Software Licence Agreement

A software licence agreement is a contract which governs the provision of software by a supplier to a customer, for use on the customer’s own systems / network. Without a software licence agreement in place, there is a risk that the scope of use of the software is unclear and each party’s rights in relation to the software may not be adequately protected. Read more

What is a licence?

A software licence gives a customer the right to use a supplier’s software without breaching the supplier’s rights in that software. Licences are generally subject to a number of conditions, including paying licence fees and obligations and restrictions regarding the use of the software.

Why document your use of software?

Risk of unexpected restrictions: For customers purchasing software, it is important to clearly set out the scope of their licence to use that software in a software licence agreement. Particularly where a customer is procuring business-critical software, unless the scope of the licence is clearly defined, there is a risk that the software supplier could suspend or restrict the use of the software which could have a major impact on the customer’s business. The software licence agreement should set out how long the customer is entitled to use the software, to allow for continuity of use.

Protecting rights in the software: It is equally important to document the terms relating to the provision of software for software suppliers to ensure that: (i) their software is not exploited; (ii) it is clear when and what the supplier gets paid for licensing the software; and (iii) the supplier’s rights in, and ownership of, the software are protected. The software licence agreement will set out clear rules and restrictions on the use of the software by the customer and its authorised users.

Know how long the licence lasts: For both parties, it is important to clearly understand how and when the licence could come to an end to avoid an unexpected, sudden stop in licence fees or software use, so this should be documented in a software licence agreement (as provisions relating to term and termination rights).

What information does a software licence agreement include?

Key provisions: This software licence agreement template contains key provisions in relation to:

  • the scope of the licence;
  • restrictions on use of the software;
  • intellectual property right protections;
  • the charging structure and payment terms; and
  • software warranties and disclaimers.

You can also include support services: It also contains optional clauses to cover the provision of support services (e.g. support relating to installation, maintenance and fixing bugs/issues/errors) by the software supplier to the customer, if required.

This template software licence agreement assumes that the parties are contracting B2B, that they are incorporated in the UK, and that English law applies.

Customised to meet your needs

Tailored to protect your interests: This software licence agreement template contains alternate clauses depending on whether you are the supplier of software (known as the licensor) or the customer receiving the software (known as the licensee).

What are the differences: For example, in the pro-customer / pro-licensee optional clauses, there is the freedom to define a wide scope of use in order to avoid unintentionally limiting the ways in which the software can be used by the customer. However, in the pro-supplier / pro-licensor optional clauses, use of the software can be restricted to certain locations (e.g. to the customer’s own premises only) and to hardware (e.g. to specified hardware which is defined in the software licence agreement), and by a specified number of users, in order to keep control over how the software is being used.

Other software agreements

When should this template be used: This software licence agreement template should be used where the customer is looking to obtain a licence to use and run the software from their own network or systems.

When should the SaaS agreement template be used: If the software is being accessed from the supplier’s systems (or via a cloud-based platform), as opposed to via the customer’s system the template Software as a Service Agreement would generally be more appropriate.

The software that is being supplied under this software licence agreement comes “as is” (or “off the shelf”) and does not require significant development to adapt it to the customer’s needs, so you should not use this document if you want a more bespoke arrangement.

Why Docue?

With Docue, you can create a top-quality software licence agreement in minutes. The service includes model clauses designed by business lawyers to help you draft the contract yourself and tailor it to your needs.

Signatures can be collected electronically, and all contracts you make are saved in your company's own contract account.

Docue gives you access to 90+ high-quality legal templates drafted and maintained by UK lawyers. Trusted by 30,000+ companies.

"Docue’s suite of templates saves SMEs on time, money, and stress, by equipping them with affordable legal documentation they can rely on."

Ed Boal

Director and Head of Corporate, Stephenson Law

"Having legal documents available at the touch of a button is incredibly convenient."

Jackson Harrison

Owner, J Harrison Installations