunctions against rogue websites, so mirror sites can be added later without a new suit. You'll still need solid evidence against the defendants you've managed to identify, and a local commissioner is often appointed to seize stock. These suits ask for urgent injunctions, so Section 12A mediation isn't usually required first.

Usually you'll have to pick one. Damages look at what you lost. An account of profits looks at what the infringer made, and makes it hand that over. You can't have both for the same infringement. If the infringer's sales are big but your own provable loss is thin, an account of profits is often the better pick. Delhi courts award costs as well, and in some flagrant cases they've given damages beyond the proved loss. Either way, the defendant's sales figures drive the number. Ask early for them to be disclosed.

Yes, if what you shared was confidential and the NDA covers it. Confidentiality duties normally outlive the talks. They aren't hit by Section 27 of the Contract Act, because they limit how information is used rather than restraining trade. Courts protect information given in confidence even where there's no NDA at all. Your job is to show what was shared, when, and how it was marked. One practical point. Get the NDA stamped properly at signing, since a court won't act on an unstamped document until duty and penalty are paid. More on protecting confidential information.