Filed under: survival
Down in the general terms of most contracts (sometimes hidden in the termination clause), there is usually a section called “Survival”. No, we’re not talking about an over-baked reality tv-show. Rather, we’re taking about what sections of a contract would survive termination of the agreement. At first blush, this seems pretty counter-intuitive. A contract is either active or inactive – alive or dead, right? Well, sorta’. A contract is, in some cases, a zombie.
Bad B-movies aside, it’s true. There are some sections of a contract that are intended to continue to live long after the rest of the contract is terminated or deactivated. These sections “survive” because they contain obligations that both parties would want to continue – such as confidentiality. This makes a lot of sense, actually. If you and I are going to do a deal and we share some confidential information… then a few months later, the contract ends, chances are we would want the confidentiality obligations to continue (in fact, most companies agree that confidential information should remain confidential for anywhere from 3-7 years post-termination).
Off hand, I can think of three other sections of an agreement that should continue to beat long after the contract’s heart has been stopped. IP indemnification, Limitation of Liability, and some Remedies. These three make sense, as it’s possible to have issues arise which would require the applicability of these sections.
But what about contract language which reads “and any other provision which, in accordance with its terms is intended to survive the agreement”? Sure, it’s good cop-out language when you’re not sure of all of the twists and turns a relationship can have. However, language such as this can create problems if the rest of your contract isn’t carefully worded.
For example, look at your license grant language. Now look at your termination language. I’m not sure of your specific language, but if the license grant is perpetual and the termination language merely terminates the agreement, but not the perpetual license grant… and you have survival language as listed earlier, I think you might have a situation where one party can believe they’re terminating the license and the other believe they’re terminating the agreement (but continue to have a license to the product).
Sure, you can clean this up by changing the survival clause OR the termination clause. Obviously, it’s going to depend upon your situation. I just don’t want to see you in a situation where you’re holed up in a small room, shotgun pen in hand with a barricaded door, praying that your zombie contracts would just go away. 😉