Drafting an Enterprise License Agreement

Saptaparni Raha
Sep 20, 2022
2 min read

Written by Saptaparni Raha, Lawyer

Rohit is the owner of a company and needs software for the same. He needs the software at a discounted and fixed rate for a certain period. He has to install the software each time on a new device when any new employee joins his company. He does not want that and wants to save his money too. He went to Raj, who is a software vendor for his product.

What can they do? Rohit comes to Shweta Consultancy Services for a solution.

Introduction:

In the aforementioned situation, Rohit is a customer, and Raj is a software vendor. They may enter into a legally binding enterprise license agreement. It is an agreement between customer and vendor which allows the purchase of software at a discounted rate for a certain period.

Benefits of having this Agreement:

This agreement helps in creating a scalable system that aligns with your organization's objectives.
This agreement provides geographical information systems and mapping services.
This agreement helps in optimizing the tech speed and lowers the cost of asset management and software compliances.

Important clauses:

First, you need to mention the legal names of the parties to the agreement.
This agreement is basically for five years, but you can have an Out or Grey Year, which is an additional discounted year.
You need a minimum value before entering into the agreement.
You must put certain definitions like an authorized end user, company products, and deployment. In authorized end users, you may refer to the employees, students, and other personnel as the users. Both of you should be on the same page when defining the term. In company products, you need to mention products you are licensing. You should also define the term deployment.
There must be a date regarding deployment and reporting.
If the software vendor has security and passwords for their end users, then the detailed process of providing the license with a username and password must be mentioned.
Licensees can have the ability to change or substitute their licenses.
In the next clause, the licensee must mention how he can use the software and what kind of updates and support they can get.
Under the Ownership of IP Clause, it should be mentioned that you own all of the rights of products that the licensor is licensing.
In the next clause, the licensor shall mention the support they will offer to the licensee.
Next is the Termination Clause, where parties can terminate the agreement. If the licensee fails to comply with the terms and conditions of the licensor, then the agreement may be terminated.

Other clauses:

Other clauses to be mentioned are:

Default
Dispute resolution
Jurisdiction

Conclusion:

Enterprise licensees may deploy software for their organization for a fixed rate and a period of time through this agreement.

References:

Ironclad. What is an Enterprise License Agreement? retrieved from https://ironcladapp.com/journal/contracts/enterprise-license-agreement
Linda Rosencrance. (2021). enterprise license agreement. retrieved from What is an Enterprise License Agreement (ELA)? (techtarget.com)