Breach of Contract (ILLUSTRATION)
Facts:
X being an influencer of the society is hired by a cosmetic firm Y in order to market their products.
X’s side of the contract provide them with an opportunity to earn an 10% commission on each sale made through the referral link.
Y failed to equip X with necessary tracking tools thus growing into an issue with the commission amount.
X has alleged that he was denied ₹500,000 in unpaid commissions For Y, that is not the case and the respondent was not entitled to the said commission on grounds that he failed to meet sales targets on behalf of the appellant.
Legal Issues:
Breach of Contract
Was Y breaching its contract when it did not equip Z with tracking tools?
For a contract to be valid it needs to be supported by performance of the contract by both parties. Depending on the terms of the relationship between Y and X, were Y must provide X with tools to track sales that originated from the referral link and s/he has not done so this could be considered a breach.
According to the Indian Contract Act 1872, a breach of contract therefore occurs whenever one party prevents the other from performing his part of the bargain.
Arguments for X:
X may also layout that they lacked tracking tools to enable them determine the sales to compute the commission and therefore could not meet the contractual obligations.
The responsibility of bringing the tracking mechanism should have been Lies Y’s since he is charged with the responsibility of checking the commission calculations.
Arguments for Y:
Y could say that they are not to supply tracking tools as was not expressly stated in the contract, or X must have other means of ascertaining sales.
Y may also claim that X fully appreciated the sales targets within the contract and dependant of the tools used for monitoring.
Commission Payment Disputes
Does X deserve the commission stated to be ₹500,000?
Section 73 of the Indian Contract Act, 1872 provides for the recovery of the amount which could otherwise have been realized for breach of contract such losses or damage. X may demand the unpaid commission basing his or her estimation on the recorded figure of sales.
Arguments for X:
X can claim ₹ 500,000 and computed that is their behalf based on the projected sales based on Section 73 of the general provisions for damages.
Arguments for Y:
Y may contended that no real sales have been generated or produced such that any claim to commission is always hypothetical.
They might also say that X cannot demonstrate the number of sales made because there is no record, and, therefore, the amount stated is non-warranted.
Sales Target Obligations
Did X ever fulfil his/her part of the bargain in respect of the sales targets of the contract?
For example, X’s claim could be affected if there was a certain sales that were to be achieved for the contract and the commission was to be paid upon achievement of the this target.
Arguments for X:
X can say that because Y failed to avail tracking tools pointing out the exact day the sales target was met, their failure to perform was caused by frustration of the contract.
Arguments for Y:
Y might say that no matter one tracks or not it was the obligation of X to bring the agreed sales and since there is no proof that this has been made, then X cannot demand for commission.
Applicable Law:
In India, the Act that deals with the laws on contract performance, breach and remedy for breach are provided in Indian Contract Act, 1872. Key provisions include:
Section 37: Failure by the parties to perform contract duties.
Section 39: Penalties for failure to perform or perform inadequately.
Section 73: Damages or otherwise for failure to perform as agreed.
Conclusion:
If the court finds that Y had an implied obligation to provide tracking tools, Y may be liable for breach of contract. However, without concrete evidence of sales, X’s claim for ₹500,000 could be challenged unless X can show probable sales through other evidence. The court might require either renegotiation of the commission amount or direct Y to provide the tools, thereby allowing X to track sales going forward. This case demonstrates the importance of clear contract terms, especially regarding performance metrics and necessary support mechanisms.