Whose Scope Was It? Deliverables, Acceptance and Ownership in Technology and Design Contracts

R & D Law Chambers LLP Practice is led by Ravish Bhatt  |  Advocate, Bar Council of Gujarat (G/504/2008)  |  Dual-qualified lawyer (India and England and Wales)  |  Solicitor of England and Wales (non-practising), SRA Registration No. 492 477  |  ADIT, Chartered Institute of Taxation, London Published: 4 November 2026  |  Last reviewed: 4 November 2026

 

Written against the Indian Contract Act, 1872, the Specific Relief Act, 1963 and the Arbitration and Conciliation Act, 1996, as in force on 4 November 2026. Indian law only. Examples are generic and are drawn from no identified contract or dispute.

 

In a design or technology contract the dispute is almost never about the technology. It is about a layer of work the contract named for neither party, and about whether the recipient’s silence after delivery amounted to acceptance. Indian law answers the second question against the party asserting acceptance: waiver must be spelled out with crystal clarity, and silence seldom reaches that standard.

Index of Topics

1. What a technology or design contract actually promises
2. The layer the contract forgets, and how the gap opens
3. Design inputs are not the design
4. Did silence amount to acceptance? Waiver under section 63
5. When the recipient’s own inaction blocks performance
6. What travels with the deliverable: native files, tooling and licence keys
7. Can the recipient hold the tooling until it is paid?
8. Recovering the thing itself
9. How these disputes are actually run, and the document that decides them
10. What a technology or design contract actually promises

Three things are commonly promised and routinely confused: know-how, a design capable of being manufactured, and manufacturing documentation. A clause promising complete design and engineering documents settles nothing unless the annexure says which of the three, and to what level of detail.

Know-how is information and method. A manufacturable design is a specified artefact, fixed in geometry and materials. Manufacturing documentation is the drawings, tolerances, bills of material and process instructions a factory needs in order to make the thing. The three are delivered independently and priced differently, and a supplier can discharge the first in full while leaving the recipient unable to manufacture anything.

The promise almost always sits in an annexure, with the clause merely pointing to it, and that allocation is decisive because the express terms govern. In Nabha Power Limited v. Punjab State Power Corporation Limited (Civil Appeal No. 179 of 2017, decided 5 October 2017, [2017] 14 SCR 301, R.F. Nariman and Sanjay Kishan Kaul JJ), the Supreme Court left little room: “The explicit terms of a contract are always the final word with regards to the intention of the parties.” The judgment is in the Supreme Court’s digital reports. List deliverables as artefacts with a file format and a level of detail, not as categories.

2. The layer the contract forgets, and how the gap opens

Design work splits into layers. Where a contract names one or two and is silent on the rest, each side later says the silent layer belonged to the other. The gap is not filled by necessity: a term is implied only on strict necessity, not because the project cannot otherwise be completed.

A machine of any complexity is designed in layers: functional or performance design, electrical design, thermal design, mechanical design of the structural and non-functional parts, assembly and tolerancing, and manufacturing documentation. A contract can name three with precision and leave a fourth unmentioned, and the project will run for months before anyone notices. When it is noticed, the party needing the missing layer argues it must have been the other side’s, because otherwise nothing could be built.

That argument is harder than it looks. Nabha Power applies a five-condition test for implying a term, which the Court called the penta-test: reasonable and equitable, necessary to give business efficacy, so obvious that it goes without saying, capable of clear expression, and not contradictory of any express term. Implication is necessitated only when that test comes into play, and “there has to be a strict necessity for it”. A gap is therefore usually a gap, and it falls where the risk was left. The remedy is a scope-completeness check against the engineering before signature, not after delivery.

3. Design inputs are not the design

A file that enables the recipient to generate a result is not the result. Where a deliverable is defined as a design, supplying the inputs from which that design could be produced is not performance, unless the annexure defines the deliverable as those inputs.

Native model files, parameter sets and material libraries let a recipient re-run an analysis and obtain outputs for itself. Supplying them has real value and is not the same as supplying the computed design. The difference decides two questions at once: whether delivery occurred, and whether the recipient could use what it received. A recipient lacking the software, the licence or the trained personnel to open a native file has received something it cannot read, and whether that is the supplier’s problem turns entirely on what the annexure promised and to whom.

State whether the deliverable is the native file, an exported neutral format, a dimensioned drawing set, or all three, and state who must be able to open it. One sentence requiring deliverables to be readable without proprietary software, or recording instead that the recipient holds the licence, removes the argument.

4. Did silence amount to acceptance? Waiver under section 63

Rarely. Section 63 of the Indian Contract Act, 1872 permits a promisee to dispense with or remit performance, and a right can be waived by conduct. But waiver is an intentional relinquishment of a known right, and the Supreme Court requires it to be spelled out with crystal clarity. Receiving a deliverable without objection seldom suffices.

Section 63 provides that every promisee may dispense with or remit, wholly or in part, the performance of the promise made to him, may extend the time for performance, or may accept instead of it any satisfaction which he thinks fit.

The controlling authority is All India Power Engineer Federation v. Sasan Power Ltd. (Civil Appeal Nos. 5881 to 5882 of 2016, decided 8 December 2016, Kurian Joseph and R.F. Nariman JJ). The Court held that section 63 governs waiver in contract, defined waiver as “an intentional relinquishment of a known right”, and held that “waiver must be spelled out with crystal clarity”. Waiver by conduct is possible, waiver signifying “an intention not to insist upon the right”, but on the facts emails declining to accept a test certificate and provisionally accepting de-rated capacity did not relinquish the right. Where public interest is involved, a waiver will not be given effect against that interest. The judgment is on the Supreme Court’s website.

This cuts both ways. A supplier contending that the recipient accepted by silence, by continuing to perform or by paying the next instalment faces a high bar. A recipient objecting months after delivery is not automatically out of time, though the longer it performed on the footing that delivery was good, the more material there is from which an intention not to insist can be argued. An acceptance clause with an inspection window, a deemed-acceptance consequence and a prescribed route for objection converts the argument from intention into dates.

5. When the recipient’s own inaction blocks performance

Where a supplier cannot proceed without a decision from the recipient, four provisions matter: sections 51, 53, 54 and 67 of the Indian Contract Act, 1872. Section 67 excuses non-performance caused by the promisee’s neglect or refusal to afford reasonable facilities. It does not excuse non-performance at large.

Under section 51, where reciprocal promises are to be simultaneously performed, no promisor need perform unless the promisee is ready and willing to perform his reciprocal promise. Under section 53, where one party prevents the other from performing, the contract becomes voidable at the option of the party so prevented, who may also claim compensation. Under section 54, where a reciprocal promise cannot be claimed until another has been performed and the promisor of that other defaults, the defaulter cannot claim performance of the reciprocal promise. Under section 67, if a promisee neglects or refuses to afford the promisor reasonable facilities for performance, the promisor is excused by that neglect for any non-performance caused by it.

These are the most over-claimed provisions in design disputes. Four limits apply.

• Section 67 is causal. It covers the deliverables the missing decision actually blocked, not the whole scope.
• The facilities must be ones the promisee was obliged or able to afford, and the request must be identifiable. A supplier that never asked has no section 67 case.
• Section 53 makes the contract voidable at the option of the prevented party. Continuing to perform forecloses rescission on that ground while leaving the compensation claim intact.
• Section 54 presupposes an order of performance. Where the contract fixes no sequence, the argument is weaker.

The correspondence is therefore the case. A written request naming the specific input, the deliverable depending on it and the consequence of not having it is worth more than any later reconstruction, and the absence of a reply does the work.

6. What travels with the deliverable: native files, tooling and licence keys

Design work is usually accompanied by things that are not deliverables: a hardware licence token, a seat of software, jigs, fixtures or sample parts. Title does not pass merely because they were handed over for the project, and most contracts say nothing about their return.

Keep three categories apart: deliverables, title to which passes on the agreed terms; the supplier’s own tools, lent or brought to site for the work; and items created for the project but paid for by one party, where ownership must be stated because it will not be obvious.

Where an item is handed over for a purpose with an obligation to return it, the relationship is a bailment. Section 148 of the Indian Contract Act, 1872 defines bailment as the delivery of goods for a purpose, upon a contract that they will, when the purpose is accomplished, be returned or disposed of according to the directions of the person delivering them. Section 160 supplies the obligation: the bailee must return the goods bailed, without demand, as soon as the time has expired or the purpose has been accomplished. Those two words carry weight, because the duty does not wait for a letter. A licence token sits awkwardly here, the token being goods while the licence is a permission from the vendor; in practice the purchaser of the licence retains it and the token is returnable on the bailment analysis unless the contract says otherwise.

7. Can the recipient hold the tooling until it is paid?

Only narrowly. Section 170 of the Indian Contract Act, 1872 gives a bailee a particular lien where it rendered a service involving labour or skill in respect of the goods bailed. Section 171 confines the general lien to named classes of persons. A manufacturer is not among them and needs an express contract.

Section 170 gives the bailee who has, in accordance with the purpose of the bailment, rendered any service involving the exercise of labour or skill in respect of the goods bailed, a right to retain them until it receives due remuneration for that service, in the absence of a contract to the contrary. Two limits are built into those words: the labour or skill must have been exercised on the very goods retained, and the lien secures remuneration for that service and not a general balance. A party holding a licence token on which it did no work, to secure a claim arising from different work, is outside the section.

Section 171 is narrower. Bankers, factors, wharfingers, attorneys of a High Court and policy-brokers may retain goods bailed to them as security for a general balance of account, “but no other persons have a right to retain, as a security for such balance, goods bailed to them, unless there is an express contract to that effect.” A general lien asserted to secure a disputed money claim therefore needs either membership of that closed class or an express contractual lien. Without either it is a position with nothing underneath it, which is worth establishing early because it changes the negotiating picture.

 

	Particular lien, section 170	General lien, section 171
Who may claim it	Any bailee	Bankers, factors, wharfingers, attorneys of a High Court and policy-brokers; anyone else only under an express contract
What it secures	Due remuneration for the service rendered on those goods	A general balance of account
Condition	Service involving labour or skill in respect of the goods bailed, in accordance with the purpose of the bailment	Membership of the named class, or an express contract
Displaced by	A contract to the contrary	A contract to the contrary

 

8. Recovering the thing itself

Sections 7 and 8 of the Specific Relief Act, 1963 allow recovery of specific movable property. Section 8 compels a person in possession who is not the owner to deliver it to the person entitled to immediate possession in four defined cases, and its Explanation supplies a presumption in two of them.

Section 7 allows a person entitled to the possession of specific movable property to recover it in the manner provided by the Code of Civil Procedure, 1908. Section 8 allows a person having possession or control of a particular article of movable property of which he is not the owner to be compelled specifically to deliver it to the person entitled to its immediate possession in four cases: where he holds it as the agent or trustee of the plaintiff; where compensation in money would not afford adequate relief for the loss of the thing claimed; where it would be extremely difficult to ascertain the actual damage caused by its loss; and where possession has been wrongfully transferred from the plaintiff.

The Explanation is the provision’s most useful feature and is regularly overlooked. Where the article is claimed under clause (b) or clause (c), the court shall presume, unless and until the contrary is proved, that money compensation would not afford adequate relief and that the actual damage would be extremely difficult to ascertain. For a unique or bespoke item that presumption does much of the plaintiff’s work.

Forum needs attention. Where an arbitration agreement covers the dispute, interim protection is sought under section 9 of the Arbitration and Conciliation Act, 1996 rather than by suit. That relief is discretionary, and a court may order the item deposited with its registry or a receiver rather than delivered. Where the arbitration has not begun, section 9(2) requires it to commence within ninety days of the order or such further time as the court determines, so the application is a commitment to arbitrate and not a self-contained remedy.

9. How these disputes are actually run, and the document that decides them

The minute of meeting decides more of these disputes than the contract does. Minutes record what each side said about scope, capability and next steps at the time, before positions hardened, and are often the only contemporaneous allocation of the layer the contract left unallocated.

Minutes matter because they are contemporaneous, because they are usually drafted by one side and circulated to the other, and because they record concessions nobody set out to make. Signed, unsigned and unacknowledged minutes are not the same document: one signed on behalf of a party is far stronger than an unsigned draft circulated and never adopted, and an unsigned minute the recipient demonstrably acted on sits between the two.

The minutes and the emails will not line up neatly with the contract, and counsel has to choose which document the case is built on. Building on the minute concedes that the contract did not allocate the layer. Building on the contract requires the annexure to say more than these annexures usually say. Both can be pleaded in the alternative, but as alternatives and not blurred.

Technical literacy is not optional here. Cross-examining on scope requires knowing which layer a deliverable belongs to, what a native file contains that an exported file does not, and which calculations cannot be performed until a bought-out component has been selected. Counsel who cannot do that will accept the other side’s description of what was delivered. Expert evidence has a boundary worth respecting from the outset: an expert can say what a file contains, what a competent engineer could do with it, and whether a performance figure is supported by the calculations produced, but cannot say whose scope the work was. That is construction of the contract.

Frequently Asked Questions

Does a clause promising complete design and engineering documents cover mechanical design?

Not by itself. The phrase takes its content from the annexure listing the deliverables. Where the annexure names some layers of the design and is silent on another, the silence is not cured by the generality of the clause: the express terms govern, and a term is implied only on strict necessity.

If the recipient never objected to a deliverable, has it accepted it?

Usually not. Acceptance by silence is a form of waiver, and waiver under section 63 of the Indian Contract Act, 1872 requires an intentional relinquishment of a known right, spelled out with crystal clarity. Continuing to perform or paying the next instalment is evidence, not conclusion. A deemed-acceptance clause, where there is one, governs instead.

Can a supplier stop work because the other side has not made a decision it needed?

Section 67 of the Indian Contract Act, 1872 excuses non-performance caused by the promisee’s neglect or refusal to afford reasonable facilities. It is causal and specific: it covers the deliverables the missing decision actually blocked, not the whole scope. A supplier that never asked in writing will struggle to rely on it.

Who owns the native CAD or simulation files?

Whatever the contract says, and where it says nothing the question is contested. Separate the deliverable from the supplier’s own working tools and from items created for the project but paid for by one party. Ownership of the file, the right to use it and the right to modify it are three distinct permissions and should be granted separately.

Can the other side keep our licence token or tooling until a disputed invoice is paid?

Only under section 170 of the Indian Contract Act, 1872, where it rendered a service involving labour or skill on those very goods and retains them for remuneration for that service, or under an express contractual lien. Section 171 restricts general liens to bankers, factors, wharfingers, attorneys of a High Court and policy-brokers.

Is the forum for recovering tooling a civil suit or arbitration?

If an arbitration agreement covers the dispute, interim protection is sought under section 9 of the Arbitration and Conciliation Act, 1996 and final relief from the tribunal. Section 9 relief is discretionary, and deposit with the registry or a receiver is a common outcome. Otherwise sections 7 and 8 of the Specific Relief Act, 1963 supply the route.

How R & D Law Chambers Works on These Matters

The firm advises on technology transfer, design and development and engineering contracts, at the drafting stage and in disputes about scope, acceptance and ownership of deliverables, including applications to the Indian courts for interim protection of property and claims before arbitral tribunals in India and abroad.

Work of this kind begins with the annexure rather than the clause, and with the contemporaneous record rather than the pleaded case. Related services and reading:

• Contract drafting
• Terminating a commercial contract and managing the risk
• Essential clauses in an international contract
• Arbitration advisory and dispute resolution
• Dispute resolution and court representation
• IP and IT, for ownership of and licensing in the software and the design itself
• EPC contracts, where the design and the manufacturing documentation sit inside a works contract
• Commercial contracts: the firm’s published analysis

 

This page is general information on Indian law as it stands on the date of publication. It is not legal advice, it does not create a lawyer and client relationship, and it must not be acted on without advice on the facts of the particular case. Statutory provisions, notifications and judgments are cited as at that date and may change.