Buying software is akin to entering into a contract with the providers of the software one purchases. In the event that one buys the software online, he or she has to append his or her consent that he or she agrees with the terms and conditions of the software. Often, many users ignore the terms and conditions of these agreements. This is usually the case especially when the software user is an individual. However, dealing with large organizations may be quite tricky. Accepting the software terms and conditions of agreement may be detrimental to the security of the organization’s information and sensitive data. Large enterprises have the bargaining power to influence the terms of software license terms and conditions.
The first contract negotiation component that an organization needs to check is the product definition and contract structure. It is imperative that the purchased software license functions as the buyer intends it to do. It is necessary for a firm to negotiate with the service provider to ensure that the software license agreement possesses maintenance provisions and installation capabilities. If these are not in the same license agreement, it should be in a different license agreement for which the agreed purchase costs cover. The service levels claimed by the license of the agreement should be coherent with the actual working capabilities of the software. Negotiating product definition is significant to eliminate misunderstandings and disputes in case some of the functionalities do not meet the expected standards.
In addition to the scope of license detailed in pre-planned terms of contract provided in the agreement, a firm needs to negotiate for contract scope that suits its operations and needs. The firm may recommend a royalty-free, transferable license as opposed to the contract terms pre-written in the software license agreement. This could be in accordance with the operations of the firm to share or transfer its assets to associates. The firm could also negotiate to repeal some of the vendor’s set of restrictions on the license. These negotiations could take the form of offering to pay incremental prices for such special considerations.
Furthermore, the enterprise could negotiate basing their arguments on the personnel requirements of the software. If IT training is required to use the software, a firm could negotiate with the company providing the software to offer the requisite training. The agreement should spell out the buyer’s access to support of the software developers. If the support through online support and telephone consultations is not sufficient, the licensee can negotiate for more appropriate deals to meet its demands. This involves signing a separate agreement between the software seller and the licensee. In addition, the agreement needs to spell out when and where to obtain maintenance support concerning fixing malfunctioning software, correcting versions, providing new releases and conducting upgrades.
Licensees can also negotiate on performance liabilities of the software license agreement. Unless the suppliers of the license are able to ascertain that the license is working properly, every buyer should reserve the right to return the product for a refund. Usually, these assurances are never available for most software provided online. It is the responsibility of a somber firm administration to bargain for warranties and acceptance of the software they purchase. The firm needs to discuss the matter with the software providers and observe operations of the software before appending their signature to purchase. The licensor and the licensee should negotiate on the possibility of refund even if there is substantial customization of services provided by the software as long as the software does not work properly. The licensee needs to bargain for an extension of the period necessary to test the full functionality of the software before the lapse of provided warranty period.
Besides, the licensee could negotiate on the methods of dispute resolution as well as exit strategies. Often, licenses offer no clear avenues for resolution of disputes between the licensor and the licensee. In such an event, the licensee stands a chance of losing in case the license fails to perform as intended. The licensee needs to bargain on the clear resolution methods in case the intended functionalities of the software fail or the software causes particular damages to the company. Such an additional agreement defines the process of dispute resolution between the licensor and the licensee. In addition, it defines the binding arbitration and mediation procedure. Moreover, the additional agreement provides an exit clause outlining rights to interim payment and deliverables.
Finally, negotiations for a fulfilling software license between licensee and licensor would include changes to limitations on liability. In several occasions, license developers and distributors pass all the liabilities of eventual occurrence of risks to the licensees. This means that the licensees bear all the costs of disasters and occurrences of risks associated with the software. The licensee can negotiate these terms and include a clause for sharing of liabilities. These include payment of insurance premiums to cover for any unforeseen eventuality.
References
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