Where an international SaaS agreement is entered into between a non-UK SaaS customer and a non-UK company of a SaaS supplier the parties should ensure that the SaaS agreement has been properly executed in accordance with the law of the country of incorporation of each company. Even where the SaaS agreement is governed by English law, failure to properly authorise or execute the SaaS agreement in accordance with the local law of each party could result in the SaaS agreement not being binding.
Integral Petroleum SA v SCU – Finanz
Two Swiss companies entered into a supply agreement that was governed by English law. The customer sued the supplier for breach of contract in the English courts and lost because the contract was never validly signed by the supplier in accordance with Swiss law requirements. The UK courts determined that the contract was not legally binding.
The Swiss commercial register stated that the supplier could only enter into a binding contract if two representatives of the supplier company signed the contract together. As only one representative signed the contract he had no authority to bind the supplier and the contract was held to not be legally binding. The customer therefore had no claim for breach of contract, as there was no binding contract.
Overseas Companies Regulations 2009
Regulation 4 of the Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009 sets out the requirements for the execution of documents by overseas companies under English law.
An overseas company will have validly executed a SaaS agreement if:
- it has done so in a manner provided for in the regulation i.e. the SaaS agreement is signed by a representative acting under the company’s authority, in accordance with the company’s law of incorporation.
Law of Country of Incorporation
In light of the above, the English courts have clarified that where two non-UK SaaS companies sign a SaaS agreement governed by English law, the law that governs the validity of the execution of the SaaS agreement will depend upon where the companies are incorporated. In the above case as both companies were incorporated in Switzerland, Swiss law applied to the validity of the execution of the SaaS agreement.
Where a SaaS supplier is dealing with an overseas company, the SaaS supplier should not assume that the execution formalities are the same as in English law, even if the SaaS agreement is governed by English law. The SaaS supplier should check that whoever is signing the SaaS agreement on behalf of the SaaS customer is actually authorised to sign and where possible, seek local advice or a legal opinion for the country or countries in which the parties are located.
Irene Bodle is an IT lawyer specialising in SaaS agreements with over 10 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:
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