LITIGIOSUS: FRESHER’S MOOT COURT COMPETITION 2021

MOOT PROPOSITION

Glenmax Beauty Care Ltd., (hereinafter referred to as Glenmax) is a limited liability company
incorporated and duly registered in the city of New Arendale, existing under the laws of
Genovia. It is the leading manufacturers of cosmetics on skincare, best known for its product
“Glowskin”- a skincare cream based on Ceramides as one of its key ingredients. Ceramides is a
natural ingredient which is found only in limited quantities in Genovia and is procured by
Genovia from its neighboring country, Morovia. Post procurement from Morovia, it is further
processed so as to enable its use in the production of Glowskin. Glowskin accounts for a
significant part of the total revenue of Glenmax and is a worldwide bestseller because of its
quality standards and long lasting relief on small wounds.

Glenmax used to produce Ceramides on its own but due to the growing demands of Glowskin, it
decided to focus only on production of finished skincare products and decided to procure
Ceramides from an outside supplier. After one year of thorough research and preliminary
negotiations with many other companies, it decided to purchase Ceramides from Zings
Pharmaceutical Ltd, a company incorporated in Genovia as they met the high quality and
quantity requirements that Glenmax wanted.

The Manufacturing and Supply Agreement (hereinafter referred to as “the Agreement”) between
the two companies concluded in the year 2018. Following the entry into the Agreement, regular
and timely deliveries were made for two consecutive years.

On January 25, 2020 Glenmax made a purchase order for 100 kg of Ceramides to be delivered
before April 10, 2020 which was confirmed by Zings Pharmaceutical the very next day.
Thereafter on March 25, 2020, Zings Pharmaceutical informed Glenmax that owing to the
COVID-19 lockdown measures implemented in the neighboring country Moravia, where
majority of its suppliers were located and the lockdown measures implemented by the Genovian
Government too, it would be difficult for it to procure the raw materials, as the same did not fall
under the category of life saving drugs, an exclusion for procurement granted by the

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governments at the time. They also stated that they are trying their best to procure the raw
materials for Ceramides and will deliver the required quantity as early as possible.

Glenmax replied to Zings Pharmaceuticals and urged that despite the rather unfortunate
development of the situation, it still expected that the quantities under the Purchase Order be
delivered as per the terms of the contract highlighting the importance that the ingredient holds in
their production. The CEO of Glenmax while speaking on the issue with the Head of
Procurement at Zings Pharmaceuticals also suggested that, “Glenmax values its relationship with
Zings Pharmaceuticals and is committed to maintain the same. However, considering that
Ceramides is an ingredient of paramount importance to Glenmax, if need be, it will not shy away
from exploring its options in the market.”

After several mails and requests made by Glenmax, Zings Pharmaceutical agreed to deliver a
portion of purchase order that is 15 kg by April 10, 2020 and promised that the rest will be
delivered very soon as they are trying to negotiate with local suppliers in Genovia itself.

Despite the numerous emails and phone calls that followed, no further deliveries were made.
This forced Glenmax on April 30, 2020 to once again remind that a failure to deliver the
remaining 85 kg Ceramides would result in additional costs, which would be claimed against
Zings Pharmaceutical.

Owing to a lack of reaction from Zings Pharmaceutical and its failure to make new deliveries,
Glenmax resorted to urgently find another supplier for the remaining quantity of Ceramides.
Much needed at that point, the remaining 85 kg was decided to be procured by a third-party
supplier. However, owing to the paucity of time, Glenmax could not subject the new supplier to
the yearlong rigorous assessment which it did with Zings Pharmaceutical. In addition to the risk
such delivery imposed, the price was also much higher than the price agreed with the Zings
Pharmaceutical. Instead of Rs. 10,000 per kg as decided between the parties to the contract,
Glenmax had to pay a price of Rs. 20,000 per kg. Besides notifying Zings Pharmaceutical Ltd of
the purchase by email dated May 25, 2020, Glenmax also served a legal notice of fundamental
breach of contract.

Replying to the notice, Zings Pharmaceutical stated that this impulsive purchase was uncalled for
as they were trying to procure the raw materials at the earliest, also that the lockdown measures

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in Moravia were in the process of being lifted soon and even the local suppliers were starting to
resume deliveries. They also stated that the delay in the delivery did not constitute fundamental
breach of contract as the following situation was unforeseen making the delivery impossible.

Glenmax Beauty Care Ltd. finally filed a suit against Zings Pharmaceutical Ltd. before
Commercial Court, New Arendale without going for the pre-institution Mediation procedure as
incorporated under section 12A of the Commercial Court Act, and claimed damages including
the additional cost of Ceramide that was paid by them.

There is no dispute as to the facts. The participants are free to frame issues and arguments
so as to secure the reliefs sought by their clients.

The relevant laws of Genovia are in pari materia with the laws of the Republic of India.