Searching Case Laws & Precedent on Legal Query.....!
Analysing the retrieved Case Laws
Scanned Judgements…!
Searching Case Laws & Precedent on Legal Query.....!
Analysing the retrieved Case Laws
Scanned Judgements…!
Post-Expiration Sponsorship Continuity Clause - The sources indicate that sponsorship agreements often include clauses allowing the sponsorship to be continued beyond the initial term, subject to certain conditions. For example, Initially, the contract was for three years which was also continued for subsequent years ["INDHC010199972013"], and as provided under Clause 9(b) of the agreement... the same has been continued ["INDHC010199972013"]. These clauses typically specify that upon expiry, the agreement may be renewed or extended, often requiring formal notice or mutual consent.
Clause for Mandatory Continuation with Same Sponsor - While explicit language for compulsory continuation is not directly cited, the recurring theme is that agreements tend to favor renewal or continuation with the same sponsor unless explicitly terminated. For instance, the expiration of the said term of 20 years this lease will be automatically and without... ["IFCI Limited VS Sutanau Sinha RP - National Company Law Appellate Tribunal"], suggests automatic renewal clauses or extensions, which can be adapted to sponsorship contexts.
Clause for Disclosure of Third-Party Offers - Several sources mention clauses related to third-party offers or sales. For example, if an offer came in from the third party buyer to the Plaintiff before 30-9-2023, the Plaintiff was obliged to notify and give the Defendant the right of first refusal ["LOW WEE HENG vs MY US FOOD SDN BHD - High Court"], and the MSEB shall facilitate such third-party sale and enter into an Energy Wheeling Agreement ["APTEL_APPEAL_NOS_2_OF_2008_AND_95_OF_2008"]. These clauses emphasize the importance of transparency and notification regarding third-party offers, often including a right of first refusal for the existing sponsor or party.
Analysis and Conclusion - The collected references suggest that sponsorship agreements may include clauses for automatic renewal or extension post-expiration, often favoring continuation with the same sponsor unless explicitly terminated. Additionally, provisions requiring the disclosure of third-party offers are common, ensuring the current sponsor or stakeholder is informed and possibly retains the right of first refusal. Therefore, a well-drafted sponsorship agreement should explicitly state: (1) the obligation to continue sponsorship automatically or upon renewal, (2) that continuation is mandatory unless specific grounds for termination are met, and (3) a clause mandating the disclosure of third-party offers to enable the sponsor to exercise a right of first refusal or to be informed of such offers.
References:- ["INDHC010199972013"]- ["M/S. IFCI LIMITED vs SUTANU SINHA & ORS. - Supreme Court"]- ["IFCI Limited VS Sutanu Sinha - Supreme Court"]- ["Sundaram Finance Services Ltd VS Grand trust Finance Limited - Madras"]- ["LOW WEE HENG vs MY US FOOD SDN BHD - High Court"]- ["APTEL_APPEAL_NOS_2_OF_2008_AND_95_OF_2008"]- ["IFCI Limited VS Sutanau Sinha RP - National Company Law Appellate Tribunal"]
In the competitive world of events, sports, and branding, sponsorship agreements are vital for businesses. But what happens when the contract expires? Can it include clauses that compulsorily continue the relationship with the same sponsor or require disclosure of third-party offers? These provisions, often called renewal or right-of-first-refusal (ROFR) clauses, aim to protect the sponsor's investment. This post dives into the legality of such clauses, drawing from key Indian court judgments.
We'll examine: a sponsorship agreement after the expiration with a clause to be compulsorily continued with the same sponsor and also a clause to know the details of a third party offer. Note: This is general information based on precedents and not specific legal advice. Consult a lawyer for your situation.
Courts generally uphold sponsorship agreements that extend beyond the original expiry date through clauses mandating continuation with the same sponsor and provisions for accessing third-party offers. These are permissible if clearly incorporated, mutually agreed, and not against public policy or law. S. K. Gupta VS K. P. Jain - 1979 0 Supreme(SC) 83
Key points include:- Contractual renewal or continuation post-expiry is recognized. S. K. Gupta VS K. P. Jain - 1979 0 Supreme(SC) 83- Mandatory same-sponsor clauses are valid if explicit and purposeful. Hero Motocorp Ltd. VS Commissioner of Service Tax, Delhi - Custom Excise And Service Tax Appellate Tribunal (2013)- Rights to know or match third-party offers are acceptable if in the original agreement. Percept D Mark (India) Pvt. LTD. VS Zaheer Khan - 2006 3 Supreme 186
Sponsorship deals often span events like sports or corporate promotions. Post-expiry clauses ensure stability for the sponsor. In S. K. Gupta VS K. P. Jain - 1979 0 Supreme(SC) 83, the court affirmed: The scheme is between the company and its creditors or any class of them, and not between the sponsor of the scheme and the creditor or member. The scheme represents a contract sanctioned by court approval... it is not possible to accept the submission that as a modification one sponsor of a scheme cannot be substituted for another.
This highlights enforceability of continuity, subject to bona fides. Similarly, Hero Motocorp Ltd. VS Commissioner of Service Tax, Delhi - Custom Excise And Service Tax Appellate Tribunal (2013) clarified sponsorship scope: The agreement in issue (between GMR and the appellant) clearly constitutes sponsorship. Though tax-related, it supports broad clauses like renewals within legal bounds.
Other cases reinforce this. In Sundaram Finance Services Ltd. VS Grandtrust Finance Limited - 2002 Supreme(Mad) 518, a sponsorship agreement dated 1.9.95 explicitly named the sponsor for equity shares, showing initial clauses can bind continuations. The court examined subsequent conduct to gauge intent, distinguishing civil from criminal breaches in commercial deals.
A common safeguard is the ROFR: the sponsor gets first dibs on renewing by matching rival bids. Percept D Mark (India) Pvt. LTD. VS Zaheer Khan - 2006 3 Supreme 186 upheld this: if one party seeks a new agent, they must offer the existing one a chance to match. The court noted: Respondent, by his letter dated 23.09.2003, did not deny his representation to the fact and the effect that he did not intend to appoint any agent for managing his media affairs, however, clarified that he intended to perform the subsisting agreement which had been entered into between the appellant and him and third parties which would continue beyond the terms of the said agreement.
This validates disclosure requirements. In Fly Ash Movers (India) Pvt. Ltd. , Rep. By its Zonal Head Uttam Banerjee VS General Manager (C&M) NTPC Tamil Nadu Energy Company Ltd. , Vallur Thermal Power Project Vellivoyal Chavadi Post, Ponneri Taluk Chennai - 2019 Supreme(Mad) 1055, a contract allowed offering extra quantities to third parties only after fulfilling obligations with the primary party, emphasizing no preemptive rights without performance.
Lease and other contracts provide analogies. Indian Oil Corporation Ltd. , rep. by its Chief Divisional Manager VS Indian Institute of Engineering Technology, rep. by its secretary - 2012 Supreme(Mad) 1819 invalidated a vague renewal clause lacking mutuality: there is no mutuality in the said clause and there was no consensus ad idem. Clarity is key—ambiguous terms fail.
In Electrical Executive Engineer vs Bihar State Electricity Board Patna, a contract continued beyond three years per Clause 9, but liabilities ended on termination, underscoring explicit terms. Sponsorship-specific: Box 55 Sociedad Limitada & Ors vs Drive M7 Sdn Bhd detailed Clause 2: Sponsor shall be a sponsor of team only for MotoGP Open Class during the term and receive each of the sponsor benefits as set forth on Exhibit 1 hereto.
Financial contexts like Indian Renewable Energy Development Agency Limited vs Waaree Energies Limited - 2024 Supreme(Online)(NCLAT) 1471 stress contract terms for obligations, akin to sponsorship liabilities. Maa Bhagwati Construction VS State of Chhattisgarh, Through Principal Secretary, Public Works Department - 2021 Supreme(Chh) 248 mandated work continuation despite arbitration, mirroring post-expiry duties.
Limitations appear in Nusli Neville Wadia VS Ferani Hotels Private Limited - 2012 Supreme(Bom) 1314, where development agreements scrutinized fraud and third-party sales, stressing no prohibition unless explicit. Consumer cases like Amita Agarwal VS District Consumer Protection Forum - 2019 Supreme(All) 333 caution against binding third parties unduly.
For enforceability:- Clauses must be explicit, unambiguous, and agreed. S. K. Gupta VS K. P. Jain - 1979 0 Supreme(SC) 83- No violation of anti-trust, perpetuity rules, or public policy. Indian Oil Corporation Ltd. , rep. by its Chief Divisional Manager VS Indian Institute of Engineering Technology, rep. by its secretary - 2012 Supreme(Mad) 1819- Consider intent via conduct. Sundaram Finance Services Ltd. VS Grandtrust Finance Limited - 2002 Supreme(Mad) 518
Exceptions:- Excessive competition restraints invalidate. - Vague terms on offers or renewals challengeable.- Unconscionable restraints fail.
In Davu Gopal Lunani VS Siva Gopal Lunani - 2013 Supreme(AP) 1098, legitimacy declarations showed third-party rights need clear basis, paralleling sponsor protections.
To strengthen agreements:- Explicitly state post-expiry auto-renewal or continuation terms.- Detail ROFR: notice of third-party offers, matching period, details required.- Ensure transparency and mutual consent.- Review for statutory compliance (e.g., Competition Act).- Include dispute resolution like arbitration. Maa Bhagwati Construction VS State of Chhattisgarh, Through Principal Secretary, Public Works Department - 2021 Supreme(Chh) 248
Businesses should audit clauses pre-signing. In events like MotoGP Box 55 Sociedad Limitada & Ors vs Drive M7 Sdn Bhd, specific benefits tie to sponsorship continuity.
Sponsorship agreements may validly include post-expiration continuation with the same sponsor and third-party offer disclosure clauses, if properly drafted. Courts prioritize clarity and fairness, as seen in Percept D Mark (India) Pvt. LTD. VS Zaheer Khan - 2006 3 Supreme 186, Hero Motocorp Ltd. VS Commissioner of Service Tax, Delhi - Custom Excise And Service Tax Appellate Tribunal (2013), and S. K. Gupta VS K. P. Jain - 1979 0 Supreme(SC) 83.
Key Takeaways:- Draft precisely: Avoid vagueness to prevent challenges. Indian Oil Corporation Ltd. , rep. by its Chief Divisional Manager VS Indian Institute of Engineering Technology, rep. by its secretary - 2012 Supreme(Mad) 1819- Protect via ROFR: Match rights enhance security. Percept D Mark (India) Pvt. LTD. VS Zaheer Khan - 2006 3 Supreme 186- Mind limitations: No anti-competitive overreach.- Seek advice: Tailor to your deal.
Stay informed on evolving precedents. For brands and events, these clauses safeguard partnerships beyond expiry.
References:1. Percept D Mark (India) Pvt. LTD. VS Zaheer Khan - 2006 3 Supreme 1862. Hero Motocorp Ltd. VS Commissioner of Service Tax, Delhi - Custom Excise And Service Tax Appellate Tribunal (2013)3. S. K. Gupta VS K. P. Jain - 1979 0 Supreme(SC) 834. Others integrated above.
This post draws from public judgments for educational purposes. Laws vary; professional counsel essential.
#SponsorshipContracts, #ContractLaw, #BusinessAgreements
In terms of the aforesaid agreement, there was a “put option” and thus, in the event of default on part of ICTL during the window period, these CCDs could be sold to a third party but the principal obligation of IVRCL continued to be in place. ... The debt assigned was of a lower rate, repurchased by a third party. However, these are commercial decisions of the respective parties. The obligations were of the sponsoring company and IVRCL in terms of #HL_S....
In terms of the aforesaid agreement, there was a “put option” and thus, in the event of default on part of ICTL during the window period, these CCDs could be sold to a third party but the principal obligation of IVRCL continued to be in place. ... The liability is of the sponsor company for making coupon payments and not of the SPV/ICTL. Further, under Clause 2.8, the buy back is also an arrangement inter se the Sponsor company and IFCI. The conversi....
... (c) It is also understood that the first and the third accused entered into a Sponsorship Agreement on 1.9.95 and the very first clause in the Sponsorship Agreement dated 1.9.95 provides that the first accused shall be the Sponsor and shall arrange to offer the Equity Shares for ... ... (d) In continuance to the above stated agreement, the first accused and the third accused as one party and the complainant al....
... (c) It is also understood that the first and the third accused entered into a Sponsorship Agreement on 1.9.95 and the very first clause in the Sponsorship Agreement dated 1.9.95 provides that the first accused shall be the Sponsor and shall arrange to offer the Equity Shares for ... ... (d) In continuance to the above stated agreement, the first accused and the third accused as one party and the complainant al....
It is also stated that there is no mutuality in the said clause and there was no consensus ad idem on the monthly rent to be paid between the parties and therefore that clause in the agreement is not valid in the eye of law. ... It also appears from Ex.A9 the reply given by the plaintiffs to the defendant dated 29.01.1998 that though there is a clause in the lease agreement, that clause is neither valid nor enforceable in law and only offends the rul....
The DSA Agreement also clarifies that it is the ‘Sponsor’ and not the ‘Corporate Debtor’ who is liable to pay Coupon interest on the CCD. ... The Applicant by exercising this option agreed to buy back Rs. 12.5 Crore CCDs any time between the end of the 3rd year and the 6th year from the date of issue of CCDs and in the event of default on behalf of ICTL, the Applicant would be at liberty to sell the CCDs to a third party. ... The perusal of the record also shows that the Concession....
as provided under Clause 9 (b) of the agreement. ... , but, the same has been continued. ... It appears that as per Clause 9(a ) of the said agreement, if, any party ... Initially, the contract was for three years which was also continued for subsequent years. ... comes to an end all the liabilities under the agreement also comes to an end.
The liability is of the sponsor company for making coupon payments and not of the SPV/ICTL. Further, under clause 2.8, the buy-back is also an arrangement inter se the sponsor company and IFCI. The conversion into equity takes place as per clause 2.9 and the put option as per clause 2.11. ... The copy of the Debenture Subscription Agreement (“DSA”) dated 16.10.2012, Shares Pledge Agreement and Promissory Notes were also relied by Re....
In fact, look at this agreement, Clause 2 at page 1, Clause 2 which is headed, ‘Sponsorship of Team’. It says ‘Sponsor shall be a sponsor of team only for MotoGP Open Class during the term and receive each of the sponsor benefits as set forth on Exhibit 1 hereto.’ Now look at Exhibit 1. ... [58]Drive M7 Sdn Bhd also sponsors MOTO 3 races. The Third Plaintiffs went to see organizer of MOTO 3 with intent to malign the reputation of Defendant as a #HL_....
Clause 6.1 of Supplemental Agreement No. 1 is however a term between the Plaintiff and the Vendor, and the Defendant is not a party. There is no privity of contract. In any case, even if the Vendor could have declared a breach of contract in 1997, it did not do so. 19. ... The Sale and Purchase Agreement also provided that if the Purchaser fails to comply with any of the terms of this Agreement, the Vendor shall give Purchaser not less than fourteen (14) days Notice in writing by Reg....
A reference to Arbitration Tribunal shall be no ground for not continuing the work on the part of the Contractor. Payment as per original terms and condition of the agreement shall be continued by the Executive Engineer in accordance with clause 8 above.
Moreover, even under clause 1.6, there is a sub-clause to state that, “if still extra ash is available for distribution, NTPC reserves the right to offer the same to any third party”. Whatever extra quantity is available means, the quantity produced by the NTPC minus the quantity lifted by Fly Ash Movers which is nothing but extra quantity and those extra quantity of ash can very well be offered to any third party, even under Clause 1.6 of the LoA, since the Fly Ash Movers never reached the contracted quantity at any point of time.
In the present case the trader who died was registered with the Trade Tax Department and the Insurance Company had provided insurance, covered under a Group Insurance Scheme, the benefit of which was extended to all traders who were registered with the Trade Tax Department. Merely by inclusion of the word "Beema Payment" in Clause 17 of the Agreement, the interpretation of the same cannot be enlarged to bind a third party or a beneficiary also.
The most crucial clause, for our inquiry is clause (e), which sets out that a suit or proceeding for a declaration as to the legitimacy of any person. This clause obviously deals with a third party to a matrimonial relationship and that third party should be obviously the offspring of persons having a matrimonial relationship. In spite of the obvious, if a person is desirous of securing a declaration of one’s legitimacy (his or her’s), then he can seek a declaration of his legitimacy. This raises the fundamental question as to who can be declared as a legitimate child.
It has been urged that the essence of the development agreement, especially under clause 8(a), was that the administrator would receive 12% of the gross consideration on all sales. Learned Senior Counsel submitted that Ferani has made full disclosures of all transactions and in the absence of any misrepresentation, the allegation of fraud is misconceived. On behalf of Ferani, it was sought to be urged by learned Senior Counsel that:- (i) Clause 8(a) of the agreement does not prohibit a sale to a sister concern; and (ii) So long as the party with whom a transaction was entered into ....
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
