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PLAYBOOK TEMPLATES

Software License Agreement

A Software License Agreement governs the use and distribution of software between a licensor and licensee. This playbook examines license grant terms, maintenance obligations, and compliance mechanisms for audit and enforcement.

Term & Termination

Why This Matters: Unfavorable term or termination clauses can trap a party in unprofitable arrangements or leave them exposed to unremedied breaches.

Negotiation strategy

If you're the Licensor:

Ensure the term is aligned with strategic goals and includes flexible termination options. Negotiate for a reasonable renewal period and clear exit strategies to avoid being locked into unfavorable terms.

If you're the Licensee:

Advocate for longer initial terms to secure business stability. Ensure termination clauses are not overly restrictive and allow for adequate notice and cure periods.

Essential elements

1

Initial Term

Duration of the initial agreement.
2

Renewal Term

Conditions for automatic renewal.
3

Termination Rights

Conditions for ending the agreement.

Action framework

ACCEPT

Propose edits if the renewal terms are too short or termination rights are too restrictive.

EDIT

Reject clauses that do not allow for termination in case of material breach or insolvency.

ADD

Add language for continuity of service to ensure smooth transitions.

PRO TIP

Always include a continuity of service clause to minimize business disruption during transitions.

Example clauses

FAVORABLE

Balanced Term and Termination Clauses

"The term of this Agreement shall commence on the Effective Date and shall continue for an initial period of three (3) years (the 'Initial Term'). Thereafter, this Agreement shall automatically renew for successive one (1) year periods (each a 'Renewal Term'), unless either party provides written notice of non-renewal to the other party at least ninety (90) days prior to the expiration of the then-current term."
NEUTRAL

Standard Termination Clause

"Either party may terminate this Agreement for convenience upon providing the other party with one hundred twenty (120) days prior written notice."
UNFAVORABLE

Restrictive Termination Conditions

"Termination is only allowed upon mutual agreement of both parties, with no provision for material breach or insolvency."

Fallbacks

High-Risk Projects

In high-risk projects, ensure termination clauses allow for immediate exit in case of significant risk exposure or breach.

Long-Term Partnerships

For long-term partnerships, focus on flexible renewal terms and extended cure periods to maintain relationship stability.

Startup Collaborations

In startup collaborations, prioritize short initial terms with easy exit options to adapt to rapid changes.
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