In the International Software License Agreement, the owner of the rights to use a certain software (the Licensor) authorizes a third party (the Licensee) to use it, in exchange for a price. The main feature of this type of agreement is that the granting of the license does not include transferring the ownership of the software; in other words, the Licensor still owns the software.
Certain general terms and conditions (installation, duration, price and form of payment, warranty, etc.) are established based on technical concepts used in the Agreement. The Licensee has to agree to these terms and conditions and is not usually able to negotiate them with the Licensor.
If the owner of the Software wishes to use a distributor to grant Software Licenses to end users (companies or individuals) in a specific foreign territory (usually, a country), then the International Software Distribution Agreement must be used.
This agreement is specifically drafted for granting software licenses in international markets; however, with a few changes it can also be used when the Licensor and the Licensee are located in the same country.
Parties clauses
- Definitions
- Software License
- Installation and Acceptance
- Price and Payment
- Intellectual Property Rights
- Confidentiality
- Warranty
- Indemnity
- Limitation of Liability
- Term and Termination
- Validity
- Binding Agreement
- No Waiver
- Licensor Personnel
- Notice
- Survival Clauses
- Applicable Law and Competent Jurisdiction
- Language
Sample of Content
DATE: …………………..
BETWEEN:
…………………………… [company legal name] whose registered office is at ……………………………….
[address, city and country] and registration/fiscal number is
………………………………………………..represented by ……………………………………………………. [name
and surname, position] (hereinafter, referred to as the “Licensor”),
AND:
…………………………… [company legal name] whose registered office is at ……………………………….
[address, city and country] and registration/fiscal number is ……………………………………………….
represented by ……………………………………………………. [name and surname, position]
(hereinafter, referred to as the “Licensee”),
RECITALS
WHEREAS, the Licensor has developed certain computer programs and related documentation
more particularly described in Annex 1 attached hereto (the “Products”) and wishes to grant the
Licensee a license to use the Software.
WHEREAS, the Licensee wishes to use the Software under the conditions set forth in this
Agreement.
PARTIES AGREE as follows:
- DEFINITIONS
When used in this Agreement, unless the context otherwise requires, the following expressions
have the following meanings:
“Acceptance” of Software means completion of the acceptance testing process set forth in
Clause 3 of this Agreement.
“Agreement” includes this Agreement and its Annexes.
“Calendar day” means any day including a Saturday, Sunday or a public holiday in the Territory.
“Delivery Date” is the date on which Licensor delivers the Software to the Licensee.
“Designated Environment” means the computer equipment and software operating system
described in Annex 2.
“Documentation” means the user, system and installation documentation for the Software.
“Error” means a material failure of the Software to function in conformity with the
Specifications.
“License” means the license granted by Licensor to Licensee to use the Software and
Documentation in accordance with the terms and conditions of this Agreement.
“Licensed Copies” means the number of copies of the Software and Documentation being
licensed to the Licensee.
“Location(s)” means Licensee’s offices at the location(s) specified in Annex 3.
“Maintenance Agreement” means the Software Maintenance Agreement between the Parties
effective as of the date of this Agreement.
“Price” means the License Fees Licensee shall pay as specified in Annex 4.
“Annex” refers to any annex attached to this Agreement, or any subsequently prepared
document which the Parties agree in writing to be considered an Annex.
“Software” means the computer programs specified in Annex 1 in machine-readable, object
code form, and any computer programs delivered to the Licensee in machine-readable, object
code form as Maintenance Releases and Product Releases (as these terms are defined in the
Maintenance Agreement).
“Specifications” means Licensor’s current published Product Release Definitions.
“Target Date” means the date set forth by which Parties anticipate delivery of the Software.
“Warranty Period” means ………… [insert number, usually 12] months days from the date of
Acceptance.
- SOFTWARE LICENSE
2.1 License
Licensor grants Licensee a non-exclusive, non-transferable license to:
(1) use the Software and Documentation solely for its internal operations at the Location(s) and
on the Designated Environment, and
(2) copy the Software and Documentation for archive or backup purposes only, provided that all
titles, trademarks, and copyright, proprietary, and restricted rights notices shall be reproduced
in all such copies, and that all copies shall be subject to the terms of this Agreement.
2.2 Distribution
Except as explicitly provided herein, the Licensee shall not:
(1) make available nor distribute all or part of the Software or Documentation to any third party
by assignment, sublicense, or by any other means;
(2) copy, adapt, reverse engineer, decompile, disassemble, or modify, in whole or in part, any of
the Software or Documentation; or
(3) use the Software to operate in or as a time-sharing, outsourcing, or service bureau
environment, or in any way allow third-party access to the Software.
- INSTALLATION AND ACCEPTANCE
Licensor shall use reasonable efforts to deliver the Licensed Copies of the Software and
Documentation of the Location(s) on or about the Target Date. The Licensee shall have
…………[insert number, usually 30] calendar days from the Delivery Date to perform acceptance
testing. The Licensee’s Acceptance of the Software shall occur on either Licensee’s operational
use of the Software or the expiration of …………[insert number, usually 30] calendar days from
the Delivery Date without the provision of notice by the Licensee to Licensor of any Error(s), which
is earlier. If the Licensee provides notice to the Licensor of any Error(s) and Licensor verifies the
alleged Error(s), the Software shall be accepted upon the Licensor’s correction of such Error(s).
- PRICE AND PAYMENT
4.1 Price
The Licensee shall pay the Price in accordance with the payment plan set forth in Annex 2.
Licensor shall invoice any additional costs reasonably incurred by Licensor in the delivery of the
Software as they are incurred. Payment shall be made by Licensee to Licensor in full without any
right of set-off or deduction, and the Licensee shall pay the Price and such costs within
…….[insert number, usually 30] calendar days from the date of invoice.
4.2 Currency
The Price will be paid in ………….. [insert currency]
4.3 Tax
The Licensee shall be responsible for any applicable sales or use taxes or any value-added or
similar taxes payable with respect to the licensing of the Software, or arising out of or in
connection with this Agreement, other than taxes levied or imposed based upon Licensor’s
income. In the event that Licensor pays any such taxes on behalf of the Licensee, Licensor shall
invoice the Licensee for such taxes and the Licensee agrees to pay such taxes in accordance with
this Agreement.
4.4 Interest
Failure by the Licensee to pay any amounts invoiced under this Agreement in full in accordance
with this Agreement shall make the Licensee liable to pay the Licensor interest at the rate of [%] per
month on the remaining amount due, or at the highest amount permitted by applicable law such
interest to accrue on a daily basis after as well as before any judgment relating to the collection of
the amount due.
Some Tips
DATE
The date when the contract comes into force is the one that appears in its header, as mentioned
in the final paragraphs of the contract, before signatures (This Contract comes into force on the
the date is written above).
In some contracts -for example in the Supply Contract- the date of coming into force is also
mentioned in one of the clauses. In these cases, you have to verify that the two dates inserted in
the contract (in the heading and in the corresponding clause) are the same, in order to avoid
discrepancies.
PARTIES
Be sure to insert on the first page of the contract the full details of the Parties:
- When a Party is a company you must insert the following information: legal name, legal form
(limited, incorporated, etc.), full address, registration data, and fiscal identification number.
- When a Party is an individual that works as an independent professional (for example a
commercial agent) you must insert the following information: full name, profession, full
address and fiscal identification number.
CLAUSES
Clauses with different alternatives: choose the most favorable
In the most important clauses of each contract (exclusivity, payment terms, applicable law and
competent jurisdiction, etc.) several drafting alternatives are proposed so you can choose the
most appropriate to each situation. Therefore, the user before submitting the contract to the
other Party must choose the alternatives that seem best suited to their interests and eliminate
the rest.
Clauses with blank spaces to be completed
In several clauses of the contract blank spaces appear with dots (…………………..) that the user
has to complete inserting text. Following the dots, between brackets, you will see the data and
explanations to insert the text.
- When the text between brackets is in normal letters (the same as the contract) and
separated by “,” or the word “o”, the user must insert one of the options suggested.
Example of blank space (……..) with options to select between brackets:
Orders handled before completion of the present Contract which produces sales transactions
within ………. [1, 2, 3, 6] months shall entitle the Agent to receive the corresponding commission.
In this case, the user must choose between options 1, 2, 3, or 6 months and insert one in the blank
space (……..).
- When the text between brackets is in italics the user has to insert the data and information
requested and eliminate the bracketed text.
Example of blank space – (………) to insert text:
Both parties, by mutual consent, resolve to refer any dispute to the Rules of Conciliation and
Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in
accordance with said Rules. The place of arbitration shall be ……….. [city and country]. In this
case the user must insert in the blank space (………..) the city and country have chosen to conduct the
arbitration and afterward eliminate the bracketed text [city and country].
Notices Clause
Sometimes it may happen that the official address of the Parties which appear at the beginning
of the contract is different from what is to be used for communications between the Parties
during the terms of the contract. In this case, the user should include at the end of the contract
a Notices Clause.
Example of Notices Clause:
Notices. – In order to comply with their contractual obligations, the Parties establish the
following address for the provision of notices related to this contract:
– Party 1 ……………………………………………………. [insert full address].
– Party 2 ……………………………………………………. [insert full address].
ANNEXES
The contracts incorporate some Annexes, each of them, referenced to the corresponding Clause.
Annexes are drafted in commonly used formats, although the user must adapt these formats
and the text inserted in them to each particular situation.
SIGNATURES
People who sign
Persons signing the contract on behalf of the company must have the authority to do so and
preferably, be entitled on the basis of a power of attorney. Below the signature, in addition to
the full name of the person that signs his/her position must be inserted. When one of the Parties
who signs is a natural person (for example a commercial agent in a Agency Contract) obviously
he or she is the person that has to sign the contract.
The laws of some countries require that contracts, to be valid, shall be signed in front of
witnesses or a public notary. Therefore, before signing a contract you should be informed about
the requirements that may exist in each country.
Place and date of signature
Usually, contracts are signed by both Parties on the same date and place. Nevertheless, in
international contracts, due to physical distance, it is common that each of the Parties to sign in
different dates and places. This contract provides for both alternatives so it comes to choosing
the most appropriate to each situation.
Number of copies
Usually, the Parties sign two copies of the contract, each Party retaining one of them, but cal
also arise the need to sign more copies. In this case, all you have to do is mention explicitly the
number of copies to be signed in the paragraph that is included at the end of the contract (Both
Parties declare their conformity to the present contract, which is signed in …… copies, each of
which shall be considered an original).
GENERAL RECOMMENDATIONS
The Parties must sign all pages of the contract, including Annexes, so they are also valid. It is
better to use ballpoint or pen (not pencil) in a color other than black (e.g.: blue); this makes it
easier to distinguish an original document from a photocopy.
It is preferable (although not mandatory) to express sums of money and percentages in words
and figures. Of course, the words and figures for a given amount must match exactly. You also
must insert the currency in which the amounts are expressed. It is advisable to use the rules
established by ISO that name each currency in three capital letters (EUR for euro, USD for dollar,
GBP for sterling pound, JPY for Japanese yen, etc. – you can get the acronyms of every currency
in the website www.oanda.com).
Once you have chosen the best alternatives for each clause and have completed the blank spaces
you should revise the whole contract to remove the remaining paragraphs and correct any errors.