Harbinger UK Ltd v GE Information Services Ltd

Where a contract provides for support and maintenance in perpetuity, the obligation survives termination of the principal agreement unless the contract indicates otherwise. The words impose no fixed time limit. The obligation continues for as long as the relevant unilateral contract survives, including while customers require the services and remain willing to pay for them. Commercial inconvenience or declining demand does not itself justify implying a shorter period. Whether the contract may be terminated on reasonable notice is a separate question. An implication of termination on reasonable notice may be excluded where the language expressly provides for perpetuity.

GE Information Services Ltd entered into a value-added reseller agreement with Atlas Products International Ltd for the supply and licensing of software and associated support and maintenance. Harbinger UK Ltd later became party to the agreement. Harbinger served notice terminating the agreement under clause 3, effective 31 December 1999.

The trial judge held that the support and maintenance obligation in clause 10 survived termination, but continued only for the minimum period required by the related end-user agreements. GE appealed against that time limitation. Harbinger cross-appealed, contending that clause 10 ended with the agreement. The central issues were whether clause 10 survived termination and, if so, the meaning and duration of the obligation to provide support and maintenance “in perpetuity”.

1. Appeal allowed; cross-appeal dismissed. The respondents were ordered to pay the appellants’ costs of the appeal and cross-appeal. Lord Justice Evans gave the judgment, with Lord Justice Potter and Mr Justice Alliott agreeing.
2. The support and maintenance obligations were separate and severable from the software supply obligations. The contractual structure, including the end-user agreements, showed that clause 10 could continue after termination under clause 3. The words in perpetuity were equivalent to an express term that the obligation survived termination.
3. Those words meant that the obligation continued without a contractual time limit. They did not literally require performance for ever, because the unilateral contract would cease to operate when the technology became obsolete and customers no longer required or paid for the services. Until then, the obligation continued.
4. The court rejected both the fixed timetable imposed by the trial judge and the proposed interpretation based on a reasonable period. The fact that continued performance might become uneconomic did not release Harbinger from its undertaking.
5. Whether the surviving contract was terminable on reasonable notice was a separate issue. Staffordshire Health Authority v Staffordshire Waterworks Co. [1978] 1 WLR 1387 was distinguishable because the wording there did not conclusively establish perpetuity. In the present contractual context, “in perpetuity” excluded an implication that Harbinger could terminate on reasonable notice.

• Court of Appeal (Civil Division): Appeal allowed and cross-appeal dismissed. The support and maintenance obligation survived termination without a fixed time limit.
• Queen’s Bench Division, Technology and Construction Court: The trial judge held that the clause 10 obligation survived termination but limited it to the minimum notice period under the end-user agreements.