WEEKLY EXERCISE

October 2024

Exercises on Contract Drafting Checklist-2

Week Duration: 08/10/2024 - 15/10/2024

Weekly exercise
Definitive Contract Checklist-2

PLEASE NOTE:

When submitting your assignment, please follow these instructions

carefully:

1. Download assignments from the portal and go through the

questions carefully. Observe the marks allotted to the questions.

2. Open a separate word document in your computer and attempt the

answers in it.

3. Correctly reference the question numbers in the answer document.

For example, write "Exercise 1 Question 1" followed by your answer.

4. Name the word document as ACD/Batch/Your name - For example

ACD/September 2024/Aditi Sinha

5. Upload the answers in Word or PDF format on the assignment

portal.

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Weekly exercise
Definitive Contract Checklist-2

Learning objectives:

⧫ To learn how to identify the intent of the parties to a contract

⧫ To learn how to identify the different parts of a contract where the terms need to be listed

⧫ To learn how to use the definitive contract checklist

Reference Material:

Module Details Chapter Name

Module 1- Introductory module ● The Definitive Contract Checklist

● The Definitive Contract Checklist-Sample Clauses

Factual Background

A technology startup named TechNest Innovations Private Limited (“Company”) based in

Bengaluru specializes in developing AI- driven software solutions for financial institutions. To scale
their operations, TechNest has entered into a service agreement with Datastream Solutions Private
Limited (“Service Provider”), a data analytics firm based in Mumbai. The agreement is for
Datastream to provide continuous data analytics support for TechNest’s flagship product, FinAI.

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Definitive Contract Checklist-2

The contract between TechNest and Datastream (“Agreement”) includes the following key clauses:

1. Scope of Services: Datastream is required to provide real-time data analytics and

machine learning models to enhance the FinAI product’s performance (the
“Services”). DataStream shall complete the Services in accordance with the timelines
specified in the project schedule (the "Timeline"), as detailed in Schedule A.
Datastream’s ability to deliver the Services in a timely and effective manner is
contingent upon TechNest providing all necessary data, information, and materials
required for the execution of the Services.

2. Payment Terms: TechNest agrees to pay Datastream Rs. 20,00,000 annually, with
payments to be made in quarterly instalments, subject to the timely delivery of
Services.

3. Confidentiality: Both parties agree to keep all proprietary information confidential.

This includes customer data, financial details, and product specifications.

4. Limitation of Liability: The liability of Datastream for any claims arising under this
Agreement is limited to the total amount of fees paid by TechNest in the preceding
twelve (12) months. If a claim arises within the first twelve (12) months of the
Agreement, the liability of Datastream shall be the total amount of fees that was to
be paid by TechNest under this Agreement in the first twelve (12) months.

5. Liquidated Damages: If Datastream fails to meet agreed Timeline for delivering key
analytics reports, TechNest will be entitled to a fixed amount of Rs. 5,00,000 per
missed deadline.

6. Termination: Either party will give 15 days notice to the other party on occasion of
breach and the defaulting party to cure the breach within 15 days of receipt of such

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Definitive Contract Checklist-2

notice. If the defaulting party fails to remedy it within fifteen (15) days of receiving
notice of the breach, the other party may terminate the contract with thirty (30)
days' written notice.

7. Dispute Resolution: Any disputes arising out of or in connection with this

agreement shall be resolved through arbitration in Bengaluru, in accordance with
the Arbitration and Conciliation Act, 1996.

8. Notice: All notices and other communications required or permitted to be served

under this agreement shall in writing and shall be delivered in person or mailed by
first class registered or certified mail, postage prepaid or sent via common carrier
and receipt acknowledged.

9. Entire Agreement: This Agreement along with its annexures and schedules
represents the entire agreement and understanding between the parties with respect
to its subject matter and supersedes any prior agreement, understanding or
arrangement between the parties, whether oral or in writing, with respect to the
same.

10. Waiver: The failure of either party to enforce any term or right arising pursuant to
the Agreement does not constitute a waiver or any such term or right and shall in no
way affect that Party’s right later to enforce or exercise the term or right.

11. Amendment: This Agreement may be amended only by a written agreement signed
by authorised representatives of both parties. No amendment shall be effective
unless it is in writing and executed by both parties.

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Definitive Contract Checklist-2

Issues Arising

1. After six (6) months, TechNest discovered that Datastream had missed
several critical deadlines, leading to performance issues with the FinAI
product

2. TechNest withheld the second quarterly payment, citing Datastream’s

failure to deliver services on time.

3. Datastream argues that the delays were caused by TechNest’s failure to

provide necessary customer data on time, which is required for their
analytics.

4. Technest sends a notice of breach to Datastream via email but does not
receive confirmation of receipt. Datastream claims it never received the
notice.

5. The Managing Directors of both the parties share a good personal

relationship, and before entering into this Agreement, they had agreed over
a phone call that email notices are a convenient mechanism and should be
accepted as valid notice if the parties were to enter into a formal agreement.

6. After entering into the Agreement, on many occasions, email notices were
accepted between both the parties without contest.

7. After sixty (60) days of the email communication citing breach, TechNest
wants to terminate the contract immediately and sue Datastream for
damages.

Exercise I [Award: 10 Marks]

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Definitive Contract Checklist-2

1. How will a court assess the validity of the current notice? Identify the 3 clauses that
will be considered for the same and analyse. (1*3 marks for identifying the correct
clauses + 1*3 marks for analysing them correctly = 6 marks)

2. Can TechNest legally terminate the contract through its proposed mechanism?
Provide reasons for your answer. (2 marks)

3. Evaluate Datastream’s claim that the delay was caused due to TechNest’s failure to
provide necessary customer data on time- which clause of the Agreement will you
check to determine the same and why? (2 marks)

_____________________________________________

Exercise II [Award: 10 Marks]

1. TechNest wishes to enforce the liquidated damages clause alleging a total of eight
(8) breaches on part of Datastream to meet the agreed Timeline.

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Definitive Contract Checklist-2

I. Identify the 3 clauses in the Agreement relevant for determining the viability
of Technest’s claim and explain. (1*3 marks for identifying the correct clauses
and 1*3 marks for analysing them correctly= 6 marks)

II. Analyse the legal distinction between penalty and liquidated damages under
Indian contract law in this context. Support your answer with 2 relevant case
laws and their relevance to the above situation. (2 marks for the analysis + 2
marks for discussing 2 case laws and their relevance = 4 marks)

_____________________________________________

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NOTE:

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