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Digital Marketing Company V. Online Apparel brand

Date of Claim raised:15/02/2022
Date of Conciliation: 23/02/2022
Date of Settlement: 16/02/2022
Digest: Mediation/Conciliation/Dispute/Claimant/Respondent/Invoice/Settlement
Case Summary

This was a dispute that came up between a digital marketing company based in Mumbai and a Delhi based online apparel brand. While the digital marketing company (Claimant) was in the business of brand promotions and the online apparel brand ( respondent) was an online startup in the business of selling customised T-shirts online. Being a typical startup the apparel brand needed to have a good online presence and needed the help of the digital marketing company to help them with the same. The digital marketing company was hired to create online properties and to increase website traffic. This was a long-term engagement and was to be a continuous process for a period of one year. The claimant was supposed to raise invoices for all the separate activities and there would be a rolling credit of 15 days for each invoice. The dispute occurred after 3 months of the project when the respondent started delaying payments of invoices raised.

The issue

The respondent, being a startup, was in the market looking for funding and had started the activity based on certain promises of funds coming through. Though they were making good headway in developing an online market for their product, they were not able to secure the first round of funding on time. Though they had the funds to support the operations, they now decided to divert it towards order fulfilment and creation of further stockpiles and ignored the payments to be made to the Claimant. As the digital marketing activities were a constant process, the receivables mounted to a sum of Rs. 5,49,000/-. The claimant approached PrivateCourt to negotiate for a settlement.

The Process

The Negotiator looked through all the documentation and established the credibility of the claim. Once he was satisfied with the accuracy, a discussion with the respondent was initiated. Understanding the issues of fund flow at the respondent's end, the negotiator also explained how the activities conducted by the claimant were important for the online business to continue on the right path. The negotiator also explained that the online property that was built over the past few months would drop in value if the activities were discontinued. Realising the problem at hand, the respondent asked for deferred payment options for the accrued invoices and also promised to pay any new invoices basis the originally agreed terms. The request was run through with the claimant, and a settlement was arrived upon.

Terms of Settlement:

The respondent would settle the accrued invoices in 5 equal parts of Rs. 1,09,800/- paid within the 15th of every calendar month. Failing to do this would prompt an immediate stop to all activities conducted by the claimant and there would be an 18% p.a. penalty charged on all outstanding amounts.

  • The first payment, amounting to Rs. 1,09,800/- on or before 15/03/2022.
  • The second payment, amounting to Rs. 1,09,800/ -on or before 15/04/2022.
  • The third payment, amounting to Rs. 1,09,800/- on or before 15/05/2022.
  • The fourth payment, amounting to Rs. 1,09,800/- on or before 15/06/2022.
  • The fifth payment, amounting to Rs. 1,09,800/- on or before 15/07/2022.
The Inference

Though there was a delay in payment, the negotiator, in this case, was not only able to get the settlement but also ensure that both parties continued their business relationship.