Mrs.n (CS, LL.B) 21 August 2012

Breach of contract

Dear all,

A PVT company established in Australia-(holding co) has subsidiary in india (subsidiry pvt co/ purchaser) had one letter of intent to purchase the material from one listed indian company(seller).

due to some circumstances LOI got cancelled and seller has to incurr a heavy expenses .they both arritved at a mutual terms to settle this but that also in mid way got crashed .

Now some payment made by the australian firm to indian seller under terms of contract , but due to non -compensating the lossed occured due to cancellation of LOI . AUSTRALIA FILED THE case agaisnt indian concern in australia and same way the indian company will also file the suit against australian company in indian in the applicable civil court .

pls suggest

1) what will be the court fees ? and if chart is available pls post the same.case will be filed in tarapur (mumbai)?

2) since partys have not agreed for any jurisdiction which country will be the appropriate forum to decide the case ?

3) LOI was from subsidiary co.india and documentaion was done from associate co in australia ?

Reply Follow

2 Replies

Adv.R.P.Chugh (Advocate/Legal Consultant (rpchughadvocatesupremecourt@hotmail.com)) 21 August 2012

Dear Querist,

1. A Letter of Intent (LOI) is not a concluded contract in itself, it is only an agreement to agree in future. It does not create the rights and obligations of a concluded contract. (See Section 29 of the Indian Contract Act, 1872)

2. However having said that - the seller is still entitled to recover the amount/expenses incurred by him under quasi contract (S.70 of the Indian Contract Act, 1872) on the basis of principle of quantum meriut - i.e he gets as much as his merit speaks. The law seeks to put him in a position as if he had not entered into the LOI.

3. As regards Jurisdiction the place of entering into contract/place of performance would have the jurisdiction.

4. Court fees is normally somewhere around 1/1.5 % of the amount to be recovered.

Good Luck !

Advocate Bharat Chugh

*Supreme Court of India

*Delhi High Court/Distt. Courts of Delhi.

Mrs.n (CS, LL.B) 21 August 2012

dear bharat sir,

THanks a ton for replying this query.just would like to add that

In LOI it was written that kindly send the acknowledgement and consider it as formal NOTICE TO PROCEED .Formal p.o will be issued.so we gave a acknowledgement and we have chain of e mails in that they are telling us to proceed for the LOI urgently .

Still the LOI will not be considered as contract ?

pls suggest

regards

Joshi