The initial term of the agreement was for seven years after which "the contract may be extended in 6-month blocks for a maximum period of 36 months". The agreement was extended by a Change Control Note in September 2010 for 6 months to 31 March 2011, when it was again extended, this time for 2 1/2 years by a further Change Control Note. The Court found that the 2 1/2 year extension was not valid under the terms of the contract, which only allowed for 6 month extension periods. It was accepted by the parties that the implied licence would go no further than the minimum necessary to enable FUL to enter into the services agreement. Whereas FUL did not have any basis to refuse the 6 month extension as this fell within the scope of the agreement, FUL was not obliged to accept a 2 1/2 year extension. The term of the licence was therefore not extended to cover this period as it was out of the scope of the agreement. This meant that FUL needed a new licence to use the software after this date.
- Any licences you have should be express.
- If you wish to validly extend an agreement, make sure that it is extended in accordance with its terms.
You can read the full judgment here.