Anindita 07 August 2017

Consideration for software assignemnt agreement

Does Consideration for software assignment agreement required to be paid upfront at the time of assignment or can it be in the form of deferred payment or earn out payments based on the sales performance of the software assigned ( subject to an earn out period and max consideration) ? As per Indian law does not paying upfront consideration make it licensing instead of assignment until the expiry of the earn out period ? What are the stamp duty and tax considerations for the seller based in India in such a case.

thanks

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4 Replies

ajay amitabh suman (ADVOCATE) 08 August 2017

For a contract , by way of assignment, to be effective, consideration is must. Untill consideration amount is paid, the contract can not be said to be existence. The stamp duty pais, vary from state to state.

Anindita 08 August 2017

Thanks for the reply . For the contract to be effective there will be consideration but can it be paid in 2 parts - (1) 5percent as upfront payment (2) 95pct in the form of earn out payments linked to the sales of software product over 10 year period . Would it mean that software will not be assigned until the full consideration is paid ? Thanks

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Originally posted by : Anindita
	Thanks for the reply . For the contract to be effective there will be consideration but can it be paid in 2 parts - (1) 5percent as upfront payment (2) 95pct in the form of earn out payments linked to the sales of software product over 10 year period . Would it mean that software will not be assigned until the full consideration is paid ? Thanks