2024 Intra Department Moot Court Competition PDF

INTRA DEPARTMENT MOOT COURT COMPETITION, 2024 MOOT PROPOSITION 1. The Indian government's emphasis on initiatives such as Digital India and AI for All, the country has been fostering a conducive environment for technological advancements, especially in the fiel...

INTRA DEPARTMENT MOOT COURT COMPETITION, 2024 MOOT PROPOSITION 1. The Indian government's emphasis on initiatives such as Digital India and AI for All, the country has been fostering a conducive environment for technological advancements, especially in the fields of Artificial Intelligence (AI) and blockchain technology. These advancements are pivotal for both the legal and corporate sectors, enabling companies to streamline processes and improve efficiency through innovative solutions. 2. Legal AI (Pvt.) Ltd. is positioned as a pioneer in the Indian market for its integration of AI with legal technology on blockchain platforms. By offering solutions that automate and streamline legal drafting processes, Legal AI has become recognized for its specialized services in managing legal documents and contracts through advanced technologies. As the demand for AI in legal operations is on the rise, Legal AI has leveraged blockchain to offer secure, efficient, and reliable solutions, particularly in contract management, compliance, and legal automation. 3. IndiCorp Ltd., on the other hand, is a business consultancy giant known for its unique customer-centric approach to scaling businesses. IndiCorp is based out of Delhi and it has built a reputation for helping clients navigate the complexities of B2B services, focusing on improving operations and enhancing client interactions. Given the scope and scale of IndiCorp’s operations, especially in consultancy services, the company required a highly sophisticated, secure, and efficient system to manage legal contracts with a large consumer base. 4. Legal AI (Pt). Ltd. has established itself as a leader in AI technology, recognized for its groundbreaking solutions that integrated Law and Artificial Intelligence on blockchain technology. Additionally, Legal AI marketed its post-deployment technical support as its unique selling proposition in the competitive market. Their reputation caught the attention of IndiCorp Ltd., which needed a sophisticated overhaul of its contract Page|1  management system. Based out of Delhi, IndiCorp is planning to scale its management consultancy business to greater heights. 5. The scale of IndiCorp’s operations necessitated a robust, efficient, and a secure system capable of managing extensive legal contractual processes between their clients and their customers in B2B services. After thorough deliberation amongst IndiCorp’s management, Legal AI was selected to develop an advanced AI-driven system leveraging Blockchain to automate document execution and enhance contract management. This partnership was celebrated as a transformative venture aimed at revolutionizing corporate governance through cutting-edge technologies. 6. The Director of Legal AI, Mr. Malhotra, and the Director of IndiCorp, Ms. Briganza convened a meeting in Delhi to negotiate for a potential collaboration. Following detailed negotiations, Legal AI and IndiCorp finalized an exclusive agreement delineating their contractual obligations and on 3rd April 2024, Legal AI was tasked with developing and deploying a contract management system that incorporated Smart Contracts on Blockchain to enhance security, transparency, accountability, and efficiency in contract handling. The system was envisioned to facilitate everything from drafting of smart contracts to execution and record-keeping which minimized the manual input and leveraged Artificial Intelligence for its efficiency. 7. In the first 3 months, the onboarding and development phase progressed smoothly; however, as the project advanced, tensions began to surface. IndiCorp started facing issues with Legal AI’s team since they had failed to meet certain critical steps as delineated in their scope of work. Certain shortcomings such as non-performance and alleged negligence, leading to project delays and increased costs. The ongoing delays significantly enhanced IndiCorp’s operational costs, which began to jeopardize their timelines and delivery commitments to their customers. 8. Despite substantial resource investments, the project lingered in a state of uncertainty due to Legal AI's alleged inaction.The financial strain on IndiCorp was exacerbated by Legal AI’s delays, resulting in harm to their reputation as well. Stagnation of IndiCorp’s projects, because of the lack of proper contracts, diminished their market credibility, as they could not demonstrate successful implementation of the system to potential clients. Page|2 9. On 20th July 2024, a global system crash was seen amongst all the major internet- operated businesses owing to the CrowdStrike virus in Microsoft’s servers. Following this, Legal AI’s servers got corrupted, and that stalled the process of enforcement of such contracts on the blockchain technology. However, Legal AI had communicated to all its clients, including IndiCorp, about the server overhaul and that they were committed to their post-deployment services as promised. They assured that they were in a continued process to fix the issue. They explained that such a global outage had led to sustained bugs in the server that required time. 10. As uncertainties mounted due to the unrelenting delays, business restrictions, and rising costs, IndiCorp opted to terminate the contract. Their legal team, initiated proceedings for the rescission of the contract before the Rohini District court in Delhi, citing Legal AI’s breach of contract and unjust enrichment. IndiCorp argued that Legal AI’s inactions had disrupted the proper execution of the contract, leading to financial losses. Furthermore, they pointed to Sections 39 and 73 of the Indian Contract Act, 1872, to address the repercussions of non-performance and the rights to seek compensation for losses. 11. In defense of their actions, Legal AI contended that the delays were not due to negligence but resulted from unforeseen technical challenges inherent in implementing such a large-scale AI system. They asserted that the complexities involved were greater than initially anticipated. Furthermore, Legal AI maintained that such Contracts fulfilled the necessary criteria for valid contracts under Section 10 of the Contract Act. 12. Legal AI argued that Smart Contracts, recognized under the TRAI, were valid due to their compliance with contract formation requirements, and adhered to pre-established business rules for forming business agreements. However, IndiCorp sought compensation for losses incurred due to Legal AI’s delays and alleged non-performance on the part of Legal AI. Citing Section 73 of the Indian Contract Act, 1872, the company asserted that the financial damages, reputational harm, and project delays had led to significant losses. Page|3  13. As both parties held firm in their respective positions, the dispute evolved into a protracted legal battle. Legal AI argued that IndiCorp had restrictive covenants within the contract, which prohibited them from onboarding clients with similar business interests. Legal AI, burdened by business restrictions and financial distress, defended its bona fide intentions to work with IndiCorp and revolutionize the legal contract management technology in India. 14. The Hon’ble Rohini District Court held that the delays and technical challenges encountered by IndiCorp were not a result of Legal AI’s negligence but were a result of unforeseen complexities due to the disruption in Legal AI’s servers owing to the Microsoft CrowdStrike virus outage. The court found that these challenges did not amount to a breach of contract under the Indian Contract Act, 1872 and questioned the validity of such contracts, asserting that while these agreements are innovative, they may not align with the traditional principles of contract. 15. Following this ruling, IndiCorp Ltd., aggrieved by the decision, appealed before the Hon’ble High Court of Delhi, seeking further adjudication on the frustration (Section 56 of ICA,1872) of contracts under such circumstances and compensation for the alleged financial losses. The following issues are in consideration before the Hon’ble Delhi Court: ISSUES 1) Whether the non-performance by Legal AI, as alleged by IndiCorp, constitutes a breach of contract under the Indian Contract Act, 1872? 2) Whether the restrictive covenants imposed by IndiCorp are valid in the context of smart contracts under Indian Contract Act, 1872? 3) Whether the outage resulted in frustration of the contract, or is IndiCorp entitled to compensation for breach of Contract? Note: All characters in the following problem are fictitious and the participants must restrict their arguments to the issues strictly. *** Page|4