Software licence agreement

At its most fundamental, a software licence is a right granted by one person or company to another, permitting the other to use the software. Use of software without a licence will usually amount to copyright infringement.

These software licence agreements include a detailed licensing clause, which sets out the scope of the licence being granted. In other words, it answers the question: what is the licensee permitted to do with the software? The clause comprehends a number of different licensing models, for instance where licensing is on the basis of:

• concurrent user numbers;
• named users; and/or
• number of installations or instances.

These software licence agreement templates are very much B2B documents, and are unsuitable for B2C software licensing.

There are three different agreement versions: a basic version which covers only the essentials, a standard versions with provisions suitable for a wide range of licensing situations, and a very flexible premium version.

Basic software licence

This document includes provisions relating to the supply and licensing of the software, charges and payments, software-related warranties along with limitations on those warranties, liability disclaimers, rights of termination and results of termination, together with standard boilerplate clauses.

Standard software licence

In addition to the provisions of the basic software licensing agreement, this document includes an acceptance testing clause, a provision covering set up services, confidentiality obligations, indemnities, audit rights, and an optional background section. Many of the other provisions included in the template are more detailed than those in the basic agreement.

The software licence agreement template does not include provisions for the licensing of source code to the customer. Nor does it include escrow provisions. If you need a licence agreement covering source code and/or with escrow provisions, see our premium software license agreement template.

The template refers to, but does not include, an end user licence agreement (EULA). You may therefore also need to consider our EULA template.

Premium software licence

This licence agreement template is based upon - and contains all the provisions included in - the standard software licence agreement template.

In addition, it includes provisions relating to contract management, change control, licensing of source code and source code escrow.

As with the standard document, the template refers to a EULA. However, it does not include a EULA. If you need a EULA, please consider our EULA template. Similarly, the template refers to but does not include an escrow agreement. Typically, an escrow agent will supply its own model escrow agreement.

Basic version:

1. Definitions
2. Term
3. Supply of Software
4. Licence
5. No assignment of Intellectual Property Rights
6. Charges
7. Payments
8. Warranties
9. Acknowledgements and warranty limitations
10. Limitations and exclusions of liability
11. Termination
12. Effects of termination
13. Notices
14. General
15. Interpretation

Standard version:

1. Definitions
2. Term
3. Supply of Software
4. Set Up Services
5. Acceptance procedure
6. Licence
7. Source Code
8. Licence audit
9. Licensee obligations
10. No assignment of Intellectual Property Rights
11. Charges
12. Timesheets
13. Payments
14. Licensor's confidentiality obligations
15. Licensee's confidentiality obligations
16. Warranties
17. Acknowledgements and warranty limitations
18. Indemnities
19. Limitations and exclusions of liability
20. Force Majeure Event
21. Termination
22. Effects of termination
23. Notices
24. Subcontracting
25. Assignment
26. No waivers
27. Severability
28. Third party rights
29. Variation
30. Entire agreement
31. Law and jurisdiction
32. Interpretation

Premium version:

1. Definitions
2. Term
3. Supply of Software
4. Set Up Services
5. Acceptance procedure
6. Licence
7. Source Code
8. Source Code
9. Licence audit
10. Escrow
11. Licensee obligations
12. Licensee Systems
13. Licensee Materials
14. No assignment of Intellectual Property Rights
15. Representatives
16. Management
17. Change control
18. Charges
19. Expenses
20. Timesheets
21. Payments
22. Licensor's confidentiality obligations
23. Licensee's confidentiality obligations
24. Publicity
25. Data protection
26. Warranties
27. Acknowledgements and warranty limitations
28. Indemnities
29. Limitations and exclusions of liability
30. Force Majeure Event
31. Termination
32. Effects of termination
33. Non-solicitation of personnel
34. Notices
35. Subcontracting
36. Assignment
37. No waivers
38. Severability
39. Third party rights
40. Variation
41. Entire agreement
42. Export control
43. Law and jurisdiction
44. Interpretation

Is the licence automatically terminated if licence fees go unpaid?

Not automatically. A failure to pay licence fees may be a material breach of the agreement, giving a right to terminate the entire agreement.

Does the licence acknowledge that software may be a little buggy?

Yes. The warranties section includes an acknowledgement that "complex software is never wholly free from defects, errors and bugs".

Does the software licence agreement exclude all liability for faulty software?

No. A provision that attempted to exclude all such liability would likely fall foul of the Unfair Contract Terms Act 1977 (amongst other things).

How are charges under the software license agreement structured?

Obviously, different licensors will have different charging models. The model suggested in the template agreement is therefore likely to need at least some amendment. With that caveat in mind, the suggested charging model is as follows: the licensee will pay to the licensor an agreed fee (or an agreed fee per licensed user or per installation) in respect of each defined period (e.g. calendar month) during the term of the agreement. Where the defined period falls partly outside a calendar month, it is the job of the licensor to pro-rate the fee. In doing so, the licensor must act reasonably. The fee may also be varied by the licensor, but optionally such variations may be subject to a ceiling (e.g. at the level of RPI increases).

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A copy of this software licence agreement is included in the following pack:

• Software developer pack (all versions of this document are included in the premium version of the pack and the basic and standard versions of this document are included in the standard version of the pack)