"Touchstone: A basalt or slate rock used for assaying precious metals. Before accurate analysis was possible gold and silver was struck against the touchstone to test for quality against a known standard."

When does perpetual not mean forever?

March 19th, 2010

Apparently when it means “of indefinite duration, but subject to any contractual provisions governing termination” according to Mr Justice Sales in a High Court Chancery Division decision last week.  The parties to a software licence varied the agreement to make it “perpetual” but did not refer to the termination provisions (and did not say whether they still applied or not) so the Judge looked at the entire agreement and came to the conclusion that if they had wanted to exclude the original termination provisions they would have said so expressly.  So do you need to look at all your software licences and other intellectual property grants to find out what the expression of that term means in the context of your contracts?  Er, well, yes.  Each contract will be interpreted against the nuances of its own drafting.  Perpetual is not a term of art and its legal meaning might not be the one you can view in your dictionary.

The case is also a good example of contract variations being examined at a much later date and sloppy drafting coming back to haunt the parties.  It is often the case, where the parties fail to state the precedence of conflicting clauses or vary the contract but don’t delete the entire original clause by the variation, that changes or conflicts can give an entirely different complexion to the arrangement.

Before you take the step to vary or terminate a contractual arrangement relating to software or intellectual property of any nature then it would be wise to consult your specialit IT/IP lawyer to ensure that any changes are made in your favour.  If you want to know more about this specific case BMS Computer Solutions Ltd v AB Agri Ltd [2010] EWHC 464 (Ch) and how it could affect your business give us a ring on 07787 283749 or contact us by email sarah@touchstonels.com.

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