Dispute over software development contract

TEAM CODE: _ST-14_
13TH
SURANA & SURANA INTERNATIONAL TECHNOLOGY LAW MOOT COURT
COMPETITION
10TH
TO 12TH
OCTOBER, 2014
SYMBIOSIS LAW SCHOOL, PUNE
BEFORE
THE HON’BLE HIGH COURT OF JUDICATURE, MUMBAI
DISPUTE RELATING TO
RECOVERY OF MONIES & PROTECTION OF PROPRIETARY RIGHTS
CIVIL CASE NO._____/2014
[Under § 20 & § 15 of the Civil Procedure Code, 1908]
In the Matter of
INDICO……………………………………………………………………………..(APPLICANT)
V.
CARCO……………………………………………………………………….......(RESPONDENT)
MEMORIAL for RESPONDENT
~ CARCO ~

~ I ~
MEMORIAL for RESPONDENT TABLE OF CONTENTS
TABLE OF CONTENTS
INDEX OF AUTHORITIES................................................................................................ IV
STATEMENT OF JURISDICTION................................................................................... IX
STATEMENT OF FACTS.....................................................................................................X
STATEMENT OF ISSUES.................................................................................................. XI
SUMMARY OF ISSUES.....................................................................................................XII
ARGUMENTS ADVANCED..................................................................................................1
ISSUE I: THE SUIT IS NOT MAINTAINABLE IN THE HON’BLE COURT......1
[A] THE HON’BLE COURT DOES NOT HAVE JURISDICTION TO TRY THE INSTANT CASE
.................................................................................................................................1
(a) The ‘Cause of Action’ didn’t arise within Territorial Jurisdiction of the Court..1
(b) The Court should not entertain the instant case on the basis of ‘Balance of
Convenience’ .................................................................................................................2
(c) The contract shall be governed by UNCITRAL Rules........................................2
[B] THE INSTANT CASE SHOULD BE REFERRED TO ARBITRATION...............................2
(a) The dispute in instant case is Arbitrable..............................................................3
(b) The Parties have agreed to an Arbitration Clause................................................3
(c) The Dispute in the instant case arose out of the Contract....................................3
[C] THE PRINCIPLES OF ‘CONFLICT OF LAWS’ ARE APPLICABLE FOR THE HON’BLE
COURT TO NOT ASSUME JURISDICTION ............................................................................4
(a) The Parties have expressly decided the ‘Proper Law’ of the Contract to be
NYIAC Rules.................................................................................................................4
(b) The ‘Dispute Resolution Clause’ is an ‘Ouster Clause’ ......................................5
(c) The Instant Case shall not be governed by the Indian Laws................................5
ISSUE II: THE CONTRACT BETWEEN THE PARTIES IS NOT VALID AND
BINDING ..........................................................................................................................5

~ II ~
[A] INDICO CANNOT SEEK ENFORCEMENT OF THE CONTRACT ...................................6
(a) The Software Codes were not as per Specifications............................................6
(b) Indico used Technology which was Banned........................................................6
[B] THE PROPERTY IN THE SOFTWARE CODES HAS NOT BEEN PASSED TO CARCO ....7
(a) Software Codes are goods for the purposes of the Sales of Goods Act...............7
(b) There was no acceptance on part of Carco. .........................................................7
ISSUE III: THERE IS A BREACH OF CONTRACT ON THE PART OF
INDICO..8
[A] THE TERMS MENTIONED IN THE CONTRACT ARE ‘CONDITIONS’...........................8
(a) ‘Time is of the Essence’ to the Contract..............................................................8
(b) There cannot be a presumption of Extension of Time.........................................8
(c) Indico Committed breach of a condition by using Third Party IPR ....................9
[B] THERE IS MISREPRESENTATION ON THE PART OF INDICO ....................................9
(a) There was a Positive Act on the part of Indico....................................................9
(b) There was a duty on the part of Indico to disclose the Illegality in the Software
Codes............................................................................................................................10
ISSUE IV: THE OWNERSHIP OF THE INTELLECTUAL PROPERTY RIGHTS
IN THE SOFTWARE CODES DEOS NOT LIE WITH INDICO.................................10
[A] COPYRIGHT CANNOT BE GRANTED ON SOFTWARE CODES..................................10
(a) The ‘Test of Originality’ is not fulfilled ............................................................11
(b) The AACN and Smart TV Tracking Chips are already in ‘public domain’......11
[B] IN ARGUENDO, INDICO CANNOT CLAIM COPYRIGHT OVER THE SOFTWARE
CODES ..................................................................................................................................
12
(a) The Contract is a ‘Contract of Service’ .............................................................12
(b) The IPR is exclusively granted to Carco for a fixed period...............................12
ISSUE V: THERE ARE REMEDIES AVAILABLE TO CARCO UNDER

~ III ~
INDIANS LAWS....................................................................................................................
13
[A] THE CONTRACT CAN BE TERMINATED AND COMPENSATION TO BE GRANTED TO
CARCO .............................................................................................................................13
(a) There is a breach of contract on part of Indico..................................................13
(b) Carco is entitled to receive Compensation.........................................................14
[B] THE INJUNCTION ON THE SOFTWARE CODES SOUGHT FOR BY INDICO NOT BE
GRANTED..........................................................................................................................14
(a) There is no Prima Facie case of Indico.............................................................14
(b) The ‘Balance of Convenience’ is not in favour of Indico..................................15
(c) There would be no Irreparable Loss to Indico if Injunction not be granted ......15
PRAYER..............................................................................................................................XIII

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MEMORIAL for RESPONDENT INDEX OF AUTHORITIES
INDEX OF AUTHORITIES
ERROR! REFERENCE SOURCE NOT FOUND.
Error! Reference source not found.

~ V ~
MEMORIAL for RESPONDENT STATEMENT OF JURISDICTION
STATEMENT OF JURISDICTION
The APPLICANT (Indico) has invoked, in the dispute concerning ‘Recovery of Monies
and Protection of Proprietary Rights’, the jurisdiction of the Hon’ble High Court of
Judicature at Mumbai, Maharashtra under § 20 and § 15 of the Civil Procedure Code, 1908,
respectively. The RESPONDENT challenges the jurisdiction of the Hon’ble Court. Thereby, the
RESPONDENT submits this memorial which sets forth the facts & the laws on which the claims
are based.

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MEMORIAL for RESPONDENT STATEMENT OF FACTS
STATEMENT OF FACTS
BACKGROUND
The APPLICANT (Indico) is a Pvt. Ltd. Co. incorporated in India. The RESPONDENT
(Carco) is Detroit based US Co.
The Government of India issued a notification that manufacture and use of microchip
used in Smart TV or any such invasive technology, only with the prior permission of the
Government after detailing the end use of such a device
THE CONTRACT
The parties entered into an agreement in January 2014, which mentioned the ‘Scope
of Work’ (SOW) regarding manufacture of software codes, involving a consideration of USD
7 Million. A substantial part of the work was required to be done at Pune, India, where
Indico’s Company was situated but installation, commissioning and approval was to be done
at Detroit using Carco’s systems.
Within about 10 days of signing of the Agreement, Carco added an additional SOW,
after confirming of the Indico’s ability to deliver the same. Indico confirmed that it was
capable of performing and agreed to include the same for the same cost.
THE DISPUTE
Indico submitted preliminary details as per the agreement and Carco paid the first two
instalments which was 30% of the total consideration. There was delay in complying with the
2nd
milestone due to the additional SOW. The delayed submission was not accepted by Carco
which claimed that the submissions were not as per specifications.
After several exchange of communications between the parties and modifications to
submissions by Indico, Carco issued a termination letter to Indico within 10 days of
submission of the 2nd
milestone and stopped further payments. Carco raised a claim for
refund of monies already paid by it, on the ground that Indico had misrepresented its ability
to deliver requirements under SOW.
THE SUIT
Indico has, thereby, filed the instant suit for recovery of monies and for protection of
their copyright to the software codes submitted by them to Carco.

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MEMORIAL for RESPONDENT STATEMENT OF ISSUES
STATEMENT OF ISSUES
ISSUE I: Whether the suit is maintainable in the Hon’ble Court.
ISSUE II: Whether the Contract between the parties is valid and binding.
ISSUE III: Whether there is a breach of contract on the part of Indico.
ISSUE IV: Whether the ownership of the Intellectual Property Rights in the Software
Codes lie with Indico.
ISSUE V: Whether there are remedies available to Indico under the Indian Laws.

~ VIII ~
MEMORIAL for RESPONDENT SUMMARY OF ISSUES
SUMMARY OF ISSUES
ISSUE I: WHETHER THE SUIT IS MAINTAINABLE IN THE HON’BLE COURT.
The instant suit is not maintainable in the Hon’ble Court as the Court does not have
jurisdiction over the instant case. Moreover, the principle of ‘Conflict of Laws’ would be
applicable with necessitating the matter to be referred arbitration.
ISSUE II: WHETHER THE CONTRACT BETWEEN THE PARTIES IS VALID AND BINDING.
The Contract between the parties is not valid and binding as Indico used a technology
which was banned, thereby, debarring Indico to seek enforcement of the contract. Further,
there is no acceptance of goods on the part of Carco, and thus, it is not liable to pay the
consideration.
ISSUE III: WHETHER THERE IS A BREACH OF CONTRACT ON THE PART OF INDICO.
The terms mentioned in the contract, which are breached by Indico, are ‘conditions’
and not ‘warranties’. Further, Indico misrepresented Carco about its capabilities, thereby
committing a breach.
ISSUE IV: WHETHER THE OWNERSHIP OF THE INTELLECTUAL PROPERTY RIGHTS IN
THE SOFTWARE CODES LIE WITH INDICO.
The software codes do not fulfil the ‘originality’ criteria and therefore, cannot be
granted Copyright. Further, Indico granted exclusive rights to Carco for a fixed period. Thus,
the ownership of IPR in the codes lie with Carco.
ISSUE V: WHETHER THERE ARE REMEDIES AVAILABLE TO INDICO UNDER THE INDIAN
LAWS.
The parties, who entered into an agreement, the innocent party, in case of breach of contract,
is entitled to various remedies. Therefore, Carco is entitled to claim compensation suffered by
it and can also terminate the contract. Further, the injunction sought for by Indico need not be
granted.

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MEMORIAL for RESPONDENT ARGUMENTS ADVANCED
ARGUMENTS ADVANCED
ISSUE I: THE SUIT IS NOT MAINTAINABLE IN THE HON’BLE COURT.
¶ 1. If a court does not have jurisdiction, neither the consent nor the acquiescence, nor a
waiver can create it and the suit filed in such court should be regarded as non-maintainable.1
Therefore, it is submitted that, firstly, the Hon’ble Court does not have jurisdiction to try the
instant case [A]; secondly, the instant case should be referred to arbitration [B]; and, thirdly,
the principles of ‘Conflicts of Laws’ are applicable for the Hon’ble Court to not assume
jurisdiction [C].
[A] THE HON’BLE COURT DOES NOT HAVE JURISDICTION TO TRY THE INSTANT CASE
¶ 2. Jurisdiction means the power of the court to hear and decide the question at issue and
decide the dispute that has arisen between the parties.2
Thereby, it is put forth that the
Hon’ble Court doesn’t have jurisdiction as, the ‘cause of action’ didn’t arise within territorial
jurisdiction of the Court [a]; the Court should not entertain the instant case on the basis of
‘Balance of Convenience’ [b]; and, the contract shall be governed by UNCITRAL Rules [c].
(a) THE ‘CAUSE OF ACTION’ DIDN’T ARISE WITHIN TERRITORIAL JURISDICTION OF THE COURT
¶ 3. The facts pleaded, having nexus and relevance to the dispute involved, constitute
‘cause of action’ and in cases where a part or whole of the cause of action arises within
territorial jurisdiction, such Court would have the jurisdiction to entertain such suit.3
The
‘cause of action’ arises at a place (i) where the contract was concluded; or, (ii) where the
contract was to be performed; or, (iii) where money was required to be paid.4
¶ 4. In the instant case, the software codes were to be installed, commissioned and
approved at Detroit using Carco’s systems. Further, the dissatisfaction regarding the 2nd
milestone was reported from Detroit.5
The ‘cause of action’ arose in the territory of Detroit,
and not Pune; thus, the Hon’ble Court does not have jurisdiction.
1
Harshad Chiman Lal Modi v. DLF Universal Ltd., A.I.R. 2005 S.C. 4446Error! Reference source not
found..
2
Union of India v. Tarachand Gupta and Bros., (1971) 1 S.C.C. 486Error! Reference source not found..
3
Union of India v. Adani Exports Ltd., A.I.R. 2002 S.C. 126Error! Reference source not found..
4
Bakhtawar Singh Bal Kishan v. Union of India, A.I.R. 1988 S.C. 1003Error! Reference source not found..
5
Case Data, ¶8, 4.

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(b) THE COURT SHOULD NOT ENTERTAIN THE INSTANT CASE ON THE BASIS OF ‘BALANCE OF
CONVENIENCE’
¶ 5. The choice of forum made by the parties to a contract is usually not disturbed unless
the ‘balance of convenience’ is strongly in favor of the party contesting it. 6
It includes
exercise of sound judicial discretion to find substantial mischief or injury, which is likely to
be caused to the parties.7
¶ 6. In the instant case, there was an express ‘choice of law’ made by the parties to be
governed by New York International Arbitration Center (“NYIAC”) Rules.8
Further, there is
nothing to show that the balance of convenience favors Indico, and thus, the choice made by
the parties should not be disturbed.
(c) THE CONTRACT SHALL BE GOVERNED BY UNCITRAL RULES
¶ 7. Where the parties have made an express choice of law regarding the proper law, the
agreement will be governed by that law.9
The NYIAC does not have its own detailed
arbitration rules,10
making the United Nations Commission on International Trade Law
(“UNCITRAL”) Arbitration Rules applicable, thereby, providing the place of hearing at New
York.11
¶ 8. In the instant case, the parties have clearly stated that the dispute between them shall
be submitted to Arbitration, which shall be held under the aegis of the NYIAC, by a sole
arbitrator.12
Thus, the instant suit should be governed by the UNCITRAL Arbitration Rules
[B] THE INSTANT CASE SHOULD BE REFERRED TO ARBITRATION
¶ 9. When the parties enter into an arbitration agreement, it stands enforceable,
6
Badat & Co. Bombay v. East India Trading Co., A.I.R. 1964 S.C. 538Error! Reference source not found..
7
Dalpat Kumar v. Prahlad Singh, A.I.R. 1993 S.C. 276Error! Reference source not found..
8
Case Data, ¶ 3, 3.
9
Shreejee Traco (I) (P) Ltd. v. Paperline International Inc., (2003) 9 S.C.C. 79Error! Reference source not
found..
10
New York International Arbitration Centre Arbitration RulesError! Reference source not found., Rule 1,
available at http://nyiac.org/about/rules/.
11
Id., Rule 1(b).
12
Case Data, ¶ 3, 3.

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notwithstanding, a declaration that the contract was null and void.13
Thereby, it is put forth
that instant case should be referred to arbitration on the grounds that, the dispute in instant
case is arbitrable [a]; the parties have agreed to an arbitration clause [b]; and, the dispute in
the instant case arose out of the Contract [c].
(a) THE DISPUTE IN THE INSTANT CASE IS ARBITRABLE
¶ 10. The existence of an arbitrable dispute is a pre-condition for the exercise of powers of
an arbitrator.14
It includes the kinds of dispute affecting civil rights, in which damages may
be claimed, may be referred to arbitration.15
¶ 11. Further, the UNCITRAL Model Law does not contain any provision prescribing any
particular category of disputes to be non-arbitrable,16
meaning that any dispute is capable of
resolution by arbitration.17
Thus, the question of arbitrability does not arise in the instant
case, making the present case referable to arbitration.
(b) THE PARTIES HAVE AGREED TO AN ARBITRATION CLAUSE
¶ 12. An arbitration agreement which may be in the form of an arbitration clause,18
made
by the parties to submit to arbitration, all or certain disputes, which have arisen or which may
arise between them, in respect of a defined legal relationship.19
It is a collateral term in the
agreement, which survives even when the contract is brought to an end.20
¶ 13. The Indian Arbitration and Conciliation Act, 1996, embodies the UNCITRAL Model
on Arbitration, states that a court ‘shall’ stay the proceedings initiated by a party to an
arbitration agreement.21
The parties, in the instant case, have agreed to an arbitration clause in
13
Reva Electric Car Co. Pvt. Ltd. v. Green Mobil, (2012) 2 S.C.C. 93Error! Reference source not found..
14
J. G. Engineers Pvt. Ltd. v. Calcutta Improvement Trust, A.I.R. 2002 S.C. 766Error! Reference source not
found..
15
Nigel Blackaby & Costantine Partasides, Redfern & Hunter on International Arbitration 125 (Alan Redfern &
Martin Hunter, Oxford University Press 2009)Error! Reference source not found..
16
Sanders, UNCITRAL Model Law, Art. 1(5), 23 Arb. Int’l 105 (2007)Error! Reference source not found..
17
Gary B. Born, International Commercial Arbitration 773 (Kluwer Law International, I Indian Reprint
2010)Error! Reference source not found..
18
M. Dayanand Reddy v. A. P. Industrial Infrastructure Corporation Ltd., A.I.R. 1993 S.C. 2268Error!
Reference source not found..
19
J. K. Jain v. Delhi Development Authority, A.I.R. 1996 S.C. 318Error! Reference source not found..
20
National Agri. Co-op. Marketing Fed. India Ltd. v. Gains Trading Ltd., A.I.R. 2007 S.C. 2327Error!
21
Smita Conductors Ltd. v. Euro Alloys Ltd., (2001) 7 S.C.C. 728Error! Reference source not found..

~ 4 ~
the contract and the dispute arose out of the contract. The court, thus, should injunct the
instant case and refer the instant case to arbitration.
(c) THE DISPUTE IN THE INSTANT CASE AROSE OUT OF THE CONTRACT
¶ 14. When the parties can get their disputes resolved by invoking the adjudicating
machinery of the arbitration clause, the court should not exercise the jurisdiction.22
Further,
when the dispute is between the parties to a contract and involves an arbitration clause for
determination of serious disputed question of facts, the Court should not exercise its
jurisdiction.23
¶ 15. The question regarding the breach and the delayed submissions by Indico forms a
dispute, which can be resolved by invoking the adjudicating machinery of the arbitration
clause. The Hon’ble Court thus, should not assume jurisdiction.
[C] THE PRINCIPLES OF ‘CONFLICT OF LAWS’ ARE APPLICABLE FOR THE HON’BLE
COURT TO NOT ASSUME JURISDICTION
¶ 16. Whenever a contract that has a foreign element is brought before the court, the rules
of private international law or conflict of laws must be considered.24
Thereby, it is put forth
that the principles of ‘Conflict of Laws’ will be applicable as, the parties have expressly
decided the ‘Proper Law’ of the Contract to be NYIAC Rules [a]; the ‘Dispute Resolution
Clause’ is an ‘Ouster Clause’ [b]; and, the instant case shall not be governed by the Indian
Laws [c].
(a) THE PARTIES HAVE EXPRESSLY DECIDED THE ‘PROPER LAW’ OF THE CONTRACT TO BE
NYIAC RULES
¶ 17. In a contract, the notion of ‘proper law’ is considered as being the express law chosen
by the parties, being either expressly made in the contract or to be inferred from the terms and
nature of the contract.25
It is the law which the parties intend to apply.26
The determination of
22
Bisra Lime Stone Company Ltd. v. Orissa Stale Electricity Board, (1976) 2 S.C.R. 307Error! Reference
source not found..
23
Indian Aluminium Company v. Kerala State Electricity Board, (1976) 1 S.C.R. 70Error! Reference source
not found..
24
Viswanathan (R) v. Rukn-ul-Mulk Syed Abdul Wajid (Dead), A.I.R. 1963 S.C. 1Error! Reference source
not found..
25
National Thermal Power Corpn. v. The Singer Co., A.I.R. 1993 S.C. 998Error! Reference source not
found..

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the ‘proper law’ does not involve any difficulty if the parties have stipulated expressly which
legal system is to apply to their agreement.27
¶ 18. A contract is governed by the law chosen by the parties, either expressly of by
implication.28
The parties, in the instant case, have chosen NYIAC Rules as the ‘proper law’,
by which the contract would be governed.29
Thus, such rules should apply to the dispute and
not the Indian laws.
(b) THE ‘DISPUTE RESOLUTION CLAUSE’ IS AN ‘OUSTER CLAUSE’
¶ 19. There is full autonomy to the parties to oust the jurisdiction of a court, by having an
agreement that the disputes would be adjudicated upon and decided through the process of
arbitration,30
i.e. even though other courts have territorial jurisdiction to try and decide such
disputes, but in view of the clause, it is only the arbitral tribunal which would have
jurisdiction to entertain such proceeding.31
¶ 20. The parties, in the instant case, have entered into an agreement which ousts the
jurisdiction of the courts, and mandates the dispute to be referred to arbitration. Thus, the
court in the present case should not consider the dispute brought before the parties.
(c) THE INSTANT CASE SHALL NOT BE GOVERNED BY THE INDIAN LAWS
¶ 21. A movable property is defined to mean property of every description except
immovable property.32
Further, the word property includes tangible goods which a person can
possess.33
With regards to the law relating to tangible movables, the courts are likely to
follow English Common Law applying English decisions.34
26
Enercon (India) Ltd. v. Enercon GMBH, (2014) 5 S.C.C. 1Error! Reference source not found..
27
1 Joseph Chitty Et. Al., The Common Law on Contracts 1971 (Sweet & Maxwell Ed. 13th
2008)Error!
28
Shreejee Traco (I) (P) Ltd. v. Paperline International Inc., supra note 9.
29
Case Data, ¶ 3, 3.
30
Hanil Era Textiles Ltd. v. Puromatic Filters (P) Ltd., (2004) 4 S.C.C. 671Error! Reference source not
found..
31
Balaji Coke Industry Pvt. Ltd. v. Maa Bhagwati Coke Gujarat Pvt. Ltd., (2009) 9 S.C.C. 403Error!
32
The General Clauses Act, No. 10 of 1897Error! Reference source not found., § 3(36).
33
Nrisingha Murari Chakraborty v. State of Bengal, A.I.R. 1977 S.C. 1174Error! Reference source not
found..
34
Bhagwandas Goverdhandas Kedia v. Girdharlal Parshottamdas & Co., A.I.R. 1966 S.C. 543Error! Reference
source not found.

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¶ 22. A transferee of tangible movables is determined by the law of the place where the
transfer took place.35
The transfer, in the instant case, involving transfer of software codes
fall under the category of movable property, which was to take place in Detroit. Therefore,
the laws of United States would be applicable.
ISSUE II: THE CONTRACT BETWEEN THE PARTIES IS NOT VALID AND
BINDING.
¶ 23. A contract, to be enforceable has to fulfil the conditions given in § 1036
, which states
that there has to be an acceptance,37
and the consideration or object has to be lawful38
.
Therefore, it is submitted that Carco is not liable to pay the consideration as, firstly, Indico
cannot seek enforcement of the contract [A]; and, secondly, the property in the Software
codes has not been passed to Carco [B].
[A] INDICO CANNOT SEEK ENFORCEMENT OF THE CONTRACT
¶ 24. An agreement is not enforceable if it involves an illegal object or consideration with
the mutual consent of both the parties to the contract.39
However, if it is only the intention of
one party to commit an illegal act, such party cannot enforce the contract.40
Thereby, it is put
forth that, the software codes were not as per specifications [a]; and, Indico used technology
which was banned [b].
(a) THE SOFTWARE CODES WERE NOT AS PER SPECIFICATIONS
¶ 25. § 1541
r/w § 16(2)42
mandates that when there is a contract for the sale of goods by
description, there is an implied condition that the goods shall correspond with the description
and shall be of merchantable quality. In such cases, the buyer, must have relied on seller's
skill or judgment.43
35
Morris, The Conflict of Laws 563 (David McClean & Veronica Ruizabou-Nigm, Ed. 8th
)Error! Reference
source not found..
36
The Indian Contract Act, No. 9 of 1872Error! Reference source not found., § 10.
37
Andhra Sugars Ltd. v. State of Andhra Pradesh, A.I.R. 1968 S.C. 599Error! Reference source not found..
38
R. Chandevarappa v. State of Karnataka, (1995) 6 S.C.C. 309Error! Reference source not found..
39
Kedar Nath Motani v. Prahlad Rai, A.I.R. 1960 S.C. 213Error! Reference source not found..
40
Id.
41
The Sale of Goods Act, No. 3 of 1930Error! Reference source not found., § 15.
42
Id., § 16(2).
43

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¶ 26. Whether the communication of the particular purpose was made by the buyer to the
seller may be inferred from the description of the goods given by the buyer to the seller or
from the circumstances of the case. 44
Further, condition is a stipulation essential to the
purpose of contract, the breach of which gives a right to the other party to treat the contract
terminated.45
¶ 27. In the instant case, the purpose and description of the software codes was made
known to Indico,46
but the codes provided were not in compliance with such description,
giving the right to Carco to terminate the contract.
(b) INDICO USED TECHNOLOGY WHICH WAS BANNED
¶ 28. When a party, who enters into the contract with an unlawful purpose or with an
intention to perform the contract unlawfully, all rights of such parties are withheld; but
appropriate remedies are still available to innocent party that was not aware of the illegality.47
If the innocent party becomes aware of the illegality before performance he can refuse to
perform the contract.48
¶ 29. Indico, in the instant case, used the logic of Smart TV and AACN in making the
software codes asked by Carco,49
which is illegal as per Indian laws. Indico thereby has
waived its right to claim the enforcement of the contract.
[B] THE PROPERTY IN THE SOFTWARE CODES HAS NOT BEEN PASSED TO CARCO
¶ 30. Carco is not liable to pay the consideration as codes have not been passed to Carco on
the grounds that, software codes are goods for the purposes of the Sales of Goods Act, 1930
[a]; and, there is no acceptance from the side of Carco [b].
(a) SOFTWARE CODES ARE GOODS FOR THE PURPOSES OF THE SALES OF GOODS ACT.
44
Rabindrasingh Shankarsingh Thakur v. Hindusthan General Electric Corporation Ltd., A.I.R. 1971 Bom.
97Error! Reference source not found..
45
The Sale of Goods Act, No. 3 of 1930Error! Reference source not found., § 12(2).
46
Case Data, ¶ 5, 3.
47
Citadel Fine Pharmaceuticals v. Ramaniyam Real Estates (P) Ltd. & Ramaniyam Real Estates (P) Ltd. v.
Citadel Fine Pharmaceuticals, A.I.R. 2011 S.C. 3351Error! Reference source not found..
48
Citadel Fine Pharmaceuticals, supra note 47.
49
Case Data, ¶ 5, 3.

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¶ 31. Softwares are considered goods for the purposes of the Act.50
Further, § 2451
provides
that when goods are delivered to the buyer ‘on approval’ or ‘on sale or return’ basis or other
similar terms, the property therein passes to the buyer only when he signifies his approval or
acceptance to the seller or retains the goods without giving notice of rejection.52
¶ 32. Henceforth, the software are goods. The contract mentions that the goods have to be
as per the satisfaction of Carco, which makes the contract fall in the category of sale on
approval. Thus, the property in the software codes has not been passed to Carco.
(b) THERE WAS NO ACCEPTANCE ON PART OF CARCO.
¶ 33. § 4153
provides that where goods are delivered to the buyer, which he has not
previously examined, he is not deemed to have accepted them unless and until he has had a
reasonable opportunity of examining the goods.
¶ 34. Carco, in the instant case, received the software codes for the purpose of testing, but
never accepted the goods. Thus, is not liable to pay any consideration.
ISSUE III: THERE IS A BREACH OF CONTRACT ON THE PART OF INDICO.
¶ 35. The terms of a contract must provide basis for determining the existence of a breach
and for giving an appropriate remedy.54
Therefore, it is submitted that, firstly, the terms
mentioned in the Contract are ‘Conditions’ [A]; and, secondly, there is misrepresentation on
the part of Indico [B].
[A] THE TERMS MENTIONED IN THE CONTRACT ARE ‘CONDITIONS’
¶ 36. A condition is a stipulation essential to the purpose of contract, breach of which gives
a right to the innocent party to treat the contract as terminated.55
Thereby, it is put forth that,
the ‘time is of the essence to the contract [a]; there cannot be a presumption of extension of
time [b]; and, Indico committed breach of a condition by using third party IPR [c].
50
Tata Consultancy Services v. State of Andhra Pradesh, A.I.R. 2005 S.C. 371Error! Reference source not
found..
51
52
United Breweries Ltd. v. State of Andhra Pradesh, A.I.R. 1997 S.C. 1316Error! Reference source not
found..
53
54
Fateh Chand v. Balkishan Das, A.I.R. 1963 S.C. 1405Error! Reference source not found..
55
The Sale of Goods Act, No. 3 of 1930Error! Reference source not found., § 12(2).

~ 9 ~
(a) ‘TIME IS OF THE ESSENCE’ TO THE CONTRACT
¶ 37. Whether time is of essence is a question of law and fact, and the test is the intention of
the parties.56
Where both parties are engaged in business and goods are purchased by one
party from the other party for business purpose, the transaction is classified as ‘mercantile
transaction’.57
A stipulation as to time is of the essence of the contract in mercantile
contract,58
and when such condition is breached, the aggrieved party is entitled to rescind the
contract.59
¶ 38. In the instant case, a term of three months for the completion along with categorical
time slabs for consideration and deliverables were explicitly mentioned.60
Thus, the time is of
essence for the instant contract.
(b) THERE CANNOT BE A PRESUMPTION OF EXTENSION OF TIME.
¶ 39. When time is of the essence of the contract, the question of there being any presumed
extension or presumed acceptance of a renewed date, would not arise;61
extension should not
be ambiguous.62
Where there was no clear extension, and where the parties did not fix any
date of performance after the specified time had elapsed, there can be no presumption as to
the time not being an essence of the contract.
¶ 40. The intention of the parties is to be considered, and not merely a written document, in
determining as to whether there is an extension of time for performance of a contract or not.63
Thus, there cannot be a presumption as to the extension of time.
(c) INDICO COMMITTED BREACH OF A CONDITION BY USING THIRD PARTY IPR
56
Smt. Swarnam Ramachandran v. Aravacode Chakungal Jayapalan, (2004) 8 S.C.C. 689Error! Reference
source not found..
57
Citadel Fine Pharmaceuticals, supra note 47.
58
China Cotton Exporters v. Beharlial Ramcharan Cotton Mills Ltd., A.I.R. 1961 S.C. 1295Error! Reference
source not found..
59
Svenska Handelsbanken v. M/s. Indian Charge Chrome and others, A.I.R. 1994 S.C. 626Error! Reference
source not found..
60
Case Data, ¶ 3, 2.
61
Claude-Lila Parulekar (Smt.) v. Sakal Papers (P) Ltd., (2004) 11 S.C.C. 73Error! Reference source not
found..
62
McDermott International Inc. v. Burn Standard Co. Ltd., (2006) 2 Supp. S.C.R. 409Error! Reference source
not found..
63
Panchanan Dhara v. Manmatha Nath Maity, (2006) 5 S.C.C. 340Error! Reference source not found..

~ 10 ~
¶ 41. The predominant modern approach is to consider the nature of the terms of the
contract in order to decide whether those terms are conditions or warranties.64
A condition is
a stipulation therein, to the purpose of the contract the breach of which gives rise to a right to
treat the contract as terminated.65
¶ 42. Despite explicitly mentioning in the contract that Indico shall ensure that it does not
use any external IPR without prior permission,66
Indico used the logic of AACN & the smart
TV tracking chips with minor tweaking. Thus, it is an essential condition to the contract, thus,
making the contract voidable on the part of Carco.
[B] THERE IS MISREPRESENTATION ON THE PART OF INDICO
¶ 43. The contract is voidable at the option of the party who was induced by
misrepresentation to enter into a contract.67
Thereby, it is put forth that there has been
misrepresentation on the part of Indico as, there was a positive act on the part of Indico [a];
and, there was a duty on the part of Indico to disclose the illegality in the software codes [b].
(a) THERE WAS A POSITIVE ACT ON THE PART OF INDICO
¶ 44. ‘Misrepresentation’ is a positive assertion, which is not true, though the person
making it believes it to be true.68
It may be a false representation by one party with regards to
a material fact made for the purpose of inducing the other party to enter into a contract, which
renders the contract voidable.69
¶ 45. Further, the party whose consent is caused by misrepresentation may terminate the
contract even though the consent may not have been caused solely by the representation.70
Indico on multiple occasions made active representations of its unworthy capabilities of
performing the contract. Thus, in the instant case, there was a positive act of
misrepresentation on the part of Indico.
64
Gomathinayagam Pillai v. Pallaniswami Nadar, (1967) 1 S.C.R. 227Error! Reference source not found..
65
K. Sreedhara Reddy v. The Conservator of Forests, A.I.R. 1976 S.C. 782Error! Reference source not
found..
66
Case Data, ¶ 6, 3.
67
1 Pollock & Mulla, Indian Contract & Specific Relief Act 570 (R. G. Padia, Ed. 13th
2010)Error! Reference
source not found..
68
The Indian Contract Act, No. 9 of 1872Error! Reference source not found., § 18(1).
69
Devendra Kumar v. State of Uttaranchal, A.I.R. 2013 S.C. 3325Error! Reference source not found..
70
2008)Error!

~ 11 ~
(b) THERE WAS A DUTY ON THE PART OF INDICO TO DISCLOSE THE ILLEGALITY IN THE
SOFTWARE CODES
¶ 46. Where a party to the contract knows or believes a fact to be true, but conceals it
actively from the other party with a view to enter into a contract, the contract is held to be
invalid on the grounds of fraud.71
In cases of fraudulent misrepresentation, the party so
misrepresented has the right to terminate the contract,72
along with an action for damages.73
¶ 47. Thus, Indico, by not disclosing the illegality in the software codes used by them, has
fraudulently misrepresented Carco.
ISSUE IV: THE OWNERSHIP OF THE INTELLECTUAL PROPERTY RIGHTS
IN THE SOFTWARE CODES DEOS NOT LIE WITH INDICO.
¶ 48. A ‘software’ is defined to mean a set of instructions expressed in words, codes or
schemes, capable of causing a computer to perform particular task.74
It is submitted that
Indico cannot claim copyright over the software codes as, copyright cannot be granted on
software codes [A]; and, In Arguendo, Indico cannot claim copyright over the software codes
[B].
[A] COPYRIGHT CANNOT BE GRANTED ON SOFTWARE CODES
¶ 49. Software falls under the definition of literary works for the purposes of the Indian
Copyright Act.75
The Act of 1957, specifically provides that copyright subsists in original
literary works.76
Thereby, it is put forth that no copyright subsists in the software codes as,
the ‘test of originality’ is not fulfilled [A]; and, the AACN and Smart TV Tracking Chips are
already in ‘public domain’ [B].
(a) THE ‘TEST OF ORIGINALITY’ IS NOT FULFILLED
¶ 50. The copyright subsists only in original literary work.77
Originality for the purpose of
71
Mithoolal Nayak v. Life Insurance Corpn. of India, A.I.R. 1962 S.C. 814Error! Reference source not
found..
72
1 Pollock & Mulla, Indian Contract & Specific Relief Act 515 (R.G. Padia, Ed. 13th
2010).
73
Id.
74
The Indian Copyright Act, No. 14 of 1957Error! Reference source not found., § 2(ffb).
75
Id., § 2(ffc).
76
The Indian Copyright Act, No. 14 of 1957Error! Reference source not found., § 13(1)(a).
77
Entertainment Network (India) Ltd. v. Super Cassette Industries & Phonographic Performance Ltd. v.

~ 12 ~
copyright law relates to the expression of thought,78
which must originate from the author.79
The sine qua non of copyright is originality, meaning only that the work which was created
by the author, or at least, it possesses some minimal degree of creativity.80
¶ 51. Thus, in the instant case, the ‘test of originality’ is not fulfilled as there is no element
of creativity in the software codes used as they have used the logic of Smart TV and AACN
with only minor tweaking by Indico.81
(b) THE AACN AND SMART TV TRACKING CHIPS ARE ALREADY IN ‘PUBLIC DOMAIN’
¶ 52. Copyright cannot be granted to the subject matter which is in public domain.82
Moreover, OnStar’s latest technical innovation, the next-generation Advanced Automatic
Crash Notification (AACN) system, is a well-known advancement in the field of vehicle
safety and emergency medical response.83
¶ 53. The use of the logic of AACN and the Smart TV tracking chip codes,84
by Indico, is
against the requirement of the contract and the technology that has been contemplated is
already in the public domain. Thus, the software codes are not copyrightable.
[B] IN ARGUENDO, INDICO CANNOT CLAIM COPYRIGHT OVER THE SOFTWARE CODES
¶ 54. The author of a literary work is the first owner of a literary work.85
Thereby, it is put
forth that ownership of the copyright over the software codes lie with Carco as, the Contract
is a ‘Contract of Service’ [a]; and, the IPR is exclusively granted to Carco for a fixed period
[b].
(a) THE CONTRACT IS A ‘CONTRACT OF SERVICE’
Millineum Chennai Broadcast (P) Ltd., (2008) 13 S.C.C. 30Error! Reference source not found..
78
R. G. Anand v. Delux Films, A.I.R. 1978 S.C. 1613Error! Reference source not found..
79
Eastern Book Co. v. D. B. Modak, A.I.R. 2008 S.C. 809Error! Reference source not found..
80
Id.
81
Case Data, ¶ 5, 3.
82
Eastern Book Co. v. D. B. Modak, supra note 79.
83
Advanced Automobile Crash Notification (AACN), http://www.cwhonors.org/archives/case_studies/onstar
.pdfError! Reference source not found..
84
Case Data, ¶ 5, 3
85
The Indian Copyright Act, No. 14 of 1957Error! Reference source not found., § 17.

~ 13 ~
¶ 55. In case of a work done in the course of the author’s employment under a contract of
service or apprenticeship, the employer shall, be the first owner of the copyright therein.86
¶ 56. The court considers several factors which would have a bearing in judging the
relationship between employer and employee such as, (i) who is the appointing authority; (ii)
who is the paymaster; (iii) who can dismiss; (iv) how long alternative service lasts; and, (iv)
the right to reject.87
Further, incidence of tax is also one of the factors.88
¶ 57. In the instant case, Carco not only has the complete power of dismissal and reject, but
is also the paymaster and bears all the taxes incurred,89
and the systems used for the
installation purposes belongs to Carco. Thus, the contract is a ‘contract of service’.
(b) THE IPR IS EXCLUSIVELY GRANTED TO CARCO FOR A FIXED PERIOD
¶ 58. Where the assignee of a copyright becomes entitled to any rights comprised in the
copyright, he shall be treated as the owner of the copyright in respect of those rights.90
Moreover, it is difficult sometimes to distinguish whether it was an exclusive license or a
partial assignment of the copyright. If the agreement contained words or terms as to copyright
then inference could be drawn.91
¶ 59. Where the agreement contained no such terms but the consideration was the payment
of royalties or a share of profits instead of downright payment, then the copyright is not
assigned.92
¶ 60. It is submitted that the non-exclusivity to the software codes would only begin “after a
period of six months from the date of completion of the SOW”93
i.e. the IPR rights are
exclusive till this period. It is also asserted that there is a lump sum consideration of USD 7
million,94
flowing as payment from Carco & not any profits or royalty.
86
The Indian Copyright Act, No. 14 of 1957Error! Reference source not found., § 17(c).
87
Workmen of Nilgiri Cooperative Marketing Society Ltd. v. State of Tamil Nadu, (2004) 2 S.C.C. 514Error!
88
2008)Error!
89
Case Data, ¶ 3, 2.
90
The Indian Copyright Act, No. 14 of 1957Error! Reference source not found., § 18.
91
Asia Publishing House v. John Wiley & Sons Inc., (1969) 71 Bom.L.R. 777Error! Reference source not
found..
92
Id.
93
Case Data, ¶ 3, 2.
94
Id.

~ 14 ~
¶ 61. Thus, if there exists any copyright, the ownership of such rights would lie with Carco.
ISSUE V: THERE ARE REMEDIES AVAILABLE TO CARCO UNDER INDIANS
LAWS
¶ 62. Where the party performing a contract does not do so as per the standard required
under the contract or within the timeframe set, that party is liable for the breach of the
contract.95
In such cases the party suffering due to such breach of contract has various
remedies. Therefore, it is submitted that Carco can sought for, firstly, the contract can be
terminated and compensation to be granted to Carco [A]; and, the injunction on the software
codes sought for by Indico not be granted [B].
[A] THE CONTRACT CAN BE TERMINATED AND COMPENSATION TO BE GRANTED TO
CARCO
¶ 63. It is humbly submitted that where there is a breach of contract by one party, the
innocent party can terminate the contract. Thereby, it is put forth that, there is a breach of
contract on part of Indico [a]; and, Carco is entitled to receive compensation [b].
(a) THERE IS A BREACH OF CONTRACT ON PART OF INDICO
¶ 64. A breach of contract occurs when a party to a contract fails to perform his part of the
contract.96
Such breach may occur either on the due date of performance or during the course
of performance.97
Furthermore, prima facie a breach of condition entitles the innocent party
to rescind the contract and claim damages for any loss he may have suffered.98
¶ 65. Indico, thus, by not meeting the standard required by the terms in the contract for the
quality and the timely submission of the software codes, has breached the contract.99
Thus,
making Carco entitled for damages.
(b) CARCO IS ENTITLED TO RECEIVE COMPENSATION
¶ 66. The damages which the innocent party ought to receive in respect of such breach of
95
Maula Bux v. Union of India, A.I.R. 1970 S.C. 1955Error! Reference source not found..
96
Man Kaur (Dead) by LRS v. Hartar Singh Sangha, (2010) 10 S.C.C. 512Error! Reference source not
found..
97
Reliance Salt Ltd. v. Cosmos Enterprise, (2006) 13 S.C.C. 599Error! Reference source not found..
98
9 Halsbury, Halsbury’s Laws of India: Damages 542 (Buttersworth India, New Delhi, Ed. 4 2001)Error!
99
Case Data, ¶ 10, 4.

~ 15 ~
contract should be such as may be fairly and reasonably be considered either arising naturally
i.e. as per the usual course of things from such breach itself.100
¶ 67. The injured party has to be placed in as good a situation as if the contract has been
performed.101
It humbly submitted that, thus, Indico is liable to pay monies that has already
been paid to it under the contract, along with the damages and interest.
[B] THE INJUNCTION ON THE SOFTWARE CODES SOUGHT FOR BY INDICO NOT BE
GRANTED
¶ 68. § 37102
provides that a temporary injunction is granted for a specific time and at any
stage of the suit. It is the discretion of the court to grant injunction after taking into the
considerations for the same.103
Thereby, it is submitted that, there is no prima facie case of
Indico [a]; the balance of convenience is not in favour of Indico [b]; and, there would be no
irreparable loss to Indico if injunction is not granted.
(a) THERE IS NO PRIMA FACIE CASE OF INDICO
¶ 69. To prove a prima facie case, the Court shall not examine the merits of the case rather
only the basic facts on which it is established that the applicant has a prima facie case to
contest.104
Moreover, necessitating protection of the plaintiff's rights by issue of a temporary
injunction has to be shown.105
¶ 70. Thus, it is submitted that there is no prima facie case put forth by Indico as it does not
require any protection by grant of temporary injunction; Carco only seeks recovery of monies
before the software codes are restituted to Indico.
(b) THE ‘BALANCE OF CONVENIENCE’ IS NOT IN FAVOUR OF INDICO
100
Rajkot Municipal Corpn. v. Manjulben Jyantilal Nakum, (1997) 9 S.C.C. 552Error! Reference source not
found..
101
Murlidhar Chiranjilal v. Harish Chandra Dwarkadas, (1962) 1 S.C.R. 653Error! Reference source not
found..
102
The Specific Relief Act, No. 47 of 1963Error! Reference source not found., § 37.
103
Skyline Education Institute (Pvt.) Ltd. v. S. L. Vaswani, A.I.R. 2010 S.C. 3221Error! Reference source not
found..
104
The State Trading Corpn. of India v. Jainsons Clothing Corpn., A.I.R. 1994 S.C. 2778Error! Reference
source not found..
105
Id.

~ 16 ~
¶ 71. When the need for protection of the applicant’s rights is compared with or weighed
against the need for protection of the respondent’s rights or likely infringement of the
respondent’s rights, the balance of convenience should tilt in favour of the plaintiff.106
The
party who would suffer greater loss would be said to be having balance of convenience in his
favour and accordingly, the court will pass or refuse to pass the order.107
¶ 72. In the instant case, if the injunction is granted on the software codes, the right of
Carco, with respect to the recovery of monies would be jeopardised.
(c) THERE WOULD BE NO IRREPARABLE LOSS TO INDICO IF INJUNCTION NOT BE GRANTED
¶ 73. The Court, also, considers the clear possibility of irreparable injury being caused to
the plaintiff if the temporary injunction is not granted.108
The settled principle of law is that
even where prima facie case is in favour of the plaintiff, the Court will refuse injunction if the
injury suffered by the plaintiff on account of refusal of temporary injunction was not
irreparable.109
¶ 74. If injunction be not granted, the loss suffered by Indico would in no way be
irreparable as Carco seeks the recovery of monies before the restitution of software codes to
Indico.
106
Id.
107
Gujrat Bottling Co. Ltd. v. Coco Cola Co., A.I.R. 1995 S.C. 2372Error! Reference source not found..
108
Best Sellers Retail India (P) Ltd. v. Aditya Nirla Nuvo Ltd., (2012) 6 S.C.C. 792Error! Reference source
not found..
109
Id.

~ XIII ~
MEMORIAL for RESPONDENT PRAYER
PRAYER
Wherefore, in the light of the facts stated, arguments advanced and authorities cited, it
is most humbly prayed and implored before the Hon’ble High Court of Mumbai, that it may
be graciously pleased to adjudge and declare that:
I. The suit is not maintainable in the Hon’ble Court.
II. The contract between the parties is not valid and binding.
III. There is a breach on the part of Indico.
IV. The ownership of the Intellectual Property Rights in the software codes does not lie
with Indico.
V. The remedies sought for be granted.
Also, pass any other order that it may deem fit in the favour of the respondent to meet
the ends of equity, justice and good conscience.
For this act of Kindness, the Respondent shall duty bound forever pray.
Place: Mumbai s/d
Dated: 11th
October, 2014 Counsel for
Respondent

Dispute over software development contract

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