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Discussion > Business Law > Corporate > Lock-in Period Clause   Unanswered Threads Post New Topic

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There are 12 Replies to this message


Joy Dey


Advocate
[ Scorecard : 125]
Posted On 11 February 2009 at 11:46 Report Abuse

Dear Members,

I am handling a case for a client whose service agreement has been terminated by the other Party on the ground of default.

The Agreement provides that delay in payment for over a certain period shall be considered as a substantial default of the terms of the Agreement and thus the other Party shall have the right to terminate the Agreement. The Agreement also has a 'Lock-in period' clause for three years for both the parties. However, neither the termination clause, nor the Lock-in clause has any reference to each other, in effect, it is unclear which clause shall supersede the other.

The other Party terminated the Agreement within the Lock-in period when there was a delay in payment. It is worth noting, though, that there had been quite a few delays in payment previously, but the other Party never raised any objection to the same, and business was carried on as usual.

I was wondering if anyone could analyze the above situation and tell me if my client could invoke the Lock-in clause to ask the other Party to challenge the termination. Are there any case-laws on lock-in clauses?

Thanks a lot.

Joy


PALNITKAR V.V.


Lawyer
[ Scorecard : 10744]
Posted On 11 February 2009 at 14:31 Report Abuse

If you can reproduce the default clause and the lock in period clause, it would help us to give a proper solution


ravikumarbcombl


advocate
[ Scorecard : 283]
Posted On 11 February 2009 at 17:48 Report Abuse

Yes Mr.Joy,


First your not making clear on the reason for termination,  you are saying the ground of Default, what kind of default?????


Then in general, here you said previously had delay in payment the other party also not rising any objection on it, this is a good stand to defend your client and the purpose of lock in period is to secure the benifit of the party who goes to loose something  in case of early termination, so the party can invoke the lock in period and challenge the termination and claim the payment for the lock in peiod, but one more thing if any specific clause provided to terminate the agreement in case of poor workmanship or performance or service etc. then you can not challenge the termination.


Nitin


student
[ Scorecard : 42]
Posted On 14 February 2009 at 15:13 Report Abuse

Dear Mr. Joy, the situation described by you is such that nothing can be said as of now, but it is always worthwhile to putting some efforts by invoking the Lock-in-period clause. Do proceed with sending a legal notice to the other party.


Joy Dey


Advocate
[ Scorecard : 125]
Posted On 20 February 2009 at 12:16 Report Abuse

Dear All, thank you for your responses. I will try to answer each of the above comments one by one.


Mr./Ms. Palnitkar:


I am afraid due to confidential nature of the issue, I am unable to reproduce the clauses. It may eb safe to assume that they are standar clauses of 'Lock-in' and 'Termination upon Default'.


 


Mr. Ravi Kumar:


One of the default provision relates to delay in payment, as already mentioned in my question above. The agreement is in the form of a standing order for continued supply of materials. My client, the purchaser, needed to make payments periodically for the materials supplied. The agreement stipulated that if there was a delay in payment, the agreement could be terminated. It was stated to be terminated by the seller.


My initial line of argument was the same, (which is quite obvious too) that when delay was condoned earlier, then the seller should not be allowed to use this as an excuse to terminate the contract. However, upon further consultation, I was given to u/stand that this was not a bullet-proof defence. I am looking for some credible and substantial source to back up this line of argument.


 


Mr. Nitin:


I agree with you, and perhaps you have u/stood the issue and have hit the nail directly on the head. I think I will give your suggestion some more thought as it sounds quite credible.


 


 


Once again, thanks everyone, and any further comments would be wonderful.


 


Regards.


 


Joy


 


Manish Singh


Advocate
[ Scorecard : 12697]
Posted On 25 February 2009 at 12:17 Report Abuse

every lease agreement contains such clauses and there are termination clauses in such agreements default of which can be termed as breach of contract. so you can terminate a contarct in such situations even in a period during lock in period. but if you terminate the lease before lock in period without any fault of the other party (breach of contract) you shall be liable to pay damages as expressly stipulated under the contract in such an event.


still if you find that the delay was not such to be termed as breach, you can file a suit for damages to be adjudicated by a court. 


Suresh


Advocate and Solicitor
[ Scorecard : 50]
Posted On 04 April 2009 at 17:04 Report Abuse

I suggest that you apply the princilpe of "a party in default cannot take advantage of his own wrong". If your client was in default the lock in period cannot avail the defaulting party.


Suresh


Advocate and Solicitor
[ Scorecard : 50]
Posted On 04 April 2009 at 17:05 Report Abuse

I suggest that you apply the princilpe of "a party in default cannot take advantage of his own wrong". If your client was in default the lock in period cannot avail the defaulting party.


Suresh


Advocate and Solicitor
[ Scorecard : 50]
Posted On 04 April 2009 at 17:06 Report Abuse

I suggest that you apply the princilpe of "a party in default cannot take advantage of his own wrong". If your client was in default the lock in period cannot avail the defaulting party.


Ashish


Associate Legal Manager
[ Scorecard : 33]
Posted On 04 April 2011 at 16:34 Report Abuse

It is very clear that the lock in period in the agreements are inserted to protect the interest of the lessors. so if you have defaulted in the payments and subsequently the agrement has b een terminated by the other party then you have no recourse but to pay for the balance lock in period also.



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