Materially, it seems to be on four points in particular that the assessments from the Court of Appeal differ from the District Court's, namely (1) the so-called "July Agreement", (2) the pause in the project, (3) FK's procedure for terminating of the contract and (4) the issue of delay as basis for termination.
(1) "July Agreement":
Infor stated that in July 2015 that an agreement was reached that with FK that waived the liquidated damages. Following a review of submitted e-mail correspondence between the parties in the days subsequent to FK's notice of delay on 6 July 2015, the Court of Appeal concludes that on 17 July 2015 the parties agreed that (1) a new delivery date for M3 should be established, and that (2) the delivery date of 30 June 2015 no longer applied, and that (3) no liquidated damages were incurred.
This is in sharp contrast to the District Court's reasoning, in which it arrives at the following conclusion (p. 14): "The court finds after this that no "July agreement" was entered into that is of decisive importance for the assessment of Infor's breach." The District Court's position significantly informs its assessment of the issue of actual delay, see below.
(2) The pause in the project:
In the assessment of the Court of Appeal, exercising the pause in itself did not constitute a material breach by Infor. The court believes that there are circumstances in the case that imply a "stricter threshold for termination", and it refers to an expert witness who stated that pausing a project which is out of control is a "relatively common and recognised approach". The court further emphasizes that during the period of the pause, Infor performed re-planning work amounting to approximately 7,000 hours. On this basis, the court finds that Infor was not in violation of SSA-T section 12.3 which states that "The Contractor shall not suspend any performance as the result of breach of contract on the part of the Customer, unless the breach is material and the Customer has acknowledged the breach of contract in writing or the breach of contract has been established through one of the dispute resolution mechanisms in Chapter 16."
Secondly, the Court of Appeal also finds no evidence that Infor used the pause as a way of forcing FK into accepting new commercial terms, or that Infor would halt the project if FK would not pay more than what came with the contract. The Court of Appeal relies on written statements from Infor's lawyer that changing commercial terms was not a requirement to continue the project activities. The Court of Appeal also writes that such an action would be unwise from a strategic perspective – the project would be a reference project for Infor in the Nordic market.
In the view of the District Court, however, it is clear that the criteria in SSA-T section 12.3 were not met: "It is clear that the conditions for any retention on the part of Infor were not met, either materially due to material breach, or formal with written acknowledgment, and the court does not go into further detail, beyond noting that the provision strengthens the court's perception of Infor's breach and the severity thereto. The fact that Infor, in the event of a halt, misjudged its legal position with regard to the justification of the suspension, is something of which Infor itself must bear the risk. Based on the above, since Infor's breach was at least grossly negligent, the limitation of liability of the Agreement also lapses, cf. chapter 11 of the contract, section 11.5.6 last paragraph [...]"
The District Court does not dwell on the reasons for Infor's request for the halt, stating that "regardless of [...] the reason for the project pause, the court finds that it did not have legal basis in the contract or in any other agreement or understanding between the parties."
(3) FK's procedure for terminating the contract:
In the opinion of the Court of Appeal, FK's termination was not in accordance with the contract on several points. SSA-T section 11.5.4 stipulates that "If there is a material breach of contract, the Customer may, after giving the Contractor written notice and a reasonable deadline for remedying the situation, terminate the Agreement, in full or in part, for breach with immediate effect."
FK's notice of termination of 18 December 2015 contained a statement that the termination would occur automatically and without further declaration if specified "conditions" were not fulfilled within the deadline. In the opinion of the Court of Appeal, that termination should occur automatically is not in accordance with the contractual provision: FK had to reassess whether the termination criteria were met after the deadline had expired.
FK's e-mail of 31 December 2015 proposed to postpone the termination until 18 January 2016, though conditional on the implementation of an intensive work period and an outcome that FK accepted. The Court of Appeal comments that since the point of the joint working period was precisely to consider the basis for the further process, FK should have made it clear if it expected Infor to immediately resume the project activities. The Court of Appeal therefore assumed that the requirement in the notice of termination of 18 December to resume the project activities was no longer effective, and that such a claim had to be notified again with a new deadline, in order to provide a basis for the termination of the contract. In other words, the Court of Appeal points out that including such "conditional requirements" are not in accordance with the contract. Nor would there have been a "material breach" if Infor had not met FK's requirement for the implementation of the intensive work period. The Court of Appeal concludes the review by stating that FK's termination on 3 February 2016 on the basis of the project pause was without merit.
As mentioned above, the Court of Appeal also concluded that even if the pause had been a valid reason for termination, FK would have to have issued a new notice of termination anyway, referring to the pause.
For its part, the District Court did not enter into a specific assessment of whether FK's approach to the termination was in accordance with SSA-T section 11.5.4.
(4) The question of delay as a basis for termination:
As for the question of whether there was an actual delay, the Court of Appeal points out that a set delivery date must be exceeded in order for actual delay to exist. As mentioned above, the court assumes that the parties agreed to postpone the delivery date of the M3 (cf. the "July Agreement"), but without determining any new delivery date. Thus, there was no actual delay with respect to the M3 that gave FK the right to terminate.
In addition, presupposing that there was an actual delay of M3 starting 30 June 2015, FK had maintained the contract after the maximum liquidated damages period had expired (approximately 8 October 2015), and had thus, in the opinion of the Court of Appeal, missed the chance to terminate due to the actual delay.
As regards the "anticipated" delay, the Court of Appeal said Infor had announced a 10-12 month delay as early as on 10 December 2015, and that FK nevertheless demanded the recommencement of project activities. The Court of Appeal concluded that there was no anticipated delay as a basis for termination of the contract.
On this background, the Court of Appeal does not go into further detail on the question of whether actual and anticipated delay were included in the termination basis.
The District Court on the other hand places little or no emphasis on the"July Agreement"and writes (p. 9) that "It is the delivery of Milestone 3, M3 that, at the court's discretion, is crucial in the discussion of delay. [...] It is uncontested that the delivery of the M3 was delayed. It is also clear that Felleskjøpet never accepted the delivery of the M3. [...] A new agreed delivery date was not agreed and a delivery of the M3 was never accepted." The District Court also states that (p. 7): "Based on a general interpretation of the wording of the termination declaration, the court finds, solely based on the termination declaration, that the termination was based on the project's overall delay, with the unilateral pause as a triggering factor."