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Software License

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This is a software license form, designed for use in relation to the licensing of software by one business to another. The license provides for the delivery of the software to the licensee, and sets out in detail the terms of the license granted. The license provisions have been designed to be flexible, allowing for the software to be licensed to particular named user(s), or in respect of a particular number of concurrent users, or on a per-seat basis.

Other important provisions in the document include:

  • Payments - what will the licensor be paid in respect of the license? How and when will payment be made?
  • Warranties - what warranties (if any) does the licensor give to the licensee in relation to the software?
  • Limitations of liability - will the licensor be protected in the event of a claim from the licensee?

A full listing of the sections headings is as follows: (1) Definitions and interpretation, (2) Term, (3) Delivery of Software, (4) Invoicing and payment, (5) License, (6) Warranties, (7) Limitations and exclusions of liability, (8) Termination, (9) Effects of termination, (10) General, Schedule 1 - The Software, Schedule 2 - Charges, Schedule 3 - Licensing, and Schedule 4 - EULA.

The form refers to, but does not include, an end user license agreement (EULA).

The software license is 13 pages long including the guidance notes, and is supplied (via email link) in MS Word format.

What rights are granted to the licensee?

The core of the license, set out in Clause 5 of the software license template, is as follows: "Subject to the limitations set out in Clause 5.2 and the prohibitions set out in Clause 5.3, the Licensor hereby grants to the Licensee from the date of delivery of the Software to the Licensee a non-exclusive worldwide license to: (a) install the Software; (b) use the Software in accordance with its documentation; and (c) back-up the Software...".

The limitations in Clause 5.2 are the commercial licensing limitations: how many concurrent users are permitted to use the software? How many installations of the software are permitted? Which named users are permitted to use the software? The prohibitions in Clause 5.3 may include bans on sub-licensing, reselling, distributing, editing, etc.

How can the software vendor verify license compliance? Is an audit section included?

An optional audit clause is included in the software license. The clause states that the licensor or its representative may audit the systems and records of the licensee for the purpose of ascertaining compliance. Suggested limits on the audit right include a general reasonableness requirement, a five-day notice requirement, and a maximum of one audit per calendar year.

What software warranties and undertakings are included, if any?

The licensor warranties in the software license include the following:

  • A warranty that the software will perform (or perform substantially) in accordance with its documentation. The warranty may be specified to apply at the date of supply of the software.
  • A warranty that the software will not infringe anyone's intellectual property. A pro-licensor approach may limit this to rights within a specified jurisdiction. A more pro-licensee approach may include warranties that the software will not breach applicable laws or give rise to any cause of action against the licensee.
  • A warranty that the media upon which the software is supplied is free of defects (only relevant where there is a physical media).
  • A warranty that the software will be free from viruses and other malicious software.

All of these express warranties are, of course, optional.

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