Home Q&A Forum Can a software subscription agreement be terminated before the end of the agreed term if the software is not functioning as intended?
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Software Development

Software Subscription Agreement

California

Asked on Sep 23, 2024

Can a software subscription agreement be terminated before the end of the agreed term if the software is not functioning as intended?

I entered into a software subscription agreement with a company for their software product, which was supposed to provide certain functionalities for my business. However, after using the software for a while, I have discovered that it is not functioning as intended and is causing significant issues and disruptions in my business operations. I would like to know if I have the right to terminate the agreement before the end of the agreed term based on the software's failure to meet the intended functionalities and if there are any potential legal implications or remedies available to me in this situation.

Answers from 1 Lawyer

Answer

Software Development

California

Answered 602 days ago

Dolan W.

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September 8, 2024

Hello! Under California law, a breach of contract occurs when one party fails to fulfill a legal duty the contract created and causes damages for the defendant. (California Civil Jury Instructions Number 303.) The measure of damages is the amount that will compensate the aggrieved party for all the detriment caused thereby or likely to result therefrom. (Cal. Civ. Code § 3300.) Any contract entered into after January 1, 1986 that does not stipulate the legal rate of interest, the obligation shall bear an interest rate of 10% per year after the breach. (Cal. Civ. Code § 3289.)   This applies regardless of whether the agreement was written or done orally. Typically, the aggrieved party is entitled to be returned to the same position they were in before the breach.  In your case, you said that the subscription agreement doesn't have the functionalities you expected. Because it's not functioning like you intended, and if you have made reasonable efforts to resolve this in good faith, then it is a breach of contract. Because it is a breach, you can suspend your own performance in this case and sue for any actual or consequential financial damages you've suffered. The quicker, informal option is to send a demand for performance. Because this situation is so common, I drafted a template myself to help with this so you know it's legitimate - https://www.contractscounsel.com/t/document-form-checkout/119 You can file a lawsuit in your local court. If you’ve already sent a bunch of letters, then the truth is this is the only way to compel them to do anything. You can also talk to me about drafting a letter, too. Best of luck! Dolan

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