Is your software contract protected by escrow?

There’s a strong chance you, like many people today, rely heavily on software. You might use it at home or at work but there is likely one or two programs you would likely struggle without. Like everything else, there are ways to protect this. In the case of digital services, you should look into the likes of software escrow, to protect your assets. This works like traditional escrow, only it uses the source code.

 

This is useful for the contracts surrounding software. Yet this warrants another question as to how you can acquire escrow protection and if it’s already in your contract.

 

Software contracts

 

When you use most pieces of software, you have to agree to an end user agreement – the part where you click ‘I accept’ and agree to various terms and conditions. Most people often gloss over this stage but this is where you are essentially entered into a contract with the software provider.

 

This contract is the basis of the Software as a Service (SaaS) model. You get a licence for the product, rather than owning it but the provider has to maintain a working item for you. Should this fail, you can be given the code.

 

In the worst case scenario, this gives you the tools you need to become independent from the provider while in the best instance works as a strong deterrent and encourages better results.

 

Where is the escrow?

 

SaaS works to ensure outcomes in your favour, when legally deemed so, and is not something every company will seek. This in itself is an advantage as only the most reliable businesses will willingly enter into escrow but the downside is it’s not included in any of your software contracts.

 

An escrow account needs to be a neutral third party with the power to give out the code where legally relevant. In other words, neither you nor the provider is in a suitable position for this, whereas a dedicated agency such as NCC Group is perfect for the position.

 

It’s much better to create this contract separately from the software agreement itself, although you should still ask about the possibility of escrow before buying anything.

 

However, in business situations and special contracts (not the ones built into the installation CD, for instance) this could be a different story. If you’re a company boss looking to acquire multiple licences for a product, it’s entirely reasonable to ask for escrow agreements within the same contract – when so much is on the line, why would you want a contract without it?

 

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