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Negotiating Software Contracts

– Successfully Negotiating a Warranty Section


warranty is one of the most important contract

provisions in a software contract.The warranty section

deals with the performance of the software and what

the licensor promises the software will or will not do. In a

software contract these performance warranties should be

heavily negotiated but usually they are overlooked. Because

so many factors can affect the performance of the software,

publishers seek to limit their warranty, and provide limited

remedies in the event of a breach. It’s important for businesses

who license software to have a strategy in place to successfully

negotiate this section. But what exactly are the pitfalls when

negotiating a warranty provision, and how do you successfully

navigate it?

One of themajor pitfalls in negotiating a warranty is contained

in the structure of the contract provision itself and the intent of

the software licensor. Many contracts include boilerplate lan-

guage, thus, contract negotiatorsmust develop a systematicway

to review the language and then develop a strategy to address

the warranty concerns for their side of the deal. To do this, the

partiesmust first understand the risks involvedwith a particular

software license and negotiate for the specific risk type.

The best way to put this into action is to review the warranty

language and put the language into a more concrete roadmap

to negotiate the contract by asking the following questions: (1)

what are the licensor’s objectives in the warranty section, (2)

what are licensee’s objectives in the warranty section, (3) what