Contracts: Click On License Terms

Business Contract

This post is part of a series of posts entitled A Legal Guide to the Internet. For a comprehensive list of articles contained in this series, click here.

Online software licenses can and should be as short and simple as possible. Although the needs of the particular business should be addressed, some of the basic terms which would appear in any such license agreement include the following boilerplate terms:

Merger Clause

“This agreement constitutes the entire agreement between the parties pertaining to the subject matter hereof, and supersedes any and all written and oral agreements previously existing between the parties with respect to such subject matter.”

Governing Law

“This agreement shall be governed by the laws of the State of Minnesota, excluding

  1. that body of law known as conflicts of law, and
  2. the United Nations Convention for Contracts for the International Sale of Goods.”

Unless the parties to a contract agree otherwise, a merchant that regularly deals in the type of goods being sold impliedly warrants that the goods will be fit for the ordinary purposes for which the goods are used and that they are fit for the particular purpose for which they are intended. These warranties are typically disclaimed in software license agreements. The enforceability of warranty disclaimers and limitations of liability may, however, be subject to the Magnuson Moss Warranty Federal Trade Commission Improvement Act (“Act”) (15 U.S.C. §2301), which applies to consumer products presented to consumers. It is therefore important that the disclaimers include language that complies with the Act.

LIMITATION OF LIABILITY. IN NO EVENT WILL VENDOR BE LIABLE TO YOU FOR ANY LOST PROFITS, LOST SAVINGS, OR ANY OTHER INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES, ARISING OUT OF YOUR USE OR INABILITY TO USE THE SOFTWARE EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. SOME STATES DO NOT ALLOW THE LIMITATION OR EXCLUSION OF LIABILITY FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES SO THE ABOVE LIMITATION OR EXCLUSION MAY NOT APPLY TO YOU.

DISCLAIMER OF WARRANTIES. THIS PRODUCT IS PROVIDED “AS IS” WITHOUT WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, OR NON-INFRINGEMENT. SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OF IMPLIED WARRANTIES, SO THE ABOVE EXCLUSION MAY NOT APPLY TO YOU.

A governmental agency might assert greater rights to use of software unless otherwise restricted by the license. One way to limit such rights is to include the following proviso:

Restrictive Rights Legend

Any Software which is downloaded from this Server for or on behalf of the United States of America, its agencies and/or instrumentalities (“U.S. government”), is provided with restrictive rights. Use, duplication, or disclosure by the U.S. government is subject to restrictions as set forth in subparagraph (c)(1)(ii) of the Rights in Technical Data and Computer Software Clause at DFARS 252.227-7013 or subparagraphs (c)(1)and (2) of the Commercial Computer Software-Restricted Rights at 48 CFR 52.227-19, as applicable. The manufacturer is ______________________.

This and the following posts have been copied or adopted from A Legal Guide To The INTERNET – Sixth Edition, published through a collaborative effort by the Minnesota Department of Employment & Economic Development and Merchant & Gould.