Part of setting up a sound company infrastructure is protecting your liabilities. While you probably have every intention to run an ethical business, you don’t want to leave yourself unintentionally legally exposed. A software license agreement is key for enterprises that provide software to their customers. To help you craft yours, we’ve provided a sample list of provisions commonly found in software license agreements.
Typically, a software license agreement is a binding contract between the owner of the propriety software (your enterprise) and the end user (your client). Essentially, you’ll outline the dos and don’ts of using your software and summarize the client’s rights according to United States federal law. Here’s a list of sample provisions.
- State contract participants. Explicitly state your agreement is between you and your client in relation to your software.
- Limited nonexclusive license. This section states the client can use the software, but your company retains ownership of rights, titles and interests related to your software.
- Copies and number of installations. Depending on your clients and software, you may choose to allow for the software to be installed on multiple computers or only one. You can put in provisions regarding simultaneous software usage or disallow copies except for backup purposes.
- Limited warranty. If you intend to provide a warranty, you will want to state the limitations of the warranty as well as any other terms and conditions. In this section, companies frequently mention they have delivered the product in operational condition.
- Breach of warranty. Specify the procedure if your company fails to deliver the product in working condition. This section may detail who pays for shipping, refund procedures and/or replacement procedures.
- Liability statement. Depending on the licensee’s jurisdiction and local laws, you may be able to release liability for damages related to the use of your software or the results of your license agreement. You may be able to deny liability for special, consequential, incidental, compensatory, exemplary or other damages.
- Licensee business operations liability. Your client may use your software for daily business operations, in which case you don’t want your company to be liable for the way your client’s enterprise uses the software. In this provision, you can have clients agree to defend and indemnify you from claims and damages incurred through their business.
- Licensee material breach. Essentially in this section, you retain the right to terminate the software agreement with the client if the client’s software use qualifies as a material breach. This means the client must use the software according to the user agreement.
- Agreement termination. Should you terminate your agreement with your client, the client will be obligated to either return all copies of software or otherwise destroy all software copies.
- License agreement authority. This section will state the document is the entire software agreement. Furthermore, the agreement supersedes all previous agreements and dealings between you and your client. Of course, if you wish to put another agreement above your software agreement, you may do so with a more personalized specification.
- Valid locations. Typically, these software agreements are subject to state and local laws. For this reason, you must explicitly list in which states your contract is applicable and which state laws govern your contract.
- Agreement’s validity and start date. If your agreement will be valid without a signature, state so. Additionally, state the terms for when the contract goes into effect; for instance, upon the client’s signature, or when the client begins using the software.
Having a guideline or example as you craft your software license agreement can be incredibly useful. However, keep in mind that while the information above is an excellent guide, you should seek legal counsel before finalizing your agreement. With the help of an attorney, you can ensure you cover all of your exposures to the best of your ability.
The content on our website is only meant to provide general information and is not legal advice. We make our best efforts to make sure the information is accurate, but we cannot guarantee it. Do not rely on the content as legal advice. For assistance with legal problems or for a legal inquiry please contact you attorney.