Monday, April 5, 2010

A Software Checklist


Will you receive all the copies you need?
At what cost?
May you make and distribute copies for internal use?

Term and Termination

Are there any provisions that restrict your ability to simply stop using the software?
In what circumstances may vendor your right to use the software?
Do those circumstances include anything more than:
  • Your failure to pay undisputed balances when due?
  • You've pirated the software?
  • Vendor needs to replace the software to resolve an intellectual property infringement claim from a third party?


Does the contract provide for the termination of a material breach?
Does it define the term “material breach?”
If it doesn't, how will you know when you have the right to end the agreement and seek a refund?

  • What happens if things go wrong?
  • What are your rights?
  • What are your obligations?
  • What are your options, short of litigation?


Is the license fee fully paid up or must you pay year and year out?
If the latter, what will you receive in return?
Are maintenance fees required or optional?
If required, why?
In either case, what will you receive in return?
What will happen if you elect not to pay?


Must you pay for maintenance releases, bug fixes and the like?
Are new releases and upgrades extra cost items? Why?
How do the parties determine when an extra charge is appropriate?
What are the performance standards for the product?
If you are disappointed, can you point to an objective standard that hasn't been met?


Do they start when the product is ordered, shipped, delivered, installed or when you begin using it in production?
What remedies does the warranty provide and are you protected if vendor fails to respond promptly or fails to resolve the problem?


Are you permitted to withhold disputed payments?
May you hold back a substantial final payment until the software passes its final tests?

Acceptance Testing

Does the contract set out objective performance standards?
Mutually agreed testing procedures?
Timetables for correction, if the software does not pass the acceptance tests?

IP Indemnification

Is vendor required to respond promptly in the event a third party makes an allegation of infringement?
Does vendor have the resources – both technical and financial – to handle such a claim?

Escrow of Source Code

Everyone seems to want a source code escrow. Assume your contract provides one and a release event has occurred. Do you really have the wherewithal to put the source code to productive use?

Limitation of Liability

Imagine a worst-case scenario. How much harm could vendor cause you?
Does the limitation of liability match that exposure?


Look again to that worst case scenario. Does vendor have the liquid assets to make you whole? If not, it would be sound business to require vendor to carry the appropriate levels of insurance, from reputable and financially sound carriers.

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