Bytewise Consulting Limited (Bytewise) is a company engaged in providing consulting services in finance and investments. It wanted a studio to be developed in its corporate office for its executives to have online meetings with its clients, branch offices and associates.

Bytewise entered a contract with InnoVision Technologies Limited (InnoVision) for the development of the studio. Bytewise was converting a conference hall in a studio. The contract included InnoVision refurnishing the hall; procuring equipment including cameras, screens, servers and routers; networking the equipment; doing trial runs; and finally handing over the completed functional studio.

The entire value of the contract was Rs. 6 Crore. The contract provided a date by which the completed functional studio was to be handed over to Bytewise.

Ten days were passed the delivery date. InnoVision had not even started work on the project. Within the terms of the contract, delay of delivery by InnoVision was of essence of the contract, that is, it was a condition of the contract. Following the term, Bytewise terminated the contract. Bytewise awarded the contract to another party for a contract value of 6.05 crores.

Bytewise sought to recover the damages from InnoVision. The contract Bytewise had with InnoVision had the following clauses on damages:

Clause 5.1. InnoVision shall be liable to Bytewise for any damage suffered by Bytewise because of InnoVision’s breach of contract …

Clause 5.2. If InnoVision fails to deliver a completed functional studio within the time specified, InnoVision shall be liable to pay damages at the rate of 0.1% (zero point one percent) of the total contract value for per day of delay in delivery of the completed studio.

Bytewise calculated its damages under the two clauses as follows:

1. Under clause 5.1: Rs. 5 lakhs

2. Under clause 5.2: Rs. 6,00,00,000 x 0.1% x 10 days = Rs. 6 lakhs

Bytewise claimed both the amounts in damages from InnoVision. The InnoVision contends that Bytewise cannot apply both Clause 5.1 and Clause 5.2. As it has made claim under Clause 5.1, it cannot claim under Clause 5.2. Is the application of both, Clause 5.1 and 5.2, by Bytewise correct?

Question

Bytewise Consulting Limited (Bytewise) is a company engaged in providing consulting services in finance and investments. It wanted a studio to be developed in its corporate office for its executives to have online meetings with its clients, branch offices and associates. 
   
 Bytewise entered a contract with InnoVision Technologies Limited (InnoVision) for the development of the studio. Bytewise was converting a conference hall in a studio. The contract included InnoVision refurnishing the hall; procuring equipment including cameras, screens, servers and routers; networking the equipment; doing trial runs; and finally handing over the completed functional studio.  
   
 The entire value of the contract was Rs. 6 Crore. The contract provided a date by which the completed functional studio was to be handed over to Bytewise.  
   
 Ten days were passed the delivery date. InnoVision had not even started work on the project. Within the terms of the contract, delay of delivery by InnoVision was of essence of the contract, that is, it was a condition of the contract. Following the term, Bytewise terminated the contract. Bytewise awarded the contract to another party for a contract value of 6.05 crores. 
   
 Bytewise sought to recover the damages from InnoVision. The contract Bytewise had with InnoVision had the following clauses on damages: 
   
 Clause 5.1.  InnoVision shall be liable to Bytewise for any damage suffered by Bytewise because of InnoVision’s breach of contract … 
   
 Clause 5.2.  If InnoVision fails to deliver a completed functional studio within the time specified, InnoVision shall be liable to pay damages at the rate of 0.1% (zero point one percent) of the total contract value for per day of delay in delivery of the completed studio. 
   
 Bytewise calculated its damages under the two clauses as follows: 
   
 1. Under clause 5.1:    Rs. 5 lakhs 
   
 2. Under clause 5.2:     Rs. 6,00,00,000 x 0.1% x 10 days = Rs. 6 lakhs 
   
 Bytewise claimed both the amounts in damages from InnoVision. The InnoVision contends that Bytewise cannot apply both Clause 5.1 and Clause 5.2. As it has made claim under Clause 5.1, it cannot claim under Clause 5.2. Is the application of both, Clause 5.1 and 5.2, by Bytewise correct?

Accepted Answer

Yes. There is certainly delay in delivery which continued till the date of termination, after which the requirement of delivery is dispensed. Thus, Clause 5.2 applies for delay and Clause 5.1 for the loss of the entire contract.

Answer

No. Bytewise cannot use both the clauses together. It has to choose the clause which is more beneficial to it. Thus, it must apply only Clause 5.1 and surrender its claim under Clause 5.2.

Answer

No. Bytewise cannot use both the clauses together. It has to choose the clause which has lesser burden on InnoVision. Thus, it must apply only Clause 5.2 and surrender its claim under Clause 5.1.

Answer

Yes. Clause 5.1 covers all consequences arising from the delay while Clause 5.2 specifies a minimum value of the damages.

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Bytewise Consulting Limited (Bytewise) is a company engaged in providing con...

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