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Software License Agreement/ End User LicenseAgreement

A software license agreement is an agreement between a licensor and licensee. It defines how the software may be used by the licensee and what happens in case of a breach.

Parties involved:

  • Licensor

    Licensor is usually the owner, developer and/ or author of the software who owns the copyright and other associated rights to the software.

  • Licensee

    Licensee is the purchaser of the software, a customer of the licensor.

Essentials of a software license agreement

Non-exclusivity

Including this clause in your software license agreement will allow you as a software owner to license your software to one or multiple users or companies.

Non-transferability

If you wish that the licensee just has the right to use your software and not to transfer, sell, share, gift, or deliver your software to a third party then your agreement should include this clause. It ensures that you retain your customers. It also protects you from a situation where you don’t have an executable contract with the final user to whom the software is transferred.

Rights and breach

It should clearly lay down the rights of the licensee like how they can use your software. It should specify that the rights to the software like copyright, distribution rights, the actual software, etc. remain with you even after the termination of this agreement. It should also lay down the consequences of breach of the terms of this agreement by the licensee.

Modification

You can restrict your licensee from making much or any changes to your software.

Limitation of liability

It should limit your liability from various legal risks including but not limited to liability due to a third party. The licensee needs to accept the software as is and shall not be able to sue you for damages. You make no warranty for the software and usage.

Termination

It should enable you to terminate the software and this agreement whenever you wish, without any repercussions. It should clearly lay down the responsibility of the licensee in case of termination like destruction, deletion, or uninstallation of the software immediately.

Governing laws

It should explicitly mention the state and jurisdiction of courts and applicable laws in case of any dispute arising out of this agreement. Preferably it should be in accordance with your place of residence.

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Why do you need a software license agreement?

  • It protects your software from any misuse
    By clearly laying down the terms of use, rights of the licensee, and the mechanism in case of breach of these terms, you can ensure that your software is not fraudulently used.
  • It allows you to earn profits out of your software without having to sell it

    Through a software license agreement, you are simply allowing the right to use. This means that you get to earn profits while retaining the ownership and all associated rights to your software. 

  • You can terminate the license anytime without any repercussions

    Owing to any reasons or circumstances, you can immediately take back this right of usage from the licensee, without any consequences or need for justification.

  • You can have multiple users and customers
    You can also allow several parties, individuals or companies, to use your software in accordance with your terms and conditions. This means more control and more profits for you.
  • Protection from legal and financial losses

    By limiting your liability you protect yourself from any liabilities arising out of the usage of your software. It acts as a shield from future complications.

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Are you one of these?

  • An author or developer of a software
  • An owner of a software
  • A company developing a software
  • A company purchasing or owning a software

Then you definitely need a software license agreement