Harper James advises UK start-ups, scale-ups and established companies on commercial contracts, licensing and SaaS agreements under the laws of England and Wales. As a business grows, a clear software licensing framework helps it control costs, secure usage rights and avoid disputes over access, ownership and liability.
Businesses commonly use perpetual licences, subscriptions, usage-based arrangements and open-source software. A perpetual licence grants continuing rights to use a defined version of software, often subject to maintenance charges. A subscription provides access for a fixed period and usually includes updates or support. Usage-based pricing ties fees to users, transactions, storage or other measurable activity.
The agreement should state who may use the software, on which devices or systems, and for what business purpose. It should also cover geographic limits, user numbers, sublicensing, subcontractors, integration with third-party products and any restrictions on copying, modification or reverse engineering. Definitions are important because terms such as “user”, “affiliate” and “authorised device” directly affect cost and operational flexibility.
A software licence should identify the intellectual property owner and explain whether the customer receives ownership, an exclusive licence or a non-exclusive right to use the software. Bespoke developments require separate provisions covering ownership of source code, deliverables, background materials and customer data. Where a supplier uses subcontractors or third-party components, the contract should address responsibility for those elements.
Service levels, support, maintenance and security commitments are particularly relevant to business-critical systems. A SaaS agreement should address availability targets, incident reporting, data processing, business continuity, service credits and exit assistance. Limitation of liability provisions should reflect the value and risk of the contract, with separate treatment for matters such as confidentiality breaches, data protection failures and intellectual property infringement.
A business should keep a software register recording the supplier, licence type, renewal date, permitted users, fees, data location and termination requirements. Finance and IT teams should review the register before adding users or changing systems. Automatic renewal clauses, minimum terms and price adjustment provisions can create unexpected commitments if they are not monitored.
Open-source software requires particular discipline. Different licences impose different obligations, including attribution, notice requirements and conditions affecting modified or distributed code. Businesses should maintain an approval process for open-source components and retain records of the applicable licence terms. Before signing or renewing a material software agreement, management should confirm the commercial scope, security requirements, exit arrangements and legal ownership of all relevant technology.