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Published 27 April 2021
Technology is now truly sector-agnostic – its use is pervasive across the business world, and the real estate sector has not been left untouched.
It’s important to get software contracts right, as they often underpin such technology. Whether the agreement is for bespoke software or an ‘out of the box’ SaaS solution, getting it wrong could have wide-ranging consequences for your business – including for your IP, data and other systems.
As a minimum, here are a few things you should ensure are covered:
1. Licensing & Intellectual Property (IP) provisions:
a. A software licence with sufficient scope to cover the purposes, users, and period you need the software for (e.g. are there any undesirable restrictions on use – such as use only for your ‘own internal business purposes’ when your subsidiaries or external stakeholders need access?).
b. An obligation for the supplier to actually provide the software. Also consider if any interfaces/integrations with other systems should be included.
c. Promises / warranties that:
i. the supplier has the right to grant the licence, and will compensate (indemnify) you for third party IP infringement.
ii. the software conforms with a specification / description (which you’ve checked and are happy with), and is backed up by appropriate support / service levels.
iii. (where appropriate) the supplier will assign IP ownership rights in any bespoke software to you.
d. Clarity on whether any open source and other third party software terms apply (and who is responsible for compliance).
e. Suitable provisions protecting all IP / information / data you give to the supplier.
2. Data protection:
a. Will there be any processing and/or sharing of personal data, i.e. does the supplier host any data for you, or access the system to provide support or CRM-related services?
b. If so, consider the data processing relationship between the parties, and include appropriate data protection provisions for compliance with data protection laws.
3. Termination, suspension, and transition:
a. Check there are rights for you to terminate for material breach or insolvency – and, if needed, a ‘break clause’ or other right to terminate for convenience on notice.
b. Make sure the supplier can’t suspend or terminate too easily. Ideally this would only be for material breach.
c. Transition. Ensure the supplier must return your data / information at contract end, and consider how easy it would be to transition to a new supplier (and whether transition assistance provisions are needed).
Check that the supplier’s limitations and exclusions of liability (and warranties) provide adequate cover / aren’t too wide, particularly for data protection breaches. Also check that your own liability is suitably capped.
It is therefore important that from the get-go you consider the practicalities of why you are buying the software and what it is for. How important is it for the business (is it business critical, is it a nice-to-have)? What are the risks if it does not work as it should? This will all ultimately inform what the contract should say, and it is important to seek legal advice whenever in doubt, particularly where the software is expensive or business-critical and the stakes could be high.
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