Fujitsu Services Ltd v Electronic Data Systems Ltd

Where interconnected commercial agreements govern software licensing and system service, they must be construed together. An earlier umbrella agreement does not automatically override later agreements dealing specifically with business continuity services. Clear definitions may bring equipment within a business continuity regime even where the equipment was supplied under the earlier agreement. Commercial background may support that construction, but it cannot justify rewriting clear contractual terms merely because the bargain appears commercially unattractive. Where the express contractual regime governs the charges, there is no scope for inconsistent implied terms or recovery on a quantum meruit.

Fujitsu supplied EDS with mainframe systems used for business continuity and sought additional software licensing and system service charges. The dispute concerned two systems, BCE 011 and BCE 012, and a further system, DCI 165.

The parties had entered into EDS 100 and later agreements, including EDS 200 concerning business continuity software licensing and EDS 400 concerning system service. Fujitsu contended that EDS 100 governed the disputed charges, or alternatively relied on an implied term and quantum meruit. EDS argued that the later agreements applied and that no additional sums were due.

The central issues were the incorporation and interaction of the contractual terms and the effect of the definitions of the Business Continuity Estate in the later agreements.

1. Incorporation of EDS 100. The quotation for BCE 011 and BCE 012 expressly subjected the supply to the terms and conditions of EDS 100. That incorporation was not limited to equipment terms. The purchase, software licensing and system service provisions were interconnected and applied to the systems initially.
2. Effect of the March 2005 agreements. EDS 200 and EDS 400 were to be construed with the related agreements and amendments. EDS 100 was not an overarching agreement which displaced the later specific arrangements. The definitions of “Business Continuity” and “Business Continuity Estate” were wide enough to include BCE 011 and BCE 012, notwithstanding that they had been supplied under EDS 100. EDS 200 therefore governed software licensing for business continuity purposes, and EDS 400 governed the related system service.
3. The absence of a charge for the first period in the EDS 200 table meant that no software licensing payment was due for 1 April 2005 to 14 March 2006. For 15 March 2006 to 14 March 2007, the contractual software charge was £648,684, subject to the guaranteed MIPS provision. The corresponding system service charge under EDS 400 was £569,167.
4. The same reasoning applied to DCI 165. Although it had previously been treated as part of the Live Estate, it fell within the Business Continuity Estate for 2006/2007 and was governed by EDS 200 and EDS 400.
5. There was no scope for the proposed implied terms because they would contradict the express contractual regime. A contractual charging regime also excluded recovery on a quantum meruit.

Fujitsu’s claim for additional charges was dismissed.

Not stated in the judgment.