Concluded commercial contract and interim injunction upheld where essential terms were settled and acted upon.
Where the essential terms of a commercial arrangement were settled through correspondence, a memorandum and acted-upon conduct, the Court treated the arrangement as a concluded and binding contract, finding that later objections and unfinished formalities did not negate consensus ad idem. The defendant's unilateral discontinuance letter was held unsustainable because it attempted to repudiate an already operative arrangement on arbitrary grounds. Interim injunctive protection was justified on the plaintiff's strong prima facie case, the balance of convenience, and the inadequacy of damages for disruption of a long-term commercial relationship.
Issues: (i) Whether the correspondence, memorandum of understanding and acted-upon arrangements between the parties disclosed a concluded and binding contract; (ii) Whether the defendant could lawfully discontinue the arrangement by the letter dated 16 October 1995 and whether the plaintiff was entitled to interim protection against interference with the contract.
Issue (i): Whether the correspondence, memorandum of understanding and acted-upon arrangements between the parties disclosed a concluded and binding contract.
Analysis: The series of letters, approvals, the memorandum dated 5 April 1994 and the draft agreement showed that the parties had agreed on the essential terms and had already acted on them for a substantial period. The Court applied the principle that a contract is complete when the parties have reached agreement on the material terms with certainty, and that intention is to be gathered from outward conduct and objective manifestations rather than from later denials. Continued negotiation on subsidiary matters did not negative consensus ad idem where the core bargain had already been settled and implemented.
Conclusion: A concluded and binding contract existed between the parties, in favour of the plaintiff.
Issue (ii): Whether the defendant could lawfully discontinue the arrangement by the letter dated 16 October 1995 and whether the plaintiff was entitled to interim protection against interference with the contract.
Analysis: The impugned letter was treated as an attempted unilateral termination of an already concluded and acted-upon contract. The Court held that the stated grounds were arbitrary and unsupported by the contemporaneous record, especially because the parties had repeatedly proceeded on the basis of the agreement and the defendant itself had earlier resumed the work. The Court further held that the objection based on Specific Relief Act restrictions was unpersuasive on the facts, because the plaintiff had shown a strong prima facie case, the balance of convenience lay in its favour, and damages would not provide an adequate remedy for disruption of a long-term, mutually dependent commercial arrangement requiring the plaintiff's continued performance in the premises.
Conclusion: The defendant's discontinuance letter was not sustainable, and interim injunctive relief was warranted in favour of the plaintiff.
Final Conclusion: The plaintiff established an enforceable contractual arrangement and a strong entitlement to preserve the status quo pending trial, so the defendant was restrained from acting on the termination letter and from obstructing the plaintiff's functioning under the arrangement.
Ratio Decidendi: Where the essential terms of a commercial arrangement have been finally settled and the parties have acted upon them, a later attempt to repudiate the arrangement on the ground of unfinished formalities or subjective dissatisfaction will not defeat a concluded contract, and interim injunction may issue if damages are not an adequate remedy and the balance of convenience supports preservation of the contractual status quo.
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AI Drafter ✕
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