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I live in the UK and use software from a US-based company. I currently pay a software licence fee of $150 every six months. This covers access to support and access to monthly software updates, new features, security and bug fixes.

They are now offering to let customers switch to a new pay monthly license, but there is a clause to the effect that if you should later deactivate your monthly license and take a break of less than two years, they will reactive your license upon request, but you agree to them charging you the backdated fees for all the months you missed.

If the deactivated license is not reactivated within two years, it will be considered cancelled and thus not be possible to reactive it; a brand new licence would be required.

Is it legal to backdate the monthly license fee for the missed payments, even though you have opted to forgo the normal active license benefits whilst your license is dormant?

Peter Mortensen
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Homercles
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2 Answers2

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This is a very common scheme for software support contracts.

You're making an incorrect statement that you're forgoing benefits in the inactive period. The issue is you're receiving the version upgrades during the period the contract was inactive.

For example, you buy the full license in 2020, when version 2020 is current. You do not subscribe to the contract in 2021-2022. When you renew the contract in 2023, you get an upgrade to version 2023, without having to pay for the 2021 and 2022 upgrades like people with a continuous contract have.

Requiring the inactive years be back-paid eliminates this.

A further issue is very similar to insurance: adverse selection. People only buy support contracts when they anticipate a major issue, and let it lapse when they don't. This distorts the cost.

But in general, there's nothing illegal about this scheme.

user71659
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As a rule of thumb, any contract you read and sign is legal.

The major exception is the rule of consideration. That is, both sides should gain something from the contract.

However, that concerns the total contract, not just the renewal clause. Here the total contract clearly benefits both parties.

Private customers have a law protecting them from the most blatant abuses, corporate customers do not.

Also, consider the alternative. They could have just dropped all this "deactivated license" stuff and cancelled the contract from the first unpaid bill. Then you would have to pay the full price to start using the program again.

Instead, from the goodness of their hearts, they allow recent former customers to return at a lower price. Aren't they nice?

Stig Hemmer
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