The Agreement May Be Extended

The Court finally considered the extension provision of the BSG/CheckVelcity contract and concluded that the parties used the term “renewal” in the sense of an extension of the contract for an additional period, with the same conditions and obligations as a previous contract. The Court of Justice concluded that the concept of “prorogation” should be interpreted uniformly throughout the agreement and found that the second agreement, which required additional services and modified essential conditions of the first, was not a “renewed” agreement and therefore there were no residual costs owed. Lawyers are often accused of using two terms when they do. However, in some cases, it seems useful to distinguish between the extension and the extension of a contract. The outcome of this case would probably have been different from the simple drafting, noting that the underlying contract could be “extended” after the termination date and that the residual tax would have survived the termination of the contract and continued “until the expiry of the customer agreements, as they could have been renewed or extended”. At the expiry of its original contract, BSG sued CheckVelocity, arguing that CheckVelcity`s non-payment of taxes, allegedly due under the survival provision under its previous contract, constituted an infringement. The contract provided that the payment of a transfer contract called “transfer rights” would survive the termination of the contract and would continue “until the expiry of the customer agreements, which could have been renewed.” These were the recommendation fees arising from an agreement between CheckVelocity and a client referred by BSG to CheckVelocity while its contract was in effect. The question was whether an agreement between CheckVelocity and the customer, signed after the expiry of the BSG/CheckVelocity contract, was an extension of the first contract (and therefore subject to royalties) or whether the second was a brand new contract that replaced the first contract. The termination of the contract seems to be a simple proposition.

As a general rule, a contract expires or may be terminated by the parties with or without reason. Often, there is a provision that allows for renewal.