What is a software sales agreement?

A software sales agreement outlines the terms of selling software, including delivery, licensing, payment, support, and ownership rights.

What’s the difference between software sales and SaaS agreements?

Software sales often involve a license or one-time purchase, while SaaS agreements provide access to cloud-hosted software through subscriptions.

Why is IP ownership important in a software sales agreement?

Clarifying intellectual property ownership avoids disputes about who can use, modify, or resell the software.

Should software agreements include warranties?

Yes, warranties ensure the software meets specifications and protects buyers from hidden defects or legal issues.

Can I use a template for a software sales agreement?

Templates are useful but should be customized for your specific software type, business model, and legal requirements.

Software Sales Agreement Terms and Legal Considerations

Learn what to include in a software sales agreement, from licensing terms and payment to support, compliance, and IP protection. Avoid costly legal issues. 6 min read updated on May 14, 2025

Key Takeaways

A software sales agreement governs the rights, responsibilities, and deliverables in a software transaction.
Agreements must clearly distinguish between software sales and licensing terms, including ownership rights.
Key clauses include pricing, support obligations, intellectual property ownership, and compliance standards.
SaaS contracts often differ from perpetual software sales agreements and require special attention to uptime, SLAs, and data privacy.
Terms must address open-source components, limitation of liability, dispute resolution, and compliance with laws such as GDPR or CCPA.
A software sales agreement helps avoid disputes, clarify expectations, and protect intellectual property.

Software Sale, License, and Development Agreement

A software sale, license, and development agreement specifies consideration received by each of the parties. Typically included in the agreement are the following:

Purpose and scope of agreement. This includes definitions, such as specifications about the affiliate, acquired assets, documentation, products, and intellectual property rights.
Sale of acquired assets. This occurs when a party purchases acquired products and documentation.
Licensure to products. This includes licenses, warranties, and remedies for breach of warranty. It also pertains to engaging applications.
Development and maintenance of services. If a party needs to hire specific employees, this part of the agreement states this information.
Future development and maintenance of service. This references updates, releases, or new versions of software. It also includes training and technical services.
Marketing and quality control. This part of the agreement mentions advertising, promotion, and marketing to potential customers. It also discusses trademark license grants and ownership.
Financial structure. This section discusses revenue sharing procedures and audits.
Common terms and condition. This part elaborates on specific terms, such as warranties, indemnification, limitation of liability, force majeure, nondisclosure, rights in data, security, insurance, and termination.

Key Clauses in a Software Sales Agreement

A comprehensive software sales agreement should include the following essential clauses to define expectations and reduce risks:

Deliverables and Acceptance Criteria: Define what is being delivered (e.g., source code, documentation), how it will be evaluated, and the process for customer acceptance or rejection.
Ownership of Intellectual Property (IP): Clearly specify who retains ownership of the software. Often, the seller retains IP, while the buyer receives a limited license to use it.
Payment Terms: Specify amounts due, payment schedules, late payment penalties, and any milestone-based billing.
Maintenance and Support: Outline any post-sale support, including bug fixes, updates, or help desk access. Specify response times if SLAs apply.
Warranties: Include warranties against infringement and guarantees of performance according to defined specifications.
Indemnification: Allocate responsibility in the event of third-party IP claims or data breaches.
Limitation of Liability: Limit financial exposure in case of software malfunction or breach.
Termination Clauses: Define conditions for ending the agreement, including breach, non-payment, or mutual consent.

These provisions help both parties avoid ambiguity and reduce the risk of litigation later on.

Software Licensing Subscription Agreement

If you ever download, copy, install, or use software, you may need to agree to a software licensing subscription agreement. Always read the document carefully before using the application in any capacity. You cannot access the software until you agree to all of the terms and conditions found in the agreement.

The agreement is a legal document between you, the customer, and the software company. By indicating your assent to the agreement, which you do by signing a sales order or clicking on an "Accept" or "Agree" button, you acknowledge the software licensing subscription agreement.

If you don't agree to the terms of the agreement, you may not do anything with the software. In addition, if you already have possession of the software and don't agree to the terms, you must delete all copies of the software.

Legal Risks in Software Sales Agreements

Software sales agreements can carry legal risks if improperly drafted or too vague. Common legal issues include:

Ambiguous Licensing Terms: Failing to clarify whether the customer is buying a license or the software outright may lead to disputes.
Noncompliance with Regulations: Agreements should address relevant data protection laws such as GDPR or CCPA, especially for SaaS products.
Use of Open Source Code: If the software incorporates open-source components, disclose the licenses and ensure compliance to avoid IP issues.
Export Control Laws: Software exports, especially with encryption or AI components, may require regulatory compliance under U.S. or international law.
Dispute Resolution Mechanisms: Include jurisdiction, venue, and arbitration or litigation provisions to manage potential legal conflicts.

Equipment Sales and Software License Agreement

Similarly to a software licensing subscription agreement, an equipment sales and software license agreement has its own list of guidelines. In the agreement, you may find:

Terms and conditions. This section discusses licenses granted, equipment purchased, and installation requirements.
Orders. If you place orders, this section specifies if there are invoices and who would send them. It also discusses that if you need to make changes to the orders, both parties must agree upon it and have it in writing.
Delivery. The vendor must make a reasonable effort to meet delivery dates specified in the order schedule. It also states the carrier and method of shipment for products.
Charges and payment. You agree to pay fees and charges for the product and orders. Information on when the vendor will invoice you is also included.
Taxes. If you need to pay or reimburse the vendor for any type of tax, that information is here.
Products. This includes a limited license for the software and documentation.
Warranties and remedies. The vendor states that each piece of material is free of defects and provides a timeframe as to how long the warranty covers the items.
Termination. Either party can terminate the agreement upon written notice if one party breaches the agreement.

Differences Between Software Sales and SaaS Agreements

Though often confused, software sales agreements differ significantly from Software as a Service (SaaS) contracts:

Element	Software Sale Agreement	SaaS Agreement
Ownership	Buyer may own a copy or license	Provider retains ownership; access-based
Delivery	Software is installed on buyer’s systems	Software accessed via the internet (cloud)
Pricing	One-time license fee or milestone billing	Recurring subscription fees
Support	May or may not include ongoing support	Usually includes SLAs, uptime guarantees
Updates	Typically require a new agreement or fee	Included in the subscription fee

Understanding this distinction helps tailor agreements to the actual business model and user expectations.

Software End-User License Agreement

When it comes to software end-user license agreements, you must accept the terms before use. Most agreements include a mention of the following:

Specific definitions and related matters. A common word in the agreement is a product, and this can refer to licensed software or documentation.
License and use restrictions. Some software programs have a limited, nonexclusive, nontransferable license that you can only use with specific documentation. You might have a limited number of copies you can make of the software. Some companies only allow a backup copy for archival purposes.
Warranties and liability limitations. Some licensed software programs do not come with a warranty and come as-is. The company might only offer a cap on liability payout amounts if it involves the software application.
Miscellaneous. This section includes a wide range of topics, including how the company deals with communication, how it addresses the laws of the state it operates out of, how force majeure affects liability, and how it deals with third-party beneficiaries.

Common Software Agreement Templates

Templates can help jumpstart contract drafting, but they must be customized. Common software agreement templates include:

Software License Agreement (SLA): Grants users rights to install and use software.
Software Maintenance Agreement: Covers updates, bug fixes, and technical support services.
Software Development Agreement: Outlines custom development terms between a client and software provider.
SaaS Agreement: Focuses on subscription terms, uptime guarantees, data handling, and termination.
Beta Test Agreement: Allows controlled user testing with confidentiality and feedback obligations.

While templates are helpful starting points, legal review is recommended to ensure they address specific project and compliance requirements.

Frequently Asked Questions

What is a software sales agreement?
A software sales agreement outlines the terms of selling software, including delivery, licensing, payment, support, and ownership rights.
What’s the difference between software sales and SaaS agreements?
Software sales often involve a license or one-time purchase, while SaaS agreements provide access to cloud-hosted software through subscriptions.
Why is IP ownership important in a software sales agreement?
Clarifying intellectual property ownership avoids disputes about who can use, modify, or resell the software.
Should software agreements include warranties?
Yes, warranties ensure the software meets specifications and protects buyers from hidden defects or legal issues.
Can I use a template for a software sales agreement?
Templates are useful but should be customized for your specific software type, business model, and legal requirements.

If you need help with a software sale agreement, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.