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CONTRACT CLAUSES: TECHNIQUES FOR ANALYSIS - Part 2

You will remember that in the first post in this series, we looked at a clause from a Software Licence Agreement. Here it is again:

9.3 Licensee's Remedies

In the event of a breach, or alleged breach, of any of the Licensor’s warranties in clause 9.2, Licensee shall promptly notify Licensor and return the Software to Licensor at Licensee’s own expense. Licensee’s sole remedy in such an event shall be that Licensor shall correct the Software so that it operates according to the warranties set out in clause 9.2. Licensee is not entitled to any damages if the Software does not meet the said warranties.”

We started to analyse the clause. You will also remember that we said that dividing the clause up into smaller segments was a good idea. We also asked if you could rewrite the first part of the clause and put it into plain English. Here is our suggestion.

"This clause deals with what you must do if something goes wrong with the software. The clause says that the licensor, who is the owner of the software, has given you some warranties about the software in clause 9.2. Warranties are minor terms of a contract and are a kind of contractual promise that something is true. To warrant that something is true is not as strong as giving a guarantee, because a warranty is a promise usually given with certain exceptions. If the licensor breaks one or more of these warranties, or you claim that the licensor has done so, the clause says that, firstly, you must tell the licensor as soon as possible. You must also send the software back to the licensor and you will have to pay the costs of doing this.”

Now let’s look at the rest of the clause:


“Licensee’s sole remedy in such an event shall be that Licensor shall correct the Software so that it operates according to the warranties set out in clause 9.2. Licensee is not entitled to any damages if the Software does not meet the said warranties.”



We can divide this into two parts and use the same technique as before.


Licensee’s sole remedy in such an event shall be that Licensor shall correct the Software so that it operates according to the warranties set out in clause 9.2.

· Licensee’s

· sole remedy

· in such an event

· shall be

· that Licensor shall

· correct the Software

· so that it operates according to the warranties set out in clause 9.2

LicenseeWe know that the licensee is the person who has been given permission to use the software by the licensor (who owns it);


sole remedy – In this context, ‘sole’ really means ‘only’. A ‘remedy’ is something which is a solution to a problem. There are many ‘legal remedies’; for example, if you suffer an injury which is caused by someone else, you may be awarded money compensation, called ‘damages’, as a legal remedy. So, what is being said here is ‘the only solution or alternative to the problem’.


in such an event’ – This refers back to the situation where the warranties in clause 9.2 have been broken, or the licensee claims that they have been broken. ‘In such an event’ really means ‘if that situation happens’.


shall be. The word ‘shall’ in a contract can create problems. That is because it can mean different things in different contexts. For example, in the following sentence


You shall pay the money by Friday.


the modal verb ‘shall’ really means ‘must’. In other words, it creates an obligation. However, in the following sentence


I shall pay the money by Friday.


‘shall’ really means ‘will’. In other words, it is a statement of intention to do something in the future, and not creating an obligation. Which do you think it is doing here?

that Licensor shall correct the Software’In this section, we can see the word ‘shall’, again. ‘correct the Software’ here probably means to repair the software and put right whatever is wrong with it. In other words, it seems to be ‘repair’ rather than ‘replacement’. What do you think the word ‘shall’ means in the context of this phrase? Do you think it is creating a legal obligation (like ‘must’) or a statement of future intention (like ‘will’)?

so that it operates according to the warranties set out in clause 9.2.’ This part of the sentence says what the Licensor ‘shall’ do; namely, to do what is necessary to make sure the software works (operates) as it is expected to do under the contract

‘to set out’ in this context means ‘to specify expressly’ or ‘to make clear in writing’. For example:


The method of payment is set out in clause 12 of the agreement.’

Exercise:

Now try and explain, in writing, the meaning of this section of the clause to someone who speaks English – but who is not a lawyer. (Try to use the word ‘you’ when you are giving your advice; imagine you are advising your friend). Look at our suggestion and try to follow the same style; in other words, drafting in modern, ‘plain English’. The more you do this, the better you will get.


And, if you want, have a go at the very last section of the clause.


Good luck and see you next time.

© Cambridge Legal English Academy 2020

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