SAGARICA BRAHMA

2017PGP103
Section 2
Role: MilkSoft

TERM SHEET
Points of agreement:
Both parties agreed that the code developed for Jersey will not be used elsewhere in the
country.
While trying to strike a deal, the two parties representing Jersey and MilkSoft, were at odds
with each other over the following issues:
 Number of employees for support and maintenance activities: Jersey wanted MilkSoft
to commission at least 5 full time software engineers onsite (at Jersey’s premises) for
training and support at no extra cost. MilkSoft was confident that 3 employees would
suffice and demanded that Jersey paid their salaries as well.
 Cost of the Project: Initially Jersey mentioned in the term sheet that it was willing to
pay an amount of 5 crores to MilkSoft for the project-including installation, training
of personnel etc. MilkSoft, considering its experience in the field, found the offer
paltry, and demanded Rs.30 crores for a project of this size. Jersey representatives
said that they were unwilling to pay any amount beyond Rs. 10 Crores. None of the
sides were willing to come to a settlement about this issue.
 Penalty for delays: Instead of a penalty of 1 lakh per day beyond the deadline, Jersey
proposed an incremental penalty structure. For every 2 days that the project would get
delayed, MilkSoft would pay Jersey an additional sum of Rs. 25000 per day. This
penalty would be capped at Rs. 125000 per day.
MilkSoft found the penalty too steep, and no further negotiation could take place.
They reached an impasse and both MilkSoft as well as Jersey felt they were better off
without doing business with each other. They failed to strike a deal and hence, there
was no contract.