Negotiating Software Contracts: The Three Riskiest Provisions

The Licensing Journal, March 2016

Software and service contracts come with many potential risks, and businesses should be mindful when initiating a new contract or a renewal. It is considered a best business practice to negotiate the terms in a software or service contract before agreeing to the initial terms a vendor provides in the contract.There are many contract provisions that can be negotiated, but the major risk provisions found in most contracts are the following: (1) Limitation of Liability, (2) Indemnification, and (3) Warranty. These contract provisions must be considered in conjunction with one another because they cannot be effectively negotiated without determining how they affect each other.