The central rationale for trademark protection in protecting the brand value of businesses

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October 23, 2021

This article is written by Srishti Sinha, a student at the Institute of Law, Nirma University, Ahmedabad. The article puts forth the role of trademarks in business protection and protecting the brand value of businesses. Also, it clears the basic misconception of people that trademarks’ basic intention is to protect the interests of consumers.

Table of Contents

Introduction

Trademarks were created to identify the economic origin of services or commodities in a certain location, but it has long been assumed that trademark law was created to protect consumers’ interests and enhance the quality of information accessible in the marketplace. Even in conventional trademark law, public interest has always played a secondary role, as seen by the countless cases where courts rejected relief despite overwhelming proof that consumers would not be misled. With the evolution and development of trademark law, it has been recognized that the primary justification for trademark protection is and should be the intrinsic interest of commercial organizations in preserving their brand value, rather than catering to public interests.

Trademarks – an overview

Any term, phrase, symbol, design, or combination of these things that distinguishes your goods or services can be used as a trademark. It’s how clients know you and tell you apart from your rivals in the marketplace. Both trademarks and service marks are referred to as “trademarks.” For products, a trademark is used, whereas, for services, a service mark is used. A trademark helps you in the following ways:

It identifies the source of your goods,
It provides legal protection to your goods,
It acts as a guard that protects your goods against fraud and counterfeiting.

The use of a trademark prohibits others from copying a company’s or individual’s products or services without authorization. They also restrict any marks that have a high possibility of being confused with one that already exists. This implies that a company can’t use a sign or brand name that looks or sounds the same as, or has the same meaning as, one that’s already registered—especially if the products or services are comparable. Also, you can use symbols with trademarks. The symbol helps customers and competitors know that you’re claiming the trademark as yours. Even if you haven’t filed a trademark application, you can use Trademark (TM) for products and Service Mark (SM) for services.

Trademark laws in India

The revised Trade Marks Act, 1999, which came into action on September 15, 2003, codified the Indian trademark law. At the same time, the previous Trade and Merchandise Marks Act of 1958 was abolished. The revised Trademarks Act of 1999 complies with World Trade Organization (WTO) guidelines and the TRIPS Agreement (Trade-Related Aspects of Intellectual Property Rights), which India is a signatory to. The Trademark Act’s goal is to give legal protection to trademark users, direct the conditions on the property, and provide legal remedies for the enforcement of trademark rights.

The Trademark Act of 1999 empowers the police to make arrests in situations of trademark infringement. The Act provides a comprehensive definition of the term “infringement,” which is commonly used. The Trademark Act stipulates fines and punishments for violators. It also lengthens the time it takes to register a trademark, as well as the time it takes to register a non-traditional trademark.

Why are trademarks important in a business

Business owners must understand why trademarks are valuable assets that may help them expand their company. Below mentioned are some of the reasons which prove that trademarks are important for businesses:

Trademarks are a powerful means of communication. Trademarks may express intellectual and emotional qualities and signals about you, your organization, and its reputation, goods, and services in a single brand or logo.
Customers can easily discover you, thanks to trademarks. The market is saturated, and it’s difficult to set your company apart from the competition. Trademarks/brands are a powerful commercial communication tool for capturing customer attention and distinguishing your company, products, and services. Customers who see a trademark quickly recognize whom they’re dealing with and the company’s reputation and they’re less inclined to search for alternatives. Your brand might be the deciding factor in a customer’s choice to buy it.
Trademarks are valuable assets. Over time, trademarks can gain more value. Your brand will become more valuable as your company’s reputation grows.
Trademarks never expire.
Trademarks can make the employment process go more smoothly. Brands can evoke pleasant emotions in people’s thoughts. As a result, job possibilities are more appealing to job seekers. Employee retention may be improved if employees are enthusiastic about the company’s brand and the products and services it provides.

Importance of brand and its protection

A brand is described as a name, design, symbol, or word that differentiates a seller’s services or goods from those of others and is legally known as a trademark. Trademarks and brands, on the other hand, are two distinct ideas that are frequently misunderstood. A trademark is primarily a legal term, but a brand is a marketing notion that aids any firm in expanding its customer base. Trademarks are physical objects such as a logo, picture, or design, whereas brands are intangibles that include a company’s personality, identity, or connection.
Businesses are continuously looking for ways to preserve their brand image by registering trademarks since they know that once registered, their trademarks will endure as long as they are renewed regularly. However, the brand value may vary as a result of a change in stance or profile, which corporate groups vigorously resist using trademark protection.
Businesses want trademark protection because it lowers customer search costs and identifies the product’s point of origin, allowing them to reach a larger consumer base. It is also believed that most companies follow the brand image and get trademarks registered so that they may get the goodwill of their business. Companies use trademark protection to thwart pirates and unfair competition that harm the company’s goodwill.
Today, trademark law recognizes and protects merchandising rights, preventing competitors from manufacturing identical items and passing them off as the original by utilizing the original company’s logo or brand image. This demonstrates that the public interest comes second to brand image preservation, because individuals who buy counterfeit items are aware that they are not licensed, and they are not confused about the source or origin of the counterfeit products.

The economic aspect of trademarks

According to Article 15 of the TRIPS Agreement, a trademark is a symbol that distinguishes one product or service from similar products or services. As a result, a commercial interest takes precedence over any public interest. The TRIPS Agreement is based on the WIPO (World Intellectual Property Organization), Paris Convention, which also provides trademark owners with an authorization right, which allows them to authorize a third party to use their brand in exchange for a fee. These characteristics emphasize the economic justification for trademarks and demonstrate why firms attempt to benefit from their registered trademarks.

The fundamental role of every profit-seeking firm should be the safeguarding of brand value to sustain consumer loyalty. This can only be accomplished by trademark registration, as it allows buyers to identify between items or services provided by various businesses. Furthermore, trademarks reduce transaction costs and provide vertical restrictions that are cost-effective for every business. Any firm with a trademark registration holds the exclusive right to use the mark and can sell or give nominal use rights to other businesses. Franchisors commonly use trademarks to prevent franchisees from producing goods or services created by the parent business, while allowing franchisees to focus on the distribution of such goods or services. This reduces market competition and aids the trademark owner in maintaining his or her reputation without regard for the public interest. Economists claim that trademarks serve as information capital by lowering consumer costs in determining the origin of any goods.

Case studies

In recent years, there has been a steady increase in the number of major trademark lawsuits in India. Some of the rulings were historic in terms of the precedents they established. Here’s a look at some of India’s recent major trademark disputes which show the importance of trademark in protecting the brand value of a company. Let us take three famous cases which can show the role and importance of a trademark in the protection of brand value.

Yahoo!, Inc. v. Akash Arora & Anr (1999)

The first landmark case is of Yahoo!, Inc. v. Akash Arora & Anr (1999) which is based on cybersquatting. For the first time in India, the Delhi High Court ruled that a domain name serves the same purpose as a trademark and is entitled to the same level of protection. The defendant owned a domain name called “Yahooindia” that was identical to and phonetically similar to the plaintiff’s trademark “Yahoo!” and the domain name “Yahoo.com”. According to the Court, internet users would be deceived and misled into assuming that both domain names are from the same source. The defendant claimed that it had posted a disclaimer on its website as a defense. However, it was noted that a simple disclaimer was insufficient since the nature of the internet is such that the use of a similar domain name cannot be remedied by a disclaimer, and it makes no difference whether or not ‘yahoo’ is a dictionary term. The plaintiff’s name has acquired individuality and uniqueness as a result of its association with him. Hence, the trademark protected the brand value of “Yahoo”.

The Coca Cola Company v. Bisleri International Pvt. Ltd. (2009)

The second most famous case is The Coca Cola Company v. Bisleri International Pvt. Ltd. (2009). In this case, Bisleri, the defendant, had sold and transferred the trademark MAAZA, including formulation rights, know-how, intellectual property rights, and goodwill for India, to Coca-Cola under a master agreement.

The defendant firm registered the mark MAAZA in Turkey in 2008 and began exporting fruit drinks under the name MAAZA. Coca-Cola, the plaintiff, sought a permanent injunction as well as damages for trademark infringement and passing off. The Court, in this case, issued an interim restraining order prohibiting the defendant (Bisleri) from using the brand MAAZA in India or for export, citing trademark infringement.

Whatman International Ltd. v. P. Mehta and Ors. (2019)

Another case in which the Court protected the brand value of a product is Whatman International Ltd. v. P. Mehta and Ors. (2019). This is the famous Indian case in which Whatman obtained a massive settlement of 3.85 crores from the defendant, who traded on its goodwill and caused damages to Plaintiff’s different intellectual property rights in the last 25 years. This was the most recent instance in which the actual worth of a trademark was recognized, and defendant’s acts of malfeasance in selling counterfeited filter papers that were an identical replica of plaintiff’s filter paper under multiple trademarks were permanently halted.

Among these cases, it can be seen that the trademarks protect the brand value of any business or product if the products are original. Also, with this protection, it ensures that there is no unfair competition that can harm the company’s goodwill.

Conclusion

Trademarks are helpful for business organizations as they allow the products to reach a better consumer base. The primary justification for trademark protection is and should be the preservation of brand value since trademark owners should be able to utilize their marks in whatever way they see fit. Because corporations cannot be obliged to control their products according to public demands, the public interest is just a secondary consideration. Businesses must earn a profit on their investment and utilize their resources to the fullest extent feasible. Because, typically when a corporate entity registers a trademark that is not yet renowned, there is no underlying public interest in registering that property, the fundamental goal of trademark law is to protect brand value and business.

The primary goal of any business is to make money, and this should be the primary motivation for trademark owners to seek trademark protection. Only by creating a brand value that is identifiable and dependable will clients or the general public be able to distinguish between different items or services. As a result, the public interest is a secondary factor that motivates businesses to seek trademark protection by registering their marks, images, logos, signs, and names. The advantages derived from a company’s goodwill cannot be denied to it in the name of public interest, and this should be the most essential aspect of trademark law.

References

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What kind of preparation strategy will set you apart from others for the CLAT PG exam

By

Rachit Garg

-

October 23, 2021

0

CLAT legal reasoning — Image source - http://bit.ly/2k1VzJa

This article is written by Surbhi Jindal, from Dr. B.R. Ambedkar National Law University, Sonipat, Haryana. The article discusses the strategies that will help you ace the CLAT PG exam and provide you with an edge over others.

Table of Contents

Introduction

What kind of preparation strategy will set you apart from others for the CLAT PG exam?

Many students are struggling with how to prepare for the CLAT PG exam. They want to crack it with flying colours but are clueless about where to start. We know what it takes to be successful, and here’s an article that will guide you on the right strategy to push you for the preparation and ace it.

We want to share certain points that would give you a headstart over other candidates for the CLAT PG exam so that you can have a better chance at securing your seat in one of India’s top law institutes. Here is a list of the points; take your time and read through them carefully!

Pattern of the CLAT PG exam

The old pattern of the CLAT PG exam contained only objective-type questions. It consisted of 120 multiple-choice questions (MCQs). For every correct answer, 1 mark was awarded, and for every wrong answer, 0.25 marks were deducted. This went on till 2021.

But from 2022, the new pattern for CLAT PG will be adopted. Now, the CLAT PG exam will contain both objective and subjective type questions. Under the new pattern, there will be 100 multiple choice questions and 2 subjective questions. For the objective-type questions, 1 mark will be awarded for every correct answer, and 0.25 marks will be deducted for every wrong answer. For the two subjective questions (descriptive essay type), each question will carry 25 marks each.

Name of the exam	CLAT PG
Level of exam	National
Total questions	102
Pattern of exam	100 objective questions 2 subjective questions
Total marks	150
Duration of exam	2 hours
Marking scheme	1 for every correct answer -0.25 for every wrong answer 0 for unattempted answer
Conducted by	CLAT Consortium

Now, having understood the pattern, we need to know about the subjects required to be studied for the exam.

Objective and subjective pattern of exam

The new pattern of the CLAT PG exam has both objective and subjective questions. So, it’s important to understand what this new pattern seeks to achieve.

Objective pattern: Under the objective pattern, the extracts from legal materials such as judgments, cases, statutes etc. will be provided. These questions seek to test the candidate’s analytical and reading skills.
Subjective pattern: Under the subjective pattern, a candidate would have to write two essays not more than 800 words each. These questions seek to test the candidate’s factual and legal ability, critical analysis, and comprehensive ability.

Subjects to study for the CLAT PG exam

The syllabus for CLAT PG covers the major undergraduate subjects of the bachelor’s course. This exam tests your knowledge of what you have already studied in law school. Let us look at the topics that are covered in CLAT PG.

Constitution Law
Jurisprudence
International Law
Contract Law
Tort Law
Criminal Law
Environmental Law
Intellectual and Property Rights Law
Labour and Industrial Law
Property Law
Family Law
Administrative Law
Company Law
Tax Law
Public International Law

These are the subjects that one needs to prepare thoroughly if they want to appear for the CLAT PG exam. It is observed that constitutional law, jurisprudence, and international law have been considered the subjects covering significant portions of the paper in which constitutional law dominates the paper. The questions from other subjects are found in fewer numbers as compared to these three subjects. So, an important question that arises is how to prepare for these subjects. In the next part of this article, we will deal with this question in detail.

Preparing for each subject in the CLAT PG exam

In the previous section, we discussed the subjects to prepare for the CLAT PG exam. We also learned that the constitutional law covers a significant portion of the exam, and hence, the right strategy is required to crack it. One needs to prepare for both the major and minor subjects to ace the exam.

But an important question is how can we prepare for each subject. So, keeping in mind both the subjective and objective pattern, let us divide the preparation for the exam into three parts.

Constitutional Law, Jurisprudence, and International Law

Since these three subjects cover a significant portion, a particular emphasis should be devoted to its preparation. First of all, the right book should be chosen for the preparation of these subjects. You should know what book to refer. Otherwise, you will remain in haste.

For constitutional law, you can refer to M.P. Jain, JN Pandey, VN Shukla.
For jurisprudence, N. V. Paranjape, VD Mahajan, and Mani Tripathi.
For international law, you can refer to K. Jain.

One should always be prepared with the landmark and recent judgments as they play a significant role in acing exams.

Other areas of law

Under this category, subjects such as contract law, environmental law, tort law, etc., can be included. Similar to the significant areas of the exam, the preparation strategy remains the same. The only point of difference that occurs is that more time should be devoted to the significant area because of the highest weightage in the exams.

Legal contemporary issues

The third area which includes the contemporary legal issues also plays a vital role in acing the exam. As you know, the exam also has a subjective pattern; therefore, it is essential to be thorough with the legal issues around the world. This will help in writing relevant and comprehensive answers. Also, if you can link the applicable case laws and sections in your essay with the recent happenings, it would make your essay more comprehensive and help you score better.

Important topics to study for the CLAT PG exam

It may not be a feasible option to learn all the things given in a particular subject. However, there are certain important topics in a subject that are important to study. Whenever you try to crack any exam, the trick lies in ‘what to study and what not to study’.

Here is a list of all the important topics that one must definitely study if preparing for CLAT PG.

Subject	Topic
Constitutional Law	Constitution of India, definition, features, framing of Indian Constitution, relationship between President and Council of Minister, doctrine of separation of power, executive power, nature of executive of India, constitutional rights, right against social discrimination, writ jurisdiction of HC and SC, freedom. Legislative power – procedure, privileged judicial power – organisation of judiciary, jurisdiction of SC of India,Federal Idea – Nature of Indian Polity, co-operative federalismFreedoms of Inter-state trade and commerceImpact of emergency on centre-state relations
Criminal Law	Elements of crime, actus reus and mens rea, group liability, abetment, criminal conspiracy, exceptions, attempt to commit offences, offences against public tranquility, offences against body – culpable homicide, murder, hurt, grievous hurt, wrongful confinement and wrongful restraint criminal force, assault, abduction, kidnapping, rape & unnatural offences.
Tort Law	Classification of torts, trespass, nuisance, defamation, liability for mis-statements, negligence
Contract Law	Formation of contract, validity, discharge and performance of contract, remedies and quasi contracts, Indian Contract Act, 1872, Specific Relief Act, 1963
International Law	Definition, origin and development of international law, sources and subjects of international law, relationship between international and municipal law, state recognition, state succession, international river and canals, international law of the sea, air, space, aerial navigation, outer space exploration and use, nationality statelessness, state jurisdiction, basis of jurisdiction, jurisdiction immunity, extradition and asylum, diplomatic and consular relations, law of treaties, war and use of force in International law, law of contraband & blockade, concept of war, legal effects of outbreak of war and enemy character, settlement of international disputes, state responsibility, retorsion, reprisals, armed interventions with the role of United Nations
Intellectual Property Rights Law	Nature, meaning, definition and scope of IPR, Trademarks Act 1999, Patents Act 1970, Copyright Act 1957, IPR in International Perspective
Jurisprudence	Legal method, Indian legal system, basic theory of law, analytical positivism, Kelsen’s pure theory of law, Hart’s definition of law, Austin’s theory of law, definition of law by Holland and Salmond, different theoretical approaches to study law and jurisprudence, historical and anthropological approach, sociological approach, economic approach (Marx’s and Engel’s views about the law and state, realist approach, American and Scandinavian realism

When to start preparing for the CLAT PG exam

Many people are confused about when to start preparing for CLAT PG. Some believe that the ideal time period to prepare for an exam is 4-5 months. This is because you have studied these subjects in your law school, and hence you have to revise the concepts. But this doesn’t seem right. You should never start preparing 4-5 months before the exam.

Remember studying for law school exams and competitive exams is different. Both of them require different approaches. Hence, one should devote a minimum of 6 months to the exam. Besides this, you should always try to start as early as possible. Starting early will help you build your concepts.

Preparation strategy for the CLAT PG

If you want to ace the exam, you need to remember that the right strategy is essential to cracking it. People who have cracked competitive exams have persistently mentioned that they followed proper techniques while preparing. So, what are the things one should do and avoid while preparing for CLAT PG? Here are some of the tips mentioned that will for sure help you in preparing for the exam.

Things that one should do to ace the exam

Reading newspapers regularly will help a lot in cracking CLAT PG. The whole pattern of the exam tests a candidate on their comprehension abilities, and reading newspapers and various other legal texts such as judgments will help in two ways. First, it will increase your reading power and second, it will keep you aware of the latest happenings all around the world.
As discussed earlier, one should start preparing as early as possible. You know that the CLAT PG exam tests on what you have already studied in your law school. Study any subject of your choice on which you haven’t done well in school.
Therefore, you should keep revising the essential topics and learn various tricks to learn the sections of multiple laws. Starting early will help you build the concepts for an extended period.
One should always learn the sections, acts, and various case laws thoroughly.
Prepare a proper plan of study. One should analyze their weaknesses and strengths and work on them accordingly. Apart from an appropriate plan of study, one should also prepare a timetable. It will help you to devote sufficient time to each subject and help you ace the exam. Time strategy is the key to success.
Analyze the previous year’s papers thoroughly. It will give you a basic idea of the level of the exam. It gives you a sense of the important areas on which you are likely to be questioned.
Besides analyzing the last year’s papers, one should practice mocks as much as possible and then analyze them properly. Take mock tests to know your level of preparation.This will help in practicing time management and let you keep track of your progress and weaknesses.

Things that one should avoid while preparing for the CLAT PG

One should never collect too many books and study material.
Sometimes, people believe that they should only focus on their more vital areas and ignore weak areas as they may not be a right fit for them. But this is the wrong strategy. One should always focus on their weak areas and try to convert them into their vital areas.
You should review your mocks but not your results. You should only check the questions and analyze the mistakes. But people generally look at their results and get worried. In this way, they demotivate themselves and affect their performance.
The paper consists of negative marking for every wrong answer. Therefore, do not try to attempt those questions whose answer you are not aware of. You can make smart guesses but in such a way that it does not hamper your result.

Conclusion

Keeping up with the increasing number of questions is tough, and memorizing all the answers might prove to be tricky.

If you want to get good results, you need to work even harder for exams. Only then will you be able to knock the doors of success. The CLAT PG is a competitive exam that can have a major impact on your life. A good CLAT score can get you into the college of your dreams and a bad CLAT score can send you packing.

The best way to make sure to get success is to carefully plan for your future. If you are interested in knowing more about the CLAT-PG exams, do not forget to attend Lawsikho’s Bootcamp. You can register for the Bootcamp here.

References

Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.

LawSikho has created a telegram group for exchanging legal knowledge, referrals, and various opportunities. You can click on this link and join:

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Common mistakes made during the CLAT PG exam

By

Rachit Garg

-

October 23, 2021

0

CLAT PG — Image Source - https://rb.gy/s1rgga

This article has been written by Isha Sharma, from National Law University, Jabalpur. This article talks about the common mistakes made during the CLAT PG exam to help the aspirants score better.

Table of Contents

Not focusing on the current affairs and newspapers

Most paragraph-based questions that are asked in the examination are based on current legal happenings. This mistake made by CLAT takers goes a long way. Since the examination pattern is para-based, it could provide an excerpt from any legal document or newspaper. Though the exam does not have a separate section for current affairs, it may contain questions related to recent socio-legal happenings based on the paragraph provided. Therefore, it becomes very important for the aspirant to be well aware of the recent happenings and analyse them by reading extensively about them. Reading editorials from renowned newspapers will be very fruitful.

Some newspapers that might help are the Hindu, the Indian Express, the Times of India. You can get an e-subscription for them. One can also read online articles from sources like Live Law, Bar and Bench, SCC Online.

Not analyzing the past-year papers

Analysis of previously asked questions helps in a better understanding of the structure of the paper. Going through the past-year papers helps you identify the areas questions are asked from and helps establish a trend so that you can focus in that direction. The most important part of preparing for the test is to know the pattern and what the demand of the paper is, this cannot be possible without going through the previous papers and acquainting yourself with the pattern, the trends, and the questions. You can access past-year papers from the internet.

Neglecting comprehension based reading and landmark judgments

The passages asked might be extracts from judgments or the questions asked could be on those particular judgments. The consortium aspires to select students who are aware of the legal phenomena in their surroundings and around the world at large. The questions asked are formulated on this basis itself, which is why it becomes important for a CLAT aspirant to read on the current socio-economic and legal narratives taking place around the globe. Since the questions are passage-based one must learn the techniques of speed reading and identifying keywords and tone of the passage to answer the question in a swift and efficient manner. Therefore, it is advised that the candidates should know about important cases and be well-read on them.

Lack of a proper strategy

Most students do not pay importance to making a good strategy that can help them get better at solving the paper. A good strategy can help boost confidence or even shatter it. It is very important to solve the paper in a sequential manner that suits best with the candidate. A well-crafted strategy can work in the candidate’s favour in solving the paper in a better and more time-efficient manner. It is advised that the students pick the passage relating to the topic they are most confident and aware of. This not only eliminates the possibility of more negative marks but also develops the confidence in the candidate to be able to solve the remaining questions in a calm and effective manner.

Solve many mock papers to analyse what areas you are good at and which areas need to be worked on. Subsequently, solve the questions in a sequential order, starting from paragraphs with topics you are most aware and confident about. Solving mock tests will help you skim through the passage and identify how much time you need to devote to each passage.

Ineffective time management

Passages need to be divided in a manner that is most appropriate to yield more marks. It is advised to divide the time in such a way that gives ample time to solve all the passages and their questions. The students can chalk out a strategy they deem appropriate. They can interpret the topic of a passage by taking a cursory glance, by skimming through a passage; in case they are aware of the topic they can dedicate less time to it and more to those they have not read while preparing.

Though, it should be made sure that they do not make errors while solving the known passage in less time. It should also be noted that they should not consume much time on a question related to current affairs as it is knowledge-based and does not need to be solved.

The aspirant also needs to keep in mind that they need to save time for the two 25 mark subjective questions and practice reading and writing on recent topics to enhance their writing skills and write the passage in the prescribed time. Since the subjective part of the paper is comparatively lengthy and is to be written in about 800 words per answer, aspirants should try solving the objective questions faster so that they can dedicate more time to the two subjective questions as they bear more marks.

Panicking while writing the exam

It is often so that students fail to remain calm while appearing for the exam, this not only affects their mental state but can also affect their chances of cracking the exam. Panicking during the exam creates self-doubt and diminishes concentration which can lead to the candidate marking the wrong answer. Since the examination is conducted through an offline mode, marking the wrong answer can lead to a negative marking of 0.25 marks, subsequently, marking the right answer in the wrong question can even lead to more nervousness if you knew the answer to that particular question, as it would then be a loss of 1.25 marks which can create a major difference in your rank.

Therefore, it is advised that the students calm their nerves before the paper and attempt the exam with a peaceful mind. A week before the exam, they should focus on revising the important topics, get a good amount of sleep and have a balanced diet. On the D-day, they should try deep-breathing exercises and while solving the paper, they should first attempt the questions with areas of interest and knowledge that develop their self-confidence and help them boost their scores.

Not solving enough mock tests

Mock tests help understand the paper better and give an upper hand over other candidates. Analysing a mock after attempting it makes one understand where they are lagging behind and creates scope for improvement. Mock tests are created keeping in mind the nature of the previous papers. Solving mock tests and analysing them properly will help the candidate increase their scores if they work on the areas they are weak at. Taking mock tests also helps in formulating an effective strategy and teaches the candidate to manage time efficiently. One can access mock tests through the internet.

Not dedicating time to practice

Practice sessions are very important to improve the problem-solving skills of the student which in turn boosts the confidence and the result. Most candidates do not pay attention to regular practice sessions. Practicing helps develop the concentration that is needed in the examination and also increases the chances of scoring more marks. Candidates should pick a passage and try reading it with a timer on, doing this on a regular basis will help improve the reading speed and help complete the paper on time. One can also solve para-based questions to improve their comprehension and question-solving skills.

Making unintelligent guesses

Since the exam also has negative marking, the person taking the exam needs to keep in mind to make more attempts with more right attempts and fewer wrong ones. It is preferable to not mark questions that are completely based on unknown general knowledge or current affairs. In cases where the candidate knows one or two options to be right or wrong, they may mark one of the options they wish to but one should never blindly fluke while taking the test as a wrong answer can lead to a negative marking of -0.25 marks.

Strategies

The examination is tough to crack but not an impossible one. Let’s hear some of the best strategies from people who have cracked the exam previously.

CLAT 2020 PG topper: Kaumudi Umrao, AIR 1 said, “I would suggest that anyone planning to take CLAT should start brushing up the basics of various subjects and preparing notes on them well in advance. They should also be well-informed of all recent developments in the legal field. Above all, it is imperative that your preparation is consistent and you keep yourself motivated enough throughout the process.”

CLAT PG topper: Sahil Mathur, AIR 5 said, “You can easily prepare yourself for CLAT UG if you start studying a year or so before the exam, but in CLAT PG, if you do not focus on the fundamental concepts of legal subjects taught in law schools in the beginning of the first year, you will be at a severe disadvantage.”

Conclusion

The CLAT PG exam is quite competitive. Aspirants preparing for the examination should dedicate a major chunk of their time to practice sessions, enhancing writing skills, solving mock tests, and doing extensive reading. To crack this exam, the most important thing is consistency, one should relentlessly study and work towards cracking the exam and should put their blood and sweat into preparation. To sum it all up, if an aspirant prepares for the CLAT PG exam with discipline, consistency, and dedication, they can surely conquer it.

References

Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.

LawSikho has created a telegram group for exchanging legal knowledge, referrals, and various opportunities. You can click on this link and join:

https://t.me/joinchat/J_0YrBa4IBSHdpuTfQO_sA

Follow us on Instagram and subscribe to our YouTube channel for more amazing legal content.

How to get a good rank in the CLAT PG exam and how to manage your time

By

Rachit Garg

-

October 23, 2021

0

This article is written by Jagriti Sanghi, an Advocate practising in the Courts of Telangana. This article gives insight into how to secure a good rank in CLAT- PG examination by tackling challenges with the new pattern and managing time before and during the exam.

Table of Contents

Introduction

CLAT- Post Graduate (CLAT PG) examination is a National Level Entrance Examination conducted every year for law graduates to secure a seat in top-ranked national law schools in India. It is organized by the consortium of 22 National Law Universities excluding NLU-Delhi which facilitates law students to achieve high standards of legal education by pursuing LLM programs from reputed and cutting edge universities. NLUs broaden a law graduate’s horizon and exposure. Especially if the law graduate is a non-NLU student, then CLAT PG will play a major role in giving the most sought after “NLU tag”. CLAT PG also serves as a gateway to be employed at top Public Sector Undertakings with a high opening salary package.

New pattern and duration of CLAT PG examination

The CLAT-PG exam like the CLAT-UG exam has a changed pattern now and it focuses on the comprehension and analytical abilities of law graduates. The paper is of two hours’ duration with 120 objective type questions carrying 1 mark each. For every incorrect answer marked by the student, there shall be a negative marking of 0.25 marks. On an average, 5 questions follow from a 300-400 words passage which needs to be read and comprehended carefully. A few answers are hidden in the passage and rest depends on one’s knowledge and application of law and general awareness.

As per the official website of Consortium of NLUs, the questions will be posed from the following undergraduate law subjects:

Constitutional Law
Jurisprudence
Administrative Law
Law of Contract
Torts
Family Law
Criminal Law
Property Law
Company Law
Public International Law
Tax Law
Environmental Law
Labour & Industrial Law

Analysis of CLAT PG 2021 paper

An analysis of 2021 CLAT PG examination paper shows that an aspirant must have the ability to read and discern the issues involved in the passage; to summarize the passage; to be aware of the statute, or judgment the passage is extracted from and to be adept at application of legal knowledge to questions followed from the passage. A few questions are directly from current developments and updates in fields of law.

The weightage of each subject is not provided. It makes it tougher for an aspirant to go about the preparation. However, it is seen from past year questions papers that more weightage is generally given to Constitutional Law, Criminal Law, Contract Law. Those subjects need to be thoroughly prepared before moving to other subjects. Having said that, it is not advisable to skip any subject. At the very least, the bare acts of all legal subjects need to be read to not be thrown off guard.

Since there is negative marking, it is best to mark only sure shot questions which you are fully confident of. However, if one can use intelligent guesswork to narrow down the options from 4 to 2 then those questions can be answered since the probability of getting the right answer is much increased.

The mode of preparation for an aspirant

The aspirants who take the examination is increasing every year with upto 10,000 students eyeing for top ranked NLUs. Do not forget that there are reserved seats as well. The success mantra to secure a good rank in CLAT PG is ‘Read, Prepare Notes, Revise and Practice.’ A CLAT PG aspirant needs to be aware of all noteworthy legal developments, important provisions of law from the aforementioned subjects, major amendments in law and their application. For instance, a few legal issues in recent times which can be material for the exam are Aryan Khan’s rejection of bail application in cruise drugs case; 50 years old dispute with 5 litigation rounds to recover Rs. 3000; difference between parole and furlough as explained by Supreme Court while denying it to self-proclaimed godman and rape convict Asaram’s son; under what circumstances Anticipatory Bail can be cancelled et cetera.

Regular study of 6-7 hours a day will go a long way in bagging a good rank in CLAT PG exam. One should start brushing up the undergraduate law subjects as early as one can. Last minute preparation might not be advantageous for managing time and obtaining a seat.

Strategize. Make a daily set routine;
Read from bare acts and suggested commentaries and textbooks;
Prepare short notes of important decisions and ratios from those judgments;
Make Flow Charts;
Keep practicing mock tests.

Bare acts and books to be referred to by aspirants

Bare acts are to be finished before moving to textbooks/commentaries. After clear understanding from bare acts, textbooks can be referred to for case laws and interpretations of complex provisions. Good sources of textbooks are as mentioned below:

MP Jain textbook for Constitutional Law;
VD Mahajan for Jurisprudence;
Poonam Pradhan for Family and Property Law;
Avatar Singh for Contract law and Company Law;
R.K. Bangia for Tort law;
Oppenheim/ V.K. Ahuja textbooks for Public International Law;
KD Gaur for substantive criminal law (Indian Penal Code).

Majority of aspirants face difficulty in Jurisprudence, and Procedural Laws. It is crucial that these subjects are read and a flow chart is made to create a picture memory for easily remembering the provisions and concepts in the long term.

The modus operandi for reading lengthy landmark judgments

A student is expected to read and revise the basics of the law subjects learnt in their undergraduate programme. The landmark decisions of courts need to be thoroughly analyzed to comprehend the issues involved in the case, application of law to factual matrix and reasoning by the Hon’ble judges. Dissenting opinions of judges are also important to be understood as it has a significant effect on future court rulings.

It is often seen that judgments are quite lengthy to be read fully. It is humanly impossible for an aspirant to read and completely mug up long and life altering judgments like the landmark Ayodhya judgment on Babri Masjid issue runs to 1045 pages, Puttaswamy judgment on Privacy issue is 1500 pages; Sabarimala judgment on right of menstruating women to worship a deity is 411 pages long. The aspirant is not expected to memorize each and every word of the landmark judgment. It is well and good if the aspirant has the time, energy and mindset to go through every judgment completely. But for most aspirants, it is usually not possible due to paucity of time, vastness of subjects to be read and revised and lack of interest among other things. Therefore, an aspirant has to smartly work around a way towards judgment reading.

First, it is advisable that a well-written case note on a lengthy judgment is thoroughly read. One can find case notes from online legal databases like SCC Online, Manupatra or legal news portals like LiveLaw, Bar & Bench or even legal journals/exam guides. After understanding the case note, it becomes easier for the aspirant to move to the second step that is to dissect the brief facts, important issues involved and reasoning of judges on each of the issues. Once that is done, in the third step, the aspirant can traverse through the relevant portion in the lengthy judgment where the reasoning/ratio is clearly laid down. This method is interesting as well as effective in preparation from an exam point of view.

Ways and means for aspirants to manage time

Before the examination

Reading around 25 passages with 300 to 400 words with time ticking can be a very challenging task. The ability to read and perceive fast is one of the indispensable skills a CLAT-PG aspirant must possess. Therefore, it is important to learn certain tricks and techniques before the exam to manage time.

Practise as many mock questions papers as possible to get the hang of the actual examination.
A student should practice reading at least 5 editorials daily from newspapers to increase the speed of reading and grasping the content in a timely manner.
Follow Pomodoro Technique. Set a timer of 50 minutes and focus on a subject until the timer rings. Then enjoy a 10 minutes break to watch, meditate, walk, play or just do nothing. Repeat the process again 50/10 cycle again. Long hours of study should be avoided as it can affect one’s concentration level and grasping power.
Practise paced reading using a timer. Avoid re-reading passages/questions. Use a marker to underline keywords.
Work on improving vocabulary, especially legal terms and maxims.
Practise skimming passages. Read the beginning first, then the end and finally a few lines from the middle. Make sense of it in your head and answer questions accordingly.
Learn the concepts well, make the foundation strong and have a picture memory in mind. This helps in saving a lot of time.

During the examination

In the examination hall, it is very important to maintain peace of mind and not be perturbed by the question paper. A few tricks which will help during the exam to manage time are:

Skim through the passages. First those passages should be attempted which one is sure of. It helps in saving time and boosting one’s confidence.
Since the duration of question paper is 120 minutes, not more than 5 minutes can be spent on a single passage and its related questions. You need to remember that bubbling of answers in the answer sheet will also take time as it is currently an offline exam.
One can skip reading the entire passage and save time if it can be comprehended well with focus on keywords. Suppose there is a passage on Sabarimala judgment and the aspirant is aware of that judgment. Reading the whole passage word by word would be a waste of time and should be avoided. One should highlight the keywords in the passage quickly and then move on to answering the questions.
It is advisable to skim through the questions first and then the passage. This helps in reducing re-reading of passages. But one should see what strategy worked best during mock practise.

Different strategies for a working professional from a law student/fresh graduate

A working professional will have to first figure out how busy he/she is in a day and what time of the day can be carved out for devoting time for a quality preparation. It is stated that a person on an average spends two hours on social media platforms. Those two hours can be better employed for preparation without any distraction if the person makes a mindful choice. Once the time of the day is figured out, three to four hours of consistent preparation can be really helpful in securing a good rank.

The start point of preparation should be those subjects which usually have good weightage in the exam and in which you are comparatively weaker. This is because the strong subjects can be revised later quickly but the weak subjects need to be read slowly and made notes with more revision.

For a final year law student or law graduate, it is relatively easier to find time solely for preparation. But most times, the students think it can be covered at the last minute like the semester end examinations of University. It is the wrong notion and might be hazardous for securing a good rank. The more one practices and devotes time in making notes, flow charts and revising, the chance increases manifold to crack the exam with flying colors.

Conclusion

An aspirant should aim to achieve the first rank in the exam to ace it. Only with that motivation, no time will be wasted. A daily routine will have to be set and it should be diligently followed with a few variations here and there. Achievable goals need to be set for one’s own satisfaction. Reading whole day and night can take a toll on your concentration level. Thus, the preparation time should be combined with other fun or non-study activities which can help one reduce anxiety and exam pressure. All work, no play makes Jack a dull boy. Consistent efforts with perseverance and patience are most essential in cracking the CLAT PG exam.

References

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Duress : how would one go about setting aside a contract based on duress

By

Rachit Garg

-

October 23, 2021

0

business-contracts-4-things (1) — Image Source: https://rb.gy/msix72

This article is written by Varchaswa Dubey from JECRC University, Jaipur. This article is an exhaustive work regarding the doctrine of duress and how one would go about setting aside a contract using duress.

Table of Contents

Introduction

It is a well-settled rule of Contract Law and the rule of the land that any permission, consent, etc cannot be obtained by putting a person under any type of force, coercion, etc. The term duress is concerned with forcing a person to do something, against his/her will and such consent makes the contract merely voidable.

The term duress is not defined under the Indian Contract Act, 1872 but is one of the wide interpretations and understandings of the concept of coercion under Section 15 of the Act. Duress is often considered a synonym of coercion however that is not the case.

What is duress – scope, meaning, and concept

According to the Black’s Law Dictionary, the term duress refers to the “unlawful constraint exercised upon a man whereby he is forced to do some act that he otherwise would not have done. It may be either “duress of imprisonment,” where the person is deprived of his liberty, and he is forced to comply with the contract, or by violence, beating, or other actual injuries, or duress per minas, including threats of imprisonment or any physical injury or death.”

The defence of duress can only be pleaded when the alleged victim was under imminent danger of his own life or by any other known person.

Origins of the doctrine of duress

Under common law, duress was initially referred to as an actual threat of violence to an individual. In the early 15th Century B.C., duress referred to an actual or apprehended physical constraint so great as to amount to coercion. Under the English Common Law, the doctrine of duress was only pleaded in cases where a contract was influenced by extreme wicked threats including illegal incarceration which compelled the victim to surrender to the dominant party under fear of loss of life or loss of life of any family member, or of mayhem, etc.

Later, the doctrine of duress was believed to extend to threats concerning physical violence however, such threats must be real and mere threats that may not coerce an ordinary man were not enough.

The only rule which has ever been constant and associated with duress is the factor that it consists of putting a person under an imminent threat to gain his/her consent for a contract and that such contract will be voidable at the end of the party whose consent was not gained wilfully.

Types of duress

Duress which coerces the consent of any contracting party to a contract makes the contract voidable. Such duress is either a physical duress or economic duress.

Physical duress

Any duress which causes a physical threat to the aggrieved party to the contract falls within the ambit of physical duress. Such duress gives birth to the threat of physical harm including death and grave injury.

In the case of Barton v. Armstrong and Others (1973), the plaintiff alleged that the defendant will kill the plaintiff if he doesn’t execute a particular deed. The Privy Council, in this case, ruled in favour of the plaintiff and held that the concerned contract is void.

Economic duress

Economic duress refers to the coercion caused by putting the aggrieved party under the fear of causing an economic loss. It is an illegitimate fear, caused by the defendant party by initiating fear of terminating the already existing contract which may cause monetary loss to the other party.

In the case of Pao On v. Lau Yiu Long (1979), the plaintiff agreed to sell his shares and to protect the share value, the plaintiff and defendant agreed to retain 60% of share value, but the defendant later refused to sell his shares. The Privy Council in this case allowed the appeal and held that lower courts did not consider the coercion to amount to duress (commercial pressure).

Economic duress also refers to lawful but unethical behaviour, when one party to the contract refuses to pay as set by the terms of the contract could be economic duress.

Duress of goods

The duress of goods generally refers to the pressure relating to goods, and such pressure is usually to destroy or not to deliver the pending goods. Under the duress of goods, consent may be gained by putting a person under fear of non delivery of goods.

Essentials of duress

The doctrine of duress consists of several factors as laid down in the case of Regina v. Hasan (2005):

The threat must be to cause death or serious injury.
The threat must be against the person whose consent has been gained or any person in his/her family or a person close to such person.
The threat cannot be pleaded as a defence in the cases of murder and treason.
The tests relating to duress must be objective and regarding the reasonableness of the defendant’s perceptions and conduct.
The defence of duress only extends to the point where the threats caused were direct and only such threats can be relied upon.
Where the person whose consent has been obtained by duress had no option to avoid such duress.
The defendant must not voluntarily have laid himself or herself open to the duress relied upon.

Remedies for duress

Under the established contract jurisprudence, there are no such remedies available for duress except for rescission. The term rescission refers to the setting aside of the whole contract on the grounds of some bad conduct of a party to a contract. The result of rescission is reversing the contract, and putting the parties in the position where they were before the commencement of the contract, and such contract is treated as ‘non-existing’.

Duress under English Law

Duress under common law is also a defence, which is pleaded by those individuals who commit crimes as a consequence of them being forced or compelled to do so under particular circumstances or any illegal threats to others. The doctrine has its jurisdiction not only over the criminal law but also extends to civil law, contract law.

The methods of such illegal pressure are different from other common pressures which are associated with any competitive society. Under English Law, duress is referred to some unlawful pressure in the absence of any alternative available to the victim which leads to a party giving its consent to enter into a contract.

Duress as a defence

It has been observed that duress is also a defence in the court of law, such grounds of defence are:

The person whose consent was gained by putting him/her under duress must have no other alternative to escape from the coercive situation, only in this case he/she can plead such defence.
The aggrieved person was threatened with life or grievous hurt.
The threat must be illegal, and must be imminent.
The aggrieved person (whose consent has been gained by duress) shall not have placed himself/herself in a situation which was foreseeable to be duress.
The defence of duress cannot be pleaded in cases of murder, or treason, or attempt to murder.
The threat made must be specific and the aggrieved person must have been performing as per the threats.

In all the above-mentioned cases, duress can be pleaded as a defence in the court of law. It is significant to underscore that the burden of proof in cases of duress lies on the person who is accused of making such threats and not the person whose consent was obtained by duress.

Coercion

Defined under Section 15 of the Indian Contracts Act, 1872, coercion refers to an unlawful detaining or threatening to detain, any property, to the prejudice of any person. The term coercion is very similar to duress however the doctrine of coercion is wider and also includes the doctrine of duress.

Coercion, in other words, refers to forcing an individual to enter into a contract, and such force usually includes pressuring the concerned party to enter into a contract under threat and to gain the consent of such party. However, such consent is not free and holds no value in the eyes of law if the party’s consent is gained by any factor which causes coercion.

Difference between duress and coercion

Most people consider duress and coercion as synonyms however a thin line exists between both the doctrines which separate them.

While duress is exercised concerning the life threats to an individual or his/her family or close relatives, coercion can be exercised against any person.
Duress causes an imminent threat to an individual while coercion does not cover the ambits of imminent threat.
Unlawful detention is not considered duress under English law while detention of goods is considered a kind of coercion.

The need to set aside a contract based on duress

To set aside a contract based on duress and to eliminate the risk of other parties to a contract who may claim amendments in the contract which was initially agreed by mutual consent and without any coercion, the court must analyze the whole contract and all the facts relating to the case and must ensure that either party to the contract does not cause misrepresentation and must present their request in neutral conditions.

Setting aside a contract based on duress may not cause many issues due to the wide range of factors already present in modern-day contract laws. If duress is eliminated from the books, the contract law still contains the provisions of fraud, misrepresentation, coercion and undue influence.

The contemporary Indian contract law does not have much interpretation concerning duress and therefore the term can be eliminated and when any party alleges that any type of factor has affected the initial contract or the consent of such party was gained by any unlawful means, the court may restore the whole contract to its basics and shall ask to relook the terms of the contract.

The need to set aside a contract which is based on duress is because the consent of one or more parties to a contract is not gained voluntarily, and it is a common concept under contract law that all the parties to a contract shall form a contract voluntarily and no party to a contract shall be forced into a contract.

A contract may be set aside on the grounds of a threat where the threat caused extreme coerciveness which resulted in an unfair transaction however, in certain cases the defence has been criticised on the grounds of being unrealistic and arbitrary.

The theory of duress may be invoked even in the absence of any existing theory merely on the grounds that a party was forced to come into the contract with another party. It is hoped that courts will set aside a contract based on duress when a party was forced into a contract due to any fear, and that courts will continue to protect the interest of the parties in contract law.

To protect the interests of the parties to a contract, the courts must continue to consider the doctrine of duress, therefore providing justice to the victim and safeguarding the contract law.

Possible consequences otherwise

The advantages of having the doctrine of duress include regulating any type of pressure applied by one party to a contract on the other party with a special emphasis on life threats to the party or the family members of such parties. Duress also consists of flexibility which is not usually available in other doctrines of contract law and therefore saves time and effort for both parties.

The defence of duress is based on the concept that a party to a contract was forced by any means to come in a contract with the other party and therefore such contract shall not be enforced in the court of law however, if the defense of duress is not considered by the courts, then it will be easy for dominant parties to force the other parties to a contract, and eventually violates the right to consent of such party.

Conclusion

The doctrine of duress is not based on the absence of consent of a party to the contract but emphasizes how the plaintiff’s consent was gained by putting him/her under pressure. Duress is consent which is not out of the will of a person but the fear an individual possesses due to threats of actions made by the other dominant party to the contract.

Duress is not only a defence in criminal law but also is a remedy for a party whose consent has been derived by putting that party under imminent fear of life or grave injury to the party itself or any other person such party may be interested in.

References

https://saylordotorg.github.io/text_law-of-commercial-transactions/s13-01-duress-and-undue-influence.html
Monaghan, C. (2015) Beginning Business Law. 1st edn. Taylor and Francis. Available at: https://www.perlego.com/book/1558846/beginning-business-law-pdf
https://lawjournal.mcgill.ca/wp-content/uploads/pdf/3208479-sutton.pdf

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Partnership agreement between Disney & Pixar

By

Sneha Mahawar

-

October 23, 2021

0

This article has been written by Garima Gunjan, from ILS Law College, Pune. The article talks about the basics of the partnership agreement, how Disney and Pixar went on to form the most successful partnership agreement, how it has been beneficial for both the companies and a few clauses of the partnership agreement.

Table of Contents

Introduction

‘Mickey Mouse and Nemo are now corporate cousins.’

This is how the popular website ‘CNN Money’ described the high-profile partnership agreement between Disney and Pixar.

In January 2006, when Walt Disney announced that it was going to acquire trending animation studio Pixar, it was described via the above punchline. Disney had successfully acquired Pixar in a deal of $7.4 billion with the late founder of Pixar Mr. Steve Jobs becoming a board member at Disney. In this article, you will get to know about how Disney and Pixar rose individually in the animation sector and how they entered into a partnership agreement where Disney acquired Pixar successfully in a billion-dollar deal.

What is a partnership agreement

An agreement that explains briefly the relationship between the entities and their contributions and obligations regarding such a partnership. In such an agreement, the involved partners take equal responsibility for the debts that would result in the organization’s name. It contains all the clauses which are drafted in order to deal with disagreements and problems that could arise in the future. Having a partnership agreement helps the business entities to identify issues and their potential solutions even before such issues crop in. This agreement is drafted according to prevalent local laws.

Partnership agreements are drafted in a way that they describe each party’s rights and responsibilities; distribution of ownership, profit and loss percentage; business types; and how much each partner has to contribute. During their business tenure, the partners involved may disagree on some points, conflict of interest may occur or multiple changes unfold as the business progresses. In such a case, a partnership agreement comes into the picture by clearly defining the roles and responsibilities of each partner, helps to avoid legal and tax-related issues, outshines non-competent agreements, and also helps to deal with circumstantial changes that partners may face.

Partnership Agreement between Disney and Pixar

In 1991, Pixar suffered financial woes after which it made a deal of $26 billion with Disney to produce animation movies. Despite that, Pixar was not making a profit until Disney bailed it out by distributing the movie Toy Story (which was part of their deal) in 1995 during the holiday season. The movie grossed $350 million across the globe.

Disagreements arose between the two animation giants after they started working on their next release Toy Story 2. As demanded by Pixar, Disney refused to consider this movie as a part of their three-picture deal. Pixar’s movies had done the highest average gross per movie earlier. Despite seeing profitable days, Pixar didn’t find the ongoing arrangement as equitable. Even though production costs and profits were being split 50-50, the companies were not agreeing on sequel rights and Disney’s exclusive ownership over the story. In 2004, Disney refused Pixar’s demand to own 100% of profits and to be paid a 10-15% distribution fee by Pixar.

Although the deal almost broke down during 2004 negotiations, Disney managed to seal the partnership deal in 2006 by acquiring Pixar for $7.4 billion. The partnership agreement between the two animation giants was done in a way where they operate at separate levels within the same industry by merging operations. It increased synergies between them as they started operating as one.

As in the US, scriptwriters had unions, their strikes had resulted in millions of dollars losses to Disney over the years since its existence. Therefore, while going for this agreement, Disney made it clear that it had no plans to take Pixar employees for granted. Both companies with their combination of latest technologies and talented scriptwriters entered into the partnership agreement.

As both Disney and Pixar shared a great market reputation regarding animation movies, the partnership was bound to be a success. As Disney promised Pixar that its corporate culture will be retained in the future, its top bosses knew that this agreement would provide them with a brighter future. The negotiators from Disney were convinced that once they acquire the latest technology of Pixar, they will be ruling the animation market in the future.

Following this agreement, Pixar designed several successful movies under Disney’s name. Disney became the world’s best computer animation studio and it became closer to tech company Apple. Further, Pixar was able to rise above competitors such as 20th Century Fox and DreamWorks. Now Pixar didn’t have to invest in production and it focused more on computer animation.

Key clauses of Partnership Agreement

Partnership Agreement defines clauses in such a way that company can benefit from the skills and knowledge of partners involved. It should be governed by common state law and partners should be allowed to modify it if required. As multiple partners are involved in decision-making that affects outcomes, such an agreement addresses the role and duty of everyone involved and different aspects to run the business.

The key clauses of the partnership agreement are as follows:

Contribution

This Clause describes each partner’s stake in the daily working and finances of the venture. It states the responsibilities of the parties, and how they will be contributing in terms of efforts, time, customers, etc. In the case of the Disney and Pixar partnership agreement, Pixar focuses on creation and production, while Disney handles distribution, marketing, story, and sequel rights.

Distribution

Partners enter into business to make money and sustain a profitable venture. A partnership agreement should explain how the partners should split the profit between themselves and if they would get a paid salary (if yes, then how much). When Pixar and Disney signed a three-picture deal, they agreed to share profit, and Disney was allowed to charge distribution fees.

Ownership

The partnership agreement should describe how the partners will handle different ownership issues like a partner’s death, if he wants to sell his shares, has retirement plans, or goes bankrupt. There should also be a non-compete clause that protects the venture if one partner decides to leave permanently.

Authority and decision making

The partners involved in the venture have their vested interests. Due to this, they have the authority to make key decisions and sign agreements on the behalf of their venture. The partnership agreement should define certain rules regarding authority and decision-making power granted to each partner. To safeguard company interests, the partnership agreement should document how business decisions have to be taken.

Administration

When a venture begins, partners have several tasks and some of their admin roles remain in conflict with each other. In such a scenario, the roles and duties of every partner must be described in the partnership agreement. During such an early stage, where partners themselves are involved in every stage, their roles in different domains such as accounting, human resources or even payroll should be clearly defined.

Dissolution

The partnership agreement should define steps in case a partner wishes to end her partnership legally. Such a situation can arise if the parties stop agreeing upon the decisions related to business. It should explain what should be done if someone wishes to dissolve the partnership. Dissolution clauses are ruled by country laws and should be compiled accordingly.

Role of Partners

In this clause the partners acknowledge their duties, hence it needs to be drafted in a crisp and comprehensive manner. It talks about payment of contributions made, forbidden acts, full time involvement solely in business, non-compete, new partner’s admission, expulsion of any partner, confidentiality, and retirement of any partner.

Dispute Resolution

The partners should mention this fact in their partnership agreements that how they will handle disputes if it arises between involved parties in the future? The resolution process should be mentioned in the dispute resolution clause in the agreement. The process of mediation, the ability of the parties to appoint an Arbitrator, and court jurisdiction should be well-mentioned.

General provisions and transfer of interest

This clause should describe general provisions that are found in regular contracts such as indemnity and boilerplate clauses. If a partner decides to sell his business to someone who has no knowledge about the business, it could affect its operations. To avoid such a circumstance, the transfer of interest clause must mention the situations under which a party can transfer their interest. Other included general provisions can be legal jurisdiction and notice provisions.

Rights of Partnership firm

Since a partnership firm is deemed to be a separate entity, hence a point related to Intellectual Property (IP) must be included under this clause. It must mention that all IP created during the term of the partnership shall be owned by the firm and no Partner can claim their rights over this. The process of dissolution of the firm should also be defined according to local laws.

Reasons why this partnership agreement was successful

For Pixar

Apart from following normal tactics for a successful partnership agreement, both the companies introduced their tactics in order to preserve earlier employee culture. For example, Pixar employees were not asked to sign the Employees Contract so that they could work easily in the new professional environment. The senior executives introduced positive practices so that Pixar employees could mix in the new workplace environment easily. They continued highlighting their workplace values. Also, the executives of both companies collaborated and communicated with each other effectively. The Pixar employees were assigned new tasks and responsibilities so that they could contribute towards Disney’s efficiency. In this way, Pixar’s transformational leadership was adopted at Disney.

While implementing this partnership agreement, Disney’s biggest challenge was to accept Pixar’s relaxed workplace atmosphere. Even though Disney being the dominant force in partnership in this agreement, still it accepted the relaxed and casual work culture of Pixar. Pixar is known to have a fun yet demanding work environment. Also, Pixar employees were allowed to retain their old email ids. To keep Pixar’s identity enacted, Disney allowed it to produce more than one movie every year.

For Disney

The key reason why this agreement was successful was that the investors were able to recognize Disney’s potential to leverage Pixar’s animated characters to utilize its services. For example, in Cars, the retail products provided revenues amounting to more than $5 million. Not to forget, Pixar was willing enough to change its policies so that it could successfully become a part of the International Conglomerate. Apart from that Pixar also came up with original movies, as well as their sequels. The team of top executives which was led by Bob Iger (his experience in the merger sector benefited the venture) introduced popular steps such as ‘Direct to DVD’ as a part of their portfolio. Apart from that, the success of projects such as ‘Toy Story 4’ and ‘Incredibles 2’ also speaks volumes about the positive role of this partnership agreement between Disney and Pixar.

Conclusion

Although it consumes time and money to construct a partnership agreement, it is better to go for it to avoid legal troubles later. Due to this agreement, all parties involved got a surety that they are on the same page and have common goals and understanding. It helped them while deciding what decisions have to be taken in order to successfully operate the venture. Once such an agreement is ready, the parties agree to share their skills, finances, and time to build the business. By considering their legal requirements, the partners can take the help of an experienced business attorney in order to draft a partnership agreement that contains all relevant terms so that future issues could be avoided.

References

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Tips and tricks to prepare for the CLAT PG exam for LLM and PSU jobs

By

Sneha Mahawar

-

October 23, 2021

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CLAT — Image source - https://bit.ly/2ZgUx0t

This article is written by Yash Kapadia. Through this article, we shall enlist the tips and tricks to prepare for the subjective and objective section of the highly competitive CLAT PG exam which leads to studying LLM and bagging PSU jobs.

Table of Contents

Introduction

Are you a law graduate who is looking forward to pursuing an LLM in India? Are you someone whose dream job is to work for a giant company run by the Government of India? Well, the answer to these questions is CLAT- Post Graduate examination (CLAT PG).

CLAT PG is a national level entrance test that is organized by the Consortium of National Law Universities which serves as a gateway to law graduates who are interested to pursue LLM programs from top-ranked national law schools in India. CLAT PG also serves as a mode to be recruited at top public sector undertaking companies (whose majority equity is held by the Union Government) like NTPC, ONGC, OIL, BHEL.

With CLAT UG being more in the limelight, CLAT PG has, in the last few years gained significant attention from law graduates in order to serve their future goals. For example, in 2020, there were 632 PG (LLM) seats available for 5475 students who appeared¹ and in 2021 the number of test-takers rose to above 8,000 with available seats raising to 1635.²

It is very important to ascertain that the CLAT PG exam is highly competitive and for one to be ahead of the curve in their preparations, they need to come up with a bunch of tips and tricks that make the aspirant be the best version whilst giving this exam.

If you are one of those students who need a checklist or a set of tips and tricks for your preparations to make the entire process of learning and appearing for the exam easier, this article shall serve as a guide to you.

In this article, we shall ascertain how to approach the CLAT PG exam with the correct mindset, tips and tricks involved to prepare and how to perform to the best of one’s ability.

Disclaimer: Considering the changing pattern of the CLAT PG exam, we have, for the benefit of future aspirants included information and tips on how to approach the objective as well as subjective sections.

When should one start preparing for the exam and how many hours does one need to study

The point of starting the preparations is subjective for every person appearing for highly competitive exams. A 4-6 month time for preparations is suggested so that there is a good time frame in order to ascertain the weak ends and the strong ends. However, preparing for 2-3 months rigorously also allows candidates to score ranks if the same is done diligently.

A smart way to approach the ‘how many hours’ question is to first make a practical study plan as per one’s daily schedule. The time you wake up, the time for breakfast, lunch, dinner, nap must be fixed and the interim hours must be devoted to deep work. The answer to excellent preparations lies in the daily schedule of test-takers and not the number of hours they study. Some may study for 7-8 hours while some students study for 4-5 hours. The routine of your preparations for CLAT PG must be consistent for months.

Books one can refer to

The CLAT PG paper consists of comprehension-based questions under the objective section on constitutional law for 40 marks, and other areas like jurisprudence, administrative law, law of contract, torts, family law, criminal law, property law, company law, public international law, tax law, environmental law, and labour & industrial law for 60 marks and 50 marks are allotted for subjective questions.³

Mr. Harshit Sharma who secured a CLAT PG AIR of 15 in 2019 and then AIR 23 in 2020 and qualified the UGC NET exam states that the following are the books recommended for the subjects mentioned above⁴:

Subject	Author
Constitutional Law	A.K. Jain
Jurisprudence	K. Jain or Salmond
Family and Property Law	Poonam Pradhan
Contract Law	Avtar Singh and/ or R.K. Bangia
Public International Law	K. Jain
Tort Law	R.K. Bangia

The aforesaid list is not exhaustive. In fact, it is strongly recommended that every aspirant reads and keeps re-reading the bare acts for all the subjects mentioned above along with acts on arbitration, IBC, labour, tax, IPR, environment.

Extra attention to be given to Constitutional Law

Considering that Constitutional Law has a weightage of 40 marks, every aspirant must make sure that this subject is well-prepared. The fact that such a high weightage is attached to one particular subject must compel every test taker to make sure that a lot of time is spent reading and going through Constitutional Law along with important judgments being delivered by various courts in this domain. They may be in the form of bare acts and then of commentaries once one is well-conversant. Every test taker must start attempting past year questions of constitutional law to understand the type, difficulty and range of questions being asked. The preparations may also include notes wherein all major developments, recent and old landmark judgements have been noted down for last-minute preparations.

A senior legal officer, Navaratna Company of Government of India⁵ who cleared CLAT PG suggests that for Constitutional Law, one must have a good command over bare act provisions, especially Articles dealing with fundamental rights, directive principles of state policy, fundamental duties, president, parliament, emergency and amendment provisions, schedules, governor, state, centre-state relations, panchayat and municipalities, along with important amendments and case laws including the recent decisions of Supreme Court on constitutional matters.

However, it is pertinent to note that out of 100 marks, 40 are allotted to Constitutional Law and 60 are allotted to other subjects that also include jurisprudence. Test-takers that face problems in remembering different schools of jurisprudence can focus on other areas of laws like IPC, IPR, etc where they can score out of the remaining 60 marks.

The key to answering all questions with the highest level of confidence comes with practicing as many MCQ questions as possible from past year papers or mock tests. This helps the student to wire the brain to answer questions that come in a particular pattern.

How to prepare for objective questions

The following are some of the most effective steps and approaches to take in order to score the best in the objective questions:

Practice giving mock tests and familiarize yourself with the blueprint of the examination which is to be given.
Start attempting questions from your most preferred section so that you can confidently answer those questions which will raise your sense of confidence in the course of appearing for the exam.
Keep reading the most important (preferably marked as important) parts from bare acts as they are the key to understanding the very foundations of the legal concepts.
Keep timing yourself while giving mock tests to understand how much time is consumed and do not spend more than one minute per answer on the objective part. Divide your time as per your convenience between the objective and subjective part.
If you are a slow writer and anticipate that you might miss some subjective questions, then first prioritise attempting the objective part first as weightage is more and marks allotted to subjective answers are discretionary.
If you don’t see your answer or cannot ascertain the answer, rephrase the question and consider it to be a true or false question or else use reasoning to eliminate the wrong answers.
If you have absolutely no idea about the question then considering the negative marking, you should leave that question and move on to the next one.

How to prepare for subjective questions

The subjective section of the CLAT PG exam can become a deal-breaker or maker for a good rank depending on one’s writing skills clubbed with legal knowledge. The subjective part is 50 marks i.e. one-third of the total exam. Therefore, this part must also be prioritised.

Before understanding how to write answers, one must understand the areas of law in which these questions will be asked and what answers are expected by the authorities i.e. the aspects they are looking for. For this portion, questions may come on legal and contemporary issues. Legal knowledge includes knowledge of all the subjects taught in undergraduate subjects and contemporary issues points to current affairs and burning debatable issues. One must be well equipped with the knowledge of current laws, judicial decisions, and jurisprudential aspects.

What does the examiner expect from you

There are a few important elements that are given in the table below for an easy understanding of how an answer must be written:

Sr No.	Element	Why
1.	Structure	To make it comprehensible for the evaluator
2.	Knowledge of law	The nucleus of the answer. Include recent amendments or the passing of new bills.
3.	Case laws	Judicial precedents are a valid source of information and provide a wider horizon to the meaning of legal provisions
4.	Presentation (break down into paragraphs)	Every paragraph written must be related to the question and must have a correlation with the adjoining paragraphs so it is less confusing to a reader and has more coherence.
5.	Balanced content	Stick to the question asked and remember to not cross the 800-word limit.

After keeping in mind the above-mentioned elements in writing every answer for the subjective part, one must make every endeavour to use legible handwriting.

What should be the structure of an answer

1. For a detailed answer one must include the following:

Introduction

Every answer must start with an introduction that relates the question and an overview of what is going to be written ahead. Fill the introduction with information and curiosity relating to the question.

Body

This must contain the main content which may include the following:

Related laws
Interpretation of the provision/ statute
Analysis and critical analysis
Judicial precedent (preferably Supreme Court cases)

Conclusion

The conclusion must include an inference that has been deduced from the answer written. The conclusion may also include loopholes and suggestions or the way forward for that particular topic.

2. To answer a question based on explaining a legal concept, one must structure the answer in the following manner:

Introduction

Meaning of the concept

Laws relating to the concept

Legal explanation

Supreme Court cases or recent developments

Conclusion

3. To answer a question on explanation or critical analysis of a Supreme Court case, the following structure must be kept in mind:

Introduction

Meaning & context of case law

Details of case law : facts, issues, and judgment including ratio decidendi and obiter dicta

A critical analysis (CA)

Case laws or legal provisions supporting CA

Conclusion (final opinion)

All in all, the entire subjective section displays the true ability of the test-taker to write, structure an answer and analyse legal concepts and provide their point of view on the same. It is only an added version of what every law student learns while attaining their bachelor’s degree.

In order to understand from which areas the questions may come, one must peruse previous year papers.

As per an anonymous student who cracked CLAT and landed a job at a PSU⁶, the change in the pattern of adding the subjective section again is a win-win for students. The objective section and subjective section helps students to balance their scores and the ones who have good writing skills will also benefit from this pattern as one has enough practice to write essay-type answers in the 3 or 5 years at a law school.

Last-minute tips for preparations

Every student needs a perfect plan for around a month before the exam. This is done through the best possible utilisation of the limited time one has in hand before the exam day. The following are some last moment tips and tricks for the last 15 days:

Prepare a timetable

A student must prepare a timetable or a schedule allotting a specific number of hours a day for every subject. Getting enough sleep in the last few days before the exam is extremely important for productivity to stay at its optimum levels.

Revise notes that are prepared

One must make sure that the notes prepared while preparing for the exam are in the best condition as they are a one-point source to have a flashback of all the necessary pieces of information that need to know at the last minute. One can probably schedule to read at least one subject or topic’s notes every day in order to be well conversant with it.

Practice previous year papers/ mock tests

Due to a change in the pattern of the CLAT PG paper, there may not be too many previous year papers to solve but there are various legal education companies that provide a series of mock tests for their students to excel while giving the exam. Hence, one must practice at least one mock test per day.

Focus on important subjects that have more weightage and refrain from reading new things

Prioritise subjects as per the marking schemes of the previous year’s papers. For example, CLAT PG 2020 exam, the maximum number of questions were asked from constitution law, jurisprudence, public international law, family law, labour law, and criminal law. Focusing on these subjects in the last few days will fetch marks as we can be certain that there will be a lot of questions asked from these subjects. Also, one must refrain from learning or reading new things every day in the last days before the exam unless and until it is absolutely necessary to have knowledge about it.

Practice writing down a rough structure of sample essay type questions from the subjective part

It is imperative to keep in mind that the structure is the very foundation of your subjective answer that carries 25 marks. In order for the flow to be seamless, one must practice writing down in rough the format of the answer which is to be written in detail. Once a layout is prepared, a test-taker shall not have to think about what is to be written ahead and instead focus on the quality of content to be written under each heading of the essay type answer.

Practice speed reading for comprehension based questions

One must read as many comprehension-based questions and be in the habit of speed reading considering a test-taker must take less than a minute to answer each objective question. The catch here is that if one understands the concept of speed reading and practices it over a period of time, finding out the keywords based on the questions becomes a much easier task. Therefore, using the method of speed-reading in order to find keywords that provide answers.

Conclusion

In drawing things to a close, we must understand that the CLAT PG exam is highly competitive and as years pass, more students are enrolling for the same. For a student to excel in this exam, one needs discipline and consistency for long durations. Graduates who are working professionals may not be able to give as much time as law students but they too may enroll for online courses or crash courses so that there is a defined pattern in which they would be able to prepare for the same. With such courses, in all likelihood, one is able to complete their portion and are only focussed on sharpening certain skills they will be applying on exam day. There is no ‘enough’ preparation for such highly competitive exams until one tastes success from the results.

There are certain aspirants who aim to take the CLAT PG exam or be legal officers at huge PSU companies but have a blurry image of this. One can attend Free Bootcamps like the one on how to crack the CLAT-PG exam for LLM and PSU Jobs organised by Lawsikho in order to understand the entire shebang of the CLAT PG exam and also get answers to numerous queries asked by like-minded aspirants.

References

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All you need to know about virtual power purchase agreements

By

Oishika Banerji

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October 23, 2021

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document-428336_1280 — Image source: https://rb.gy/5z1i1d

This article has been written by Geetanjali Shastri pursuing the Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from LawSikho. This article has been edited by Ruchika Mohapatra (Associate, Lawsikho).

Table of Contents

Introduction

The demand for clean energy continues to increase as companies around the world want to implement strong renewable energy strategies and focus on sustainable business practices that reduce their carbon footprint. Clean energy also gives organizations a reputation as stakeholders among consumers who recognize that they are a business that also contributes to the well-being of society. Goals are usually achieved by more traditional means of gaining power (Power Purchase Agreement, hereinafter PPA). The developer owns, operates and maintains the renewable energy; in a third party PPA and purchases renewable energy for a predetermined period of time.

What’s a virtual power purchase agreement?

A virtual power purchase agreement is a long-term agreement between a company and a developer. As the name suggests, there is no physical energy exchange in the virtual energy purchase contract.

When a company signs a VPPA( Virtual Power Purchase Agreement), it promises to pay a fixed price for each unit of power produced by a wind or solar power plant for a fixed time. It is then sold on the wholesale market by the developer. Preferred places where residents can access electricity generated through renewable energy resources are the usual and preferred selling points.

A virtual PPA is simply a monetary agreement, unlike a physical energy purchase agreement. That is why it is also called a purchase agreement for financial strength. It is essentially a “financial exchange” contract that is not related to physical electricity delivery. Typically, the contract conditions will be drawn up as a contract for difference.

The corporation will agree on a fixed price to pay for the generated power and then take a risk on the wholesale market outturn price. If the market price for electricity is greater than their fixed price, they will benefit from the contract. If it is lower, they will lose since they are tied into a higher fixed power price.‍

How does a virtual power purchase agreement work?

Step 1: A developer makes the decision to construct a renewable energy project. He starts the green fielding phase by researching permissions, ideal locations, and grid links.

Step 2: The new buyer and developer sign the VPPA at this point. For a period of 10 to 12 years, you agree to all terms and conditions. The VPPA assists the developer in obtaining the necessary project funds.

Step 3: Once built, the developer begins selling the energy generated on the power market. Remember, the corporate buyer has committed to pay a fixed price for renewable energy; the developer, too, is exposed to price fluctuations.

Step 4: At the end of the settlement period, the developer computes the difference between the market price and the contract price. Now, if the renewable energy initiatives earn more money on the open market than the fixed contract price, the developer pays the buyer an excess. Otherwise, the buyer will be obligated to pay the difference to the developer.

‍Comparing physical PPA with virtual PPA‍

When we compare the differences between a Physical and Virtual PPA, we can observe that they are comparable. Both types will have similar cost savings, additionality, and market image. The distinctions between the two are disguised in the finer points.

SAME POWER GRID

When signing a Physical PPA, the offtaker must be connected to the same electricity grid as the renewable energy plant. Otherwise, physical delivery of electricity would be impossible.

This restriction does not apply to virtual PPAs, and the renewable energy generator can be put anywhere. This opens the door to cross-border PPAs and allows a corporation to acquire multiple forms of renewable energy or even larger volumes.

However, the corporation may still desire to have good energy cost alignment with its local energy market. In this situation, the renewable generator under a Virtual PPA would need to be on the same grid as the off-taker or in a power market that is highly connected with the off-home taker’s market. This ensures that the PPA provides an effective price hedging.

FINANCIAL DERIVATIVE ACCOUNTING

The other major distinction between a Physical and Virtual PPA is how they are accounted for. Companies situated in the United States will utilise US GAAP accounting standards under present rules, while those based in Europe will use IFRS. Global corporations may be required to report financials in accordance with both standards.

The two accounting standards have differing regulations when it comes to PPAs. One important distinction is that Virtual PPAs may be classified as a financial derivative under IFRS guidelines but not under US GAAP. This is a major issue since financial derivative accounting can have an impact on a company’s ongoing financial reporting.

How can virtual power purchase agreements assist corporations?

This is where the concept of “coverage” comes into play. No matter what the price is in the open market, buyers always benefit from a fixed level of strength and therefore, stand protected from price volatility. Also, like traditional PPAs, virtual power purchase agreements create renewable energy credits for businesses. They receive a renewable energy certificate (REC) from the developer for every megawatt hour of energy produced. Another aspect that benefits buyers and the wider market is addition. It is about adding new sustainable energy sources to the existing grid network.

What type of corporations can purchase VPPAs?

Currently, almost any entity classified as a company can purchase a VPPA. However, this is not always the case. Previously, developers preferred to sell these contracts to one giant company or service company. Once the primary buyer is secured, the remaining watts are sold to a secondary (and usually smaller) player. Of course, this approach limits the use of PPA to only the highest level. Over the years, this condition has subsided. Developers are now separating projects to attract more corporate purchasers in order to increase investment in renewable energy. These buyers have the option of deciding how much energy they want to invest. The foundation of such an idea is aggregation. This enables small purchasers to form alliances with large corporations, create purchasing power agreements, and, as a result, bring renewable energy projects to fruition. Is aggregation, however, a logistical challenge? Yes, although this can be offset by a significant emphasis on digitalization. Managing many purchasers, their contracts, donations, and payments can be made easier with the use of a robust cloud-based platform.

Are virtual power purchase agreements transformational?

Undoubtedly, VPPAs are transformational. The clean energy industry has been changed through virtual power purchase agreements. They have opened doors for smaller businesses who previously believed that only the Google, Amazon, and Microsoft of or alike could take on the carbon offset challenge. The impact of VPPAs can be divided into two categories: sustainability and borderless management. The adoption of virtual power purchase agreements has sped the process of making our world and our energy sources more sustainable. In the United States, 2018 was a record year for renewable energy contracts. Within the first ten months, 4.81 GW of virtual agreements were executed.

Demand for virtual PPAs

Corporate purchasers account for more than half of all renewable energy asset contracts. They are critical actors in making renewable energy a commodity in some of the world’s most powerful economies.

As a result, the demand for virtual power purchase agreements has primarily come from firms with less expertise in selling renewable energy.

As a result, VPPAs encourage them to contribute to the development of a new wind or solar project while also meeting their own sustainability goals.

There are multiple compelling reasons as to why businesses are flocking to offsite power purchase agreements (PPAs) to satisfy their sustainability goals, contribute to the development of more renewable energy projects, and manage variable energy budgets. In contrast to distributed/on-site power generation, offsite power purchase agreements (PPAs) are not bound by the availability of enough rooftop space, grid connection options, or other constraints at a corporation’s location (e.g., rooftop solar panels). When a business decides to pursue an offsite power purchase agreement, it has two options: a physical PPA or a virtual PPA (VPPA). Although a physical PPA and VPPA may sound similar, in practice they are different. With a physical PPA, – as the name implies – the corporation, or a designated third party, takes title to the physical energy at a specified delivery point on the electric grid. The physical energy can then be transmitted from that specified delivery point to the corporation’s energy account or meter.

Are we prepared to handle regulatory and accounting issues?

Physical PPAs and VPPAs have various regulatory duties that must be met by the buyer. As previously stated, physical PPAs necessitate the use of a licensed power marketer to allow the supply of physical energy from the plant to the buyer’s account. There are important qualifications required if the buyer chooses to undertake this service without the assistance of a third-party professional (e.g. FERC licensing). Due to these complications, very few non-utility corporate buyers have pursued a physical PPA without the assistance of a third party.

Different accounting treatments and derivative reporting requirements may apply to VPPAs and physical PPAs. Buyers should be aware of these obligations in order to prevent unwelcome regulatory complications. As a swap’ (fixed-for-floating swap) arrangement, VPPAs trigger Dodd-Frank Wall Street Reform and Consumer Protection Act reporting, record-keeping, and registration requirements for the buyer and seller. While these standards are simple to meet, buyers should obtain business and legal advice on how to fully grasp them before signing a VPPA contract.

Do we want to sign a PPA with more than one project?

Signing a PPA (physical or virtual) with more than one project can help to reduce risks. Because of location constraints and the high cost of energy management services, participation in physical PPAs is limited to projects located near the corporation’s facilities. It is easier for a firm to purchase energy from a varied range of projects in different states and/or wholesale markets using VPPAs. A corporation, for example, may purchase electricity from an ERCOT wind farm, a PJM solar farm, and a CAISO geothermal plant.

What is a physical (or sleeved) PPA?

A physical or sleeved PPA is a contract between a renewable energy generator and a site for the delivery of electricity through the power system. The renewable energy developer and off-taker will agree on a price for the duration of the PPA, which is typically set €/MWh with annual indexation.

A physical PPA allows a third-party power supplier or marketer to wrap the power volumes into a current energy contract for a corporation. Contracting with this strategy requires a corporation to cope with the variability of renewable plant power production and how this relates to their power usage.‍

Examples of PPA’s in Europe

A recent deal between Iberdrola and Danone is set to serve as a model for Physical PPAs. As an example, the arrangement has not been mentioned whether it is physical or virtual, but Iberdrola is more likely to be the project developer as well as the supplier for Danone’s facilities in Spain and to “power nap” for them. Danone will obtain some of its energy from Europe’s largest photovoltaic solar facility as a result of the contract. Novartis has completed a huge Virtual PPA arrangement to take power from Spain’s new solar power facilities. Overall, more than 275 MW of clean power is expected to be added to the system under the contract. This is a good example because Novartis follows IFRS accounting standards and PPA is likely to follow derivative accounting. This indicates that businesses are willing to take a certain level of financial reporting risk from Virtual PPA.

Conclusion

Power purchase agreements are contracts between energy consumers and developers. With newer norms and a strong shift toward borderless management, virtual power purchase agreements (VPPAs) have now become a popular option. VPPAs are easily scalable and enable buyers to satisfy a large portion of sustainability goals with a relatively small number of deals.

References

Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.

LawSikho has created a telegram group for exchanging legal knowledge, referrals, and various opportunities. You can click on this link and join:https://t.me/joinchat/J_0YrBa4IBSHdpuTfQO_sA

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Present stand of cross border insolvency in India

By

Diganth Raj Sehgal

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October 23, 2021

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Insolvency — Image Source - https://rb.gy/019nml

This article is written by Harmanpreet Kaur of Amity University, Kolkata. The article will deal with the current scenario of cross-border insolvency in India.

Table of Contents

Introduction

The law of insolvency plays a major role in a free modern enterprise in terms of economy. However cautious and farsighted a person may be in his financial and business dealings, he sometimes gets involved in financial difficulties and therefore is unable to meet the financial obligations. This leads to him being insolvent. In legal terms, a person can only be declared insolvent only by the competent courts as per the laws that deal with the phenomenon of insolvency, which can be termed as the Laws of insolvency. Insolvency can be termed as an act in which the state takes possession of the property of the debtor who cannot pay his debts or discharge his liabilities and distribute accordingly and equitably among all his creditors. The effect and the reach of a nation state’s insolvency laws have become more important as the world’s economies have become more consolidated and interdependent. Now with the development of insolvency laws in the nation-states, the need for the laws of cross-border insolvency is also gaining momentum in the present 21st century and has gained prominence and importance since the 20th century. It can be thus stated that the need for the laws of cross-border insolvency was felt after globalization.

The present article will focus on the present stand of cross-border insolvency in India, the legislation concerning cross-border insolvency, and the need for insolvency laws.

Cross border insolvency

Cross-border insolvency, can also sometimes be referred to as International insolvency. It implies a situation, wherein the insolvent debtor has assets and liabilities in more than one jurisdiction or in the other foreign countries, or where the creditors are from different jurisdictions of nations. The aspect of cross-border insolvency regulates the financially disturbed and depressed debtors, where such debtors and the creditors have the assets and liabilities in more than one company, which can either be in India or in other foreign countries. Usually, cross-border insolvency is the insolvency of the unstable companies operating in more than one country and not the insolvency of bankrupt individuals. The cross-border insolvencies have resulted in the majority of significant corporate failures like in the case of Chanda Deepak Kochhar vs Icici Bank Limited (2020), wherein Videocon held the director-general responsible for conducting bribery against the bank, making it a frequent scenario. The increase in commercial technology has led the cross-border trade to not only to the large multinational corporations but also the companies.

Model laws on cross border insolvency

The model laws were made by the United Nations and the efforts were taken by the various international legal entities to make a model law that would be beneficial to solve the disputes relating to cross-border insolvency. The model laws were created as a result of difficulties arising from the recessions in the early 1990s. This experience showed the need for some uniformity and harmonization in the multi-international companies when they deal with some sort of insolvency, to avoid multiple insolvency administrations, and allow creditors in one state to access the assets of the insolvent entity in another.

UNCITRAL Model Law on cross border insolvency

The UNCITRAL Model Law on cross-border insolvency was designed by the United Nations Commission on International Trade in 1997. It was introduced to provide a system of procedural recognition with the principles of comity and court intervention to assist any recognized foreign insolvency proceeding to achieve a more effective and speedy disposition of cases. The system was introduced because of the increase in the disputes related to cross-border insolvency so that they can be solved and handled with efficient administration and supreme authorities. The objectives of the model law can be summarized as follows:

While the cases are solved by the courts, the interests of the creditors, the debtors, and the other parties should be protected and be considered to be of primary concern.
There should be no conflict between the parties and cooperation and coordination should be maintained.
The law introduced four elements, to resolve the cases of cross border insolvency i.e, access to the courts for the recognition of simple proceedings, relief should be granted to the parties following the principles of justice, fairness, and equity, there must be the maintenance of cooperation among the parties and the judicial system i.e, the courts.
The courts should grant an action in the cases, while not acting against and contrary to the public policies.
The assistance to be made to the debtor’s assets and a preferable legal certainty for trade and investment.

The model law has been implemented and adopted by countries like Australia, The United Kingdom, and the United States of America so that assistance can be provided to the domestic courts and the foreign courts in the proceedings related to cross-border insolvency.

India has still not taken initiatives to introduce and adapt model law in its jurisdiction. India should take measures for the implementation of model law in its jurisdiction as this would assist the courts of India to provide and take assistance from the foreign courts in solving the cases and will provide transparency and justiciability to the Indian legal system.

The European convention regulation on cross border insolvency

The European Union also contributed in recognizing the model law to the other countries and has provided a legal framework on the proceedings that should be adopted to solve the cases related to cross-border insolvency. The measures adopted on cross border insolvency by the European convention regulation are:

It facilitated that the members should determine the jurisdiction and considerably apply laws and legislation for the cross-border insolvency proceedings.
It provided for automatic recognition of insolvency proceedings related to cross-border insolvency.
It stated that the cooperation between the member states should be maintained and sustained.
It recognized and introduced three kinds of proceedings related to the matters of cross-border insolvency. They were;

Main proceedings- These are the proceedings that were determined to take place in one jurisdiction and the debtor was recognized as the centre of main interests i.e., the administration of the interests can be regularly ascertained.
Secondary proceedings- These are the proceedings that would take place in the nations where the debtor has an establishment.
Territorial proceedings- These are the proceedings that have not been commenced anywhere.

However, the adoption of the European regulation on cross-border insolvency could be challenged for the member states to adopt it in their legal procedure because it requires them to incorporate the provisions in the nation’s domestic legal framework.

Reasons for adopting the Model Law in India

There are various reasons why the Indian government and Parliament should adopt model law in their legal systems. The reasons are:

This would increase the ease of recovering foreign assets by the Indian administrators from the foreign jurisdictions.
There would be an efficient treatment of international insolvency involving Indian businesses and companies.
The adoption of the model law would help in the uniformity and consistency of the administration of cross border insolvencies.
The foreign administrators and the directors would have direct access to the courts and other admissible authorities.
It would help in the speedy and clear process for the resolution of the cross-border insolvency cases.
It would help in achieving a satisfactory degree of harmonization, uniformity, and certainty of interpretation.

Reasons for not adopting the Model Law

There are various drawbacks as to why the model law should not be adopted and India has to think beyond the Model law. These are:

There can be conflicts in the domestic legislation if the model law is adopted in India.
There can be a risk for the arguments about the legislative intentions and conflict of laws.
Before adopting the model law in the Indian legislation, there should be an appropriate law on cross-border insolvency.

Legislation in India governing cross border insolvency

There is no appropriate legislation and laws to resolve the matters related to cross-border insolvency.

The Insolvency and Bankruptcy Code, 2016 was introduced and implemented in the year 2016, with the main aim to consolidate and amend the matters related to insolvency and to solve disputes for the matters related to insolvency among multinational corporations and companies. The Insolvency and Bankruptcy Code, 2016 (IBC) does not directly deal with the cases of cross-border insolvency, but there are only two Sections that are relevant to deal with the cases of cross-border insolvency i.e., Section 234 and Section 235. The particular two Sections were introduced by the recommendations from the Joint Parliamentary Committee.

Section 234 provides for the provisions for agreements with foreign states. It states that-

The central government has been given the power to enter into an agreement with any foreign government.
The agreement should be made to enforce the provisions of the Act.
The central government should specify in its official gazette through a notification and accordingly direct that the reciprocal agreements made with the foreign governments shall be subject to the conditions specified in the Act.
The assets, properties, and liabilities of the corporate debtor located anywhere inside and beyond the provinces of Indian territory should be governed by the agreements and shall be subject to the conditions under the Act.

Section 235 provides for the provisions that the letter of request should be made to a country outside India. It states that-

After the reciprocal agreements are made under Section 234 of the Act, the application can be made by the central government to the adjudicating authority to request evidence and take appropriate measures.
The evidence and the measures are required for cases related to liquidation, bankruptcy proceedings, insolvency resolution process and to solve any dispute related to the cross border insolvency.
The Adjudicating Authority has the power to make an application if he is convinced that the evidence and measures are required for the case.
If the Adjudicating Authority gets convinced, then he has the power to issue a letter of request to the country involved in the case.
He has the responsibility to then send the letter of request to the court, requesting the authorities to try the cases within their jurisdiction who are competent to do that.

These are the only two Sections that deal with the procedure of the cases, concerning the disputes related to foreign countries. But as there is a considerable increase in the case of cross-border insolvency, there is a crucial need to add provisions related to cross-border insolvency in the Insolvency and Bankruptcy Code, 2016.

Recommendations proposed by the committees in India to introduce laws related to cross border insolvency

The nation-states of Singapore, the UK, the USA have already adopted the provisions of Model Law and have incorporated them into their respective legal system, not as a replacement but as subsequent different provisions to deal with the cases related to cross-border insolvency.

From time to time, different formulations and recommendations have been put forward by the committees before the Indian Government to deal with the disputes related to cross-border insolvency. The recommendations that were adopted by the committees are:

Justice Eradi Committee

The first effort was made by the Justice Eradi Committee in the year 2000, wherein the report was submitted to the Parliamentary authorities regarding the matter of cross-border insolvency. The committee suggested that the laws should be made to adopt the UNCITRAL Model Law in the Companies Act, 1956 to deal with the cases of cross-border insolvency as this would help the courts for the quick disposal of cross-border insolvency cases and provide efficacy and transparency to the law.

N L Mitra Committee

The second efforts were made by the N L Mitra Committee in the year 2002, to the Parliamentary Committee stating that the efforts should be made, and there should be an adoption of Model Laws in the Indian regime and also there must be an introduction of legislation related to the cross border insolvency to solve the disputes, dealing with the cases of cross border insolvency.

The Insolvency Law Committee

The Insolvency Law Committee in the year 2018 made a recommendation and submitted its report to the Ministry of Corporate Affairs stating that Insolvency and Bankruptcy Code, 2016 should be amended and the provisions related to cross border insolvency should be incorporated in it. The recommendations that were proposed by the committee are:

If the UNCITRAL Model Law is adopted in the Indian legislation, then it would provide a comprehensive framework to the cases related to cross-border insolvency.
It stated that if the international laws are accepted in the municipal laws, then it would provide a balance between the two, and there would be no conflicting areas between the two laws, because the Model Law does not provide provisions for replacing it with the domestic laws, but to incorporate the provisions for the better functioning of the courts.
The framework of the cross border insolvency under the Insolvency and Bankruptcy Code is required and is necessary because the Indian companies have a global footprint and many foreign companies have their presence in the Multinational companies including India and this would provide assistance to deal with cases where the Indian Companies have foreign assets, properties, and liabilities and the vice-versa.
The new legislation or framework would bring the Insolvency Law Committee on a par with that of matured jurisdictions.

The Ministry of Corporate Affairs in September 2019 had included the recommendations of the Insolvency Law Committee for reference and had passed the draft to the Krishnan-led Committee to consider the formulations of the draft and act accordingly.

Conclusion

India has not yet been conferred with the proper legislative framework that can govern the cross-border insolvency disputes, which creates complications for the judiciary if they have to solve the cases related to the Indian and foreign companies’ conflict. The framework for the Cross Border insolvency would improve the future stability of the Indian financial system. It would bring transparency (data dissemination, fiscal and monetary policy), financial stability, and marketing integration at the national and international levels. It would help the stakeholders to better manage their financial risk and enterprise sectors promptly and would also ensure efficient access to credit and allocation of resources enhancing economic productivity and growth.

References

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Why the use of smart contracts won’t be a smart move

By

Abanti Bose

-

October 23, 2021

0

This article is written by Raghav Madan, pursuing Diploma in Law Firm Practice: Research, Drafting, Briefing and Client Management from LawSikho. The article has been edited by Kritika Sharma (Associate, LawSikho) and Ruchika Mohapatra (Associate, LawSikho).

Table of Contents

Introduction

The digitalization of the world, followed by the global pandemic, has completely changed the way businesses work now. Almost all operational tasks are being carried out digitally. The businesses/organizations/individuals have to adapt to new ways of working in order to survive for a living. Unexpectedly, it has turned out to be a blessing in disguise for many organizations in terms of cost-saving and efficiency.

It has led to an increase in productivity, mental health, awareness, and even outreach since the digital means is accessible from any corner of the world. Followed by this efficiency, the businesses continue to incorporate this digital setup even in their legal aspects as the traditional system lacks effective enforcement.

As per World Bank’s “Ease of Doing Business Report 2020”, India ranks 163 out of 190 countries in Enforcing Contracts. The average time taken to enforce a contract is 1445 days (approximately 4 years). However, businesses do not want to wait 4 years for a contract to be executed and look for a means to execute automatically. This automatic execution of contracts is taking shape by way of Smart Contracts.

Smart contracts work by following simple “if/when…then…” statements that are written in a coded format. It has been inspired majorly by the blockchain system where a network of computers executes an action when predetermined conditions have been met and verified.

It can be better understood through the following diagram:

In a Smart Contract, when two parties enter into a contract (Alice and Bob), it is validated through predetermined conditions. These predetermined conditions run on an oracle system responsible for connecting internal-external mechanisms and controlling what is called a “trigger system”. On performance or non-performance of the predetermined terms, an automatic trigger would take place communicating immediate action which could be the release of funds to the appropriate parties, sending notifications, or issuing a ticket (depending upon the terms of the contract) without the need of any intermediary.

Although the working of these Smart Contracts is extremely complex, on the contrary, they make the execution process a lot quicker than the traditional form of contracts.

Difference from an ordinary contract

The essential elements of a smart contract and an ordinary contract are the same (i.e, offer, acceptance, consideration, lawful object, etc.). However, unlike conventional contracts, a Smart Contract is written in a coded format that functions on an “if/when…then…” basis.

Moreover, a Smart Contract within itself can have many stipulations in order to satisfy the participants that the task will be completed satisfactorily and efficiently. This includes establishing the terms, determining how transactions and data are represented, agreeing on the “if/when…then…” rules that govern those transactions, exploring all possible exceptions, and defining an automated framework for resolving disputes. While a conventional contract may contain all such pre-determined details, a medium for immediate and automatic execution is only covered in Smart Contracts.

Benefits of smart contracts

Smart Contracts bring a plethora of advantages to businesses due to their broader perspective and coverage. They help in:

Increasing efficiency;
Avoiding lengthy judicial processes and cost;
Promoting innovation;
Standardization;
Trust and security;
Minimization of the role of intermediaries and;
Immediate and automatic execution.

With growing digitalization, it is gaining even more popularity and can be found in decentralized applications, payment of royalties in intellectual property rights, logistics industry, initial coin offerings, trade finance, supply chain financing, internet of things, and e-commerce industry to name a few. However, following their current position in India, the use of Smart Contracts is very sceptical, to say the least.

Reasons for not a smart move

Although, it may seem inclusion of Smart Contracts in our ecosystem would be a revolutionary change, however, considering the current progress and development, the use of Smart Contracts won’t be a smart move due to the following reasons:

Operational risks

Operational risks are associated with the working of these Smart Contracts. The main problem is that Smart Contracts work on a very rigid oracle system where the performance is programmed over “if/when…then…” code. However, the interpretation of this term “performance” varies from contract to contract. The oracle system has a very high tendency of making a judgment error while interpreting this performance.

For example, if we use the Smart Contracts in Cab Services, the oracle system would interpret the performance of the contract when the passenger reaches a destination and then only trigger the action to transfer funds. However, supposedly followed by certain unforeseeable circumstances (say some construction work on the marked location), the driver does not drop the passenger at the exact destination but at a nearby location. While the general perception would be that there is the completion of performance on the cab service company and their driver, since the passenger was not dropped in the exact location, the oracle system will not trigger the transfer of funds.

This rigid system does not give parties the freedom to amend the terms situationally but rather makes its judgements which could be erroneous. These faults in the interpretation of Smart Contracts could easily be manipulated and misused for a sole motive.

Financial issues

Having a very deep pocket is a must for Smart Contracts. Firstly, installing and maintaining servers for the smooth functioning of these smart contracts requires an exorbitant amount of investment. Secondly, since the working of these Smart Contracts is very rigid in nature, it is almost impossible to alter their procedures. Any error in the code can be time-consuming and would again require additional expenditure. And thirdly, due to a lack of awareness around Smart Contracts, an organization would need to bear additional costs of organizing workshops, webinars, training sessions, etc. to train their employees.

A simple smart contract with no complex business logic may only cost around Rs. 5,000/- (Rupees fifty thousand), while more advanced contracts cost up to 35,000/- (Rupees thirty-five thousand) or more. It is safe to assume that large organizations with specialized knowledge would require even more investment taking the figures into lakhs. In addition, there is the cost of maintenance and regular alteration.

As a result, the central focus of Smart Contracts is to save litigation costs, which, in a broader perspective, turns out even more expensive thereby defeating the whole purpose.

Tricky balance of technical and cyber security risks

An important issue with Smart Contracts in the blockchain industry is that they are pseudonymous since they are stored on a blockchain. Indeed, transactions made on a blockchain use pseudonyms for the parties involved in the transaction. This protection is not completely anonymous, but it still does not require the parties’ legal identities.

Consequently, in case of a disagreement, smart contracts cases are almost impossible to take to the court as the only information known about the parties are their wallet address and not their identities. There are some ways to go around this issue, by using KYC requirements but that would bring a whole new set of issues relating to cybersecurity and data protection.

Therefore, ensuring individual protection and cyber security at the same time is a very tricky balance to maintain.

Lack of discretionary power

This point is closely associated with the rigid nature of Smart Contracts. They take away the power to negotiate and discretion out of the hands of the parties. The absence of an intermediary takes out the procedure of confirmation and discussions between the parties before executing an action.

Smart contracts function on programmed logic and are immutable during the course of the execution of a transaction. However, this takes away the essence of a contract in terms of negotiation and relationship building. A contract must have a provision of modification as long as the parties to the contract mutually agree in order to ensure party autonomy.

For example, a rent agreement may impose a penalty on the tenant for non-payment of monthly rent timely. However, a landlord may waive/alter this penalty or extend the date of rent payment depending upon negotiation between the parties. However, no such discretion power is available in Smart Contracts. They work on what is programmed and will impose penalties on Tenant’s account as soon as the time expires.

This discretionary power plays a key role in building long-term relations. There needs to be certainty, predictability, and enforceability of contracts in a constructive manner which is completely missing in Smart Contracts.

Unclear legal status

Not all contracts can be executed through digital means. Certain documents like Power of Attorney, real estate, wills, etc. require a wet signature, proper registration, and stamping. Further, e-stamping is a very cumbersome process.

Due to these unclear execution procedures, Smart Contracts may not be applicable in many key sectors like real estate where there is a lack of trust in terms of execution, and building trust through quicker execution is what Smart Contract aims to achieve.

Some also believe that this automation system takes away the judicial discretion of the Judges. Further, there is an absence of proper Smart Contract legislation and precedents in India. The IT Act in India (or any other Act for that matter) does not provide detailed working or framework as to how Smart Contracts should be regulated.

The regulatory environment will need to catch up with the speed of development in smart contracts and distributed ledgers. For example, in the US, states such as New York have already enacted regulations for digital currency businesses. Its bit license is a custom-made regulatory framework for bitcoin and digital currency businesses, which has been established by its Department of Financial Services. For contracts to be enforceable, the identity of the parties has to be confirmed to a degree that the legal system and regulators consider appropriate, and electronic signatures need to be considered valid.

These unclear legal structures and processes degrade the level of trust and will always remain a factor in the mind of stakeholders before welcoming Smart Contracts.

Social issues

While the whole concept of Smart Contract revolves around building trust through effective execution in contracts, the fact of the matter is that there is sheer resistance to technology in India.

Moreover, followed by a lack of awareness and understanding of Smart Contracts, there is a tendency of employees to commit unintended errors. Companies can suffer merely because of an employee’s lack of understanding of Smart Contracts. The presence of this issue is clearly visible in the Cab Service example.

Followed by a lack of awareness and understanding, there is a dearth of smart contract and blockchain talent and capabilities within financial services firms. For example, companies may need to recruit “coder lawyers” – a very rare combination of skills that combines a solid understanding of both law and computer programming.

Organizations need to put in place skills development programs for their existing resources, and some startups have started to provide training support on their platforms, such as Brian Crain, Head of Business Development at Eris Industries, outlines. “Acquiring knowledge and skills is crucial at this stage. We designed training for developers to understand blockchain, smart contracts and how to build enterprise-grade smart contract applications,” he says.

While some concerns are genuine, others tilt towards the negative mindset towards the technology thereby leading to a lack of acceptability of these contracts in the social domain.

Way forward

Having discussed the limitations of effectively implementing Smart Contracts in India, here is how these hurdles could be avoided:

Critically evaluating the needs

The hype around smart contract technology should not cloud the thought processes behind whether smart contracts are needed in the first place. Gideon Greenspan, CEO and Founder of MultiChain, a private blockchain platform, highlights the importance of use case selection and states “Use-cases must be carefully evaluated as many proposed blockchain use-cases can be implemented efficiently via traditional or distributed databases as well”.

“We see clear applications for banks and other financial institutions. Respectively, these are small trading circles, provenance for trade finance, bilateral contract notarization, and the aggregation of AML/KYC data.”

In a business model, it is important to implement Smart Contracts where they are properly structured, well defined and, where business partners can provide identity so that the success of transactions can be easily measured.

Creation of a hybrid model

As mentioned before, the rigid framework of Smart Contracts takes out the discretionary and negotiation power of the parties. However, this can be solved through a hybrid model by way of a confirmation or some sort of consent from the relevant parties before an automated action. This could be similar to permissions that applications in our smartphones undertake before accessing our camera, location, microphone, etc.

Although the execution would not take place in real-time it will ensure party autonomy and the contract can be amended as per the terms as and when mutually agreed. Parties should not be compelled to accept automated decisions without any discretion.

However, it is important to ensure that the role of intermediary does not defeat the purpose of Smart Contracts. The role of intermediaries shall restrict to taking a final call or what parties agree. The idea is to avoid Smart Contracts from taking excessive control which is against the discretion of parties.

A possible solution can be through programming the oracle system on a “may” and “should” coded system. During the execution of the trigger mechanism, “may” would ask for confirmation, and “should” would automatically trigger the execution. Again, the parties must agree beforehand the conditions would fall under each category to avoid ambiguity.

Strategic alliance

It is imperative that businesses can move beyond challenges related to talent and smart contract model innovation by forging strategic partnerships with experts in the space. They need to make an informed decision on partnering with the smart contract startup ecosystem. This can be prominently used in the financial industry where banks and insurers can develop an understanding and strategically align the transaction structure that helps both the parties constructively and strategically.

Further, the government can align its objectives with private entities and collaborate to make the laid-back administrative system more efficient. This would also build trust in the eyes of the community and attract more investors.

Creating a talent pool

Creating a talent pool will solve the problem of lack of awareness about the subject matter. The first step businesses need to undertake is to form an internal team focused to understand the technology, its impact, and areas of usage. Employees can also be sent for external conferences and industry working groups or internal knowledge sessions and Hackathons to gain and exchange relevant knowledge. In foreign countries, some firms even include Smart Contracts and the blockchain industry as part of their strategic investment.

Conclusion

Smart Contracts today can be compared to what the Internet was in the early 1990s. While we have witnessed how the ‘Internet of Information’ has changed our society over the past two decades, we are now entering a phase where Smart Contracts and the blockchain industry may do the same by ushering in a new paradigm comprising ‘Internet of Trust’ and ‘Internet of Efficiency’.

The presence of Smart Contracts can be seen today in maintaining clocks, escrow, ledgers, sensors, death certificates, land registries, maintaining registers, and more so through distributed technologies. Although followed by a lack of legal, structural, and social backing, businesses would need to adapt the Smart Contracts by carefully evaluating the needs, amending the prevalent structural models, strategic alliance for mutual benefits, and creating a talent pool.

However, given the current state of affairs, it is safe to say that the use of Smart Contracts won’t be a smart move.

References

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