Lock in period in L and L agreement
5 years ago
Can lock in period clause be used in leave and license agreement?
A.Dear Sir,
The answer is yes.
Shanti Ranjan Behera
Advocate
The answer is yes.
Shanti Ranjan Behera
Advocate
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A.if the lock-in clause in a leave and license agreement states that, in case of breach of the said clause, the licensee is liable to pay the rent for the remaining lock-in period i.e., rent of 33 months, is not really enforceable in a court of law.
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Shreyash Mohta
Responded 5 years ago
A.Yes, a lock in period clause can be inserted and used in leave and licence agreement.
However, it should be noted that. In case of breach of such a clause there will be compensation as allowance. [decided by the court]
Say for example the lock in period is of 5yrs or 60months.
Most of the lock-in clauses in leave and license agreements claim that during the lock-in period the licensor/ licensee cannot terminate the contract and whereas the licensee terminates the contract within the lock-in period (after say 1year of stay), for any reason whatsoever (he has been transferred to another city from his office), he has to pay the rent of the remaining of lock-in period (4 years) to the licensor.
Indian judiciary has clearly held in several cases that such a claim is not valid. The aggrieved party is only entitled to get a compensation/ damages valued by the court itself depending on the actual loss that the party has suffered due to such breach.
Remedies in case of breach of a lock-in clause is same to that of the remedies for any other contractual breach i.e., damages and specific performance of the contract. Damages to be paid in breach of the contract is generally quantified in the agreement itself. Nevertheless in each case it is for the court to decide reasonability of the damages claimed based on evidences advanced during trial. Only reasonable damages is to be awarded by a court for a breach of any contract irrespective of whatever damages amount had been expressly consented upon by both the parties in the agreement.
Your lock in clause should contain the following
1. Period of lock in.
2. Remedy in case of breach.
3. Reasonable notice period time.
Hope this helped
Thanks
Shreyash Mohta
However, it should be noted that. In case of breach of such a clause there will be compensation as allowance. [decided by the court]
Say for example the lock in period is of 5yrs or 60months.
Most of the lock-in clauses in leave and license agreements claim that during the lock-in period the licensor/ licensee cannot terminate the contract and whereas the licensee terminates the contract within the lock-in period (after say 1year of stay), for any reason whatsoever (he has been transferred to another city from his office), he has to pay the rent of the remaining of lock-in period (4 years) to the licensor.
Indian judiciary has clearly held in several cases that such a claim is not valid. The aggrieved party is only entitled to get a compensation/ damages valued by the court itself depending on the actual loss that the party has suffered due to such breach.
Remedies in case of breach of a lock-in clause is same to that of the remedies for any other contractual breach i.e., damages and specific performance of the contract. Damages to be paid in breach of the contract is generally quantified in the agreement itself. Nevertheless in each case it is for the court to decide reasonability of the damages claimed based on evidences advanced during trial. Only reasonable damages is to be awarded by a court for a breach of any contract irrespective of whatever damages amount had been expressly consented upon by both the parties in the agreement.
Your lock in clause should contain the following
1. Period of lock in.
2. Remedy in case of breach.
3. Reasonable notice period time.
Hope this helped
Thanks
Shreyash Mohta
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