When a term sheet promises more than the licence gives: what to do first
A term sheet is not the licence. When the signed licence grants less than the term sheet described, the licence text controls, not the earlier document. Do not argue the discrepancy on commercial grounds first. Establish which document carries an entire agreement clause and what precedence it sets, before any party performs under the licence.
What actually sets the scope of a licence
The scope a licence can grant is set by the legal architecture of the underlying right, not by what the term sheet promised. For software, the exclusive rights that can be licensed are defined in Directive 2009/24/EC. For a database, the equivalent framework is Directive 96/9/EC. For an EU trade mark, registration and licensing follow Regulation (EU) 2017/1001 (EUTMR). For a European patent with unitary effect, the scope of protection is set under Regulation (EU) No 1257/2012.
None of these frameworks can be enlarged by a term sheet. A negotiator can promise a wider grant than the underlying right supports, but the licence cannot deliver more than the right itself allows.
What changes in practice
If the term sheet described broader rights — wider territory, exclusivity, sub-licensing — and the signed licence narrowed them, the gap is not automatically a breach. It may be a negotiated retreat that both sides accepted, a drafting omission that nobody caught, or a right the licensor never held to begin with. Each of these has a different remedy, and each starts a different clock.
| Document | Typical legal status | What it controls |
|---|---|---|
| Term sheet marked "subject to contract" | Non-binding, indicative | Nothing, once superseded by the signed licence |
| Signed licence with an entire agreement clause | Binding | The full scope of the grant, as written |
| Underlying registration or right | Binding, prior in time | The outer limit of what any licence can grant |
What to do first
- Read the entire agreement clause in the signed licence. A term sheet marked "subject to contract" usually loses independent force once the licence is signed.
- Map every point where the licence grants less than the term sheet: scope, territory, exclusivity, duration, sub-licensing.
- Check whether the licensor's underlying right could ever have supported the term sheet's promise. A right that was never registered, or registered more narrowly, caps what any document can grant.
- Preserve the negotiation record — drafts, redlines, correspondence — before raising the discrepancy. It becomes the evidence for whether the change was intentional or an oversight.
- Notify the counterparty in writing and ask directly whether the narrower grant is intentional. Do this before either side performs further under the licence.
- Hold further payment or performance milestones, if the licence's own terms allow it, until the answer arrives.
Who decides, and how
The forum and the applicable time limit are set by the dispute resolution clause in the signed licence, not by the term sheet. Most licensing agreements route a scope dispute to negotiation first, then to the forum named in the governing law clause. The decision-maker works from the final signed text and the entire agreement clause, not from the earlier term sheet, unless the licence itself is silent on precedence.
If your situation differs
If the mismatch surfaces because the mark itself is under separate attack, that is a parallel procedure, not the same one: A mark is challenged as descriptive trade mark.
If the gap traces back to who owned the right before the licence was signed — a departing employee, a founder, a contractor — the starting point is ownership, not the licence text: When a former employee launches a similar product: what.
If the licensed right sits in a tokenised structure and the term sheet assumed features the contract never built, the relevant situation is a different one: When the contract has no upgrade path in practice.
What this page does not resolve
This page does not decide which document prevails in your dispute — that depends on the governing law and the exact wording of the entire agreement clause, and it varies by contract. It does not calculate a remedy for a narrower grant. It does not replace a clause-by-clause reading of your specific licence against your specific term sheet.
Verified
Checked against: Regulation (EU) 2017/1001 (EUTMR); Directive 2009/24/EC; Directive 96/9/EC; Regulation (EU) No 1257/2012. Last checked: 4 March 2025.
If a public report already names your organisation and you want to know who sees it and why, see If you are named in a report and who.
Related situations
A related mismatch arises before scope is even agreed: When the parties never agreed the territory: what to.
FAQ
What is the first step when a term sheet promises more than the licence gives?
Read the entire agreement clause in the signed licence before raising the discrepancy commercially. If it is present, it usually settles which document controls, and the licence's actual scope becomes the starting point for everything that follows.
Which deadline is already running?
Not one set by the term sheet. The clock that matters comes from the dispute resolution clause and any notice period in the signed licence itself; the term sheet's own timelines expire once it is superseded.
Who decides, and on what evidence?
The forum named in the licence's governing law and dispute resolution clause decides, based on the final signed text, the entire agreement clause, and — where the wording is contested — the negotiation record, including drafts and correspondence.
If the licence you signed does not match what you were promised, the reading takes longer than the argument. We look at both documents together and tell you, in writing, where the licence actually stands.