Software Escrow

Software Escrow Definition

Software escrow is where a software developer deposits the source code that makes up a computer program with an escrow agent, in accordance with an escrow agreement. A software escrow agreement will usually state that this code will pass to the business that commissioned its creation, should the developer be unable or unwilling to meet its contractual obligations.

Advantages of Software Escrow

Bespoke software constitutes a substantial investment for a business which it will naturally want to protect. It will want to ensure that its investment will not evaporate overnight, either by the developer neglecting its contractual obligations or becoming subject to liquidation/bankruptcy proceedings. Software escrow alleviates these concerns and offers a business security and peace of mind in respect of its investment in software.

A developer, on the other hand, will have invested considerable time and effort in the creation of source code and will often want to use parts of it in other projects, so as to minimise the amount of time and effort it needs to expend in the future. Software escrow acts as a strong motivating force for it to abide by the terms of a contract by securing its ability to use parts of the code in other projects.

Software Escrow Agreements

The terms of a software escrow agreement will usually stipulate that any instruction manuals, guides and related materials be placed into escrow, together with the source code. The agreement will also set out the specific events triggering release, in addition to dealing with updated versions of the code, the form in which it will be received by the escrow agent and the manner in which it will be held.

The developer will usually pay the escrow costs because it will often have more than one client requesting software escrow. Using the same agent to escrow software will save the developer time and money by streamlining both contract negotiations and administrative burdens.

Lawdit's Software Escrow Services

Lawdit acts for clients around the world in relation to software escrow services and our team of escrow agents and solicitors are always on hand to assist and advise you. We offer a free callback service and are happy to discuss your particular needs, concerns and goals. Call or contact us today if you are looking to escrow software and we'll be pleased to talk you through your options.