Developing a software contract is a standard procedure most businesses are intimately familiar with – or so they think. Even if you are a pro at dealing with Software as a Service contracts, software development or other software implications, you may be stunned to discover some of the basics of software contracts that you were unaware of before now!
A recent data survey of close to 100 critical corporate legal contracts (as it relates to software) revealed many security trends and “pain point” issues that plague the rest of the contract industry. There were many insights, but some of them were so simple they were shocking. For example, did you know that a full 75% of contracts were put together through cut-and-paste methods from earlier contract drafting? Yet only 22% of those businesses realized they were in danger of high risk of error.
Do you feel as though your software programs and business dealings are simple enough for a cut-and-paste kind of contract? Most businesses would probably say no. But they do very little to very they are actually getting a personalized software agreement contract. This could expose your company to obligations beyond what the standard contract would imply – simply because it wasn’t really designed for your individual benefit. It was designed with speed in mind.
A relevant example is the terms of service agreements most of us scroll past quickly and click “I agree” before we really consider what we’re doing. Unfortunately, many business practices mirror that habit.
So how can you prevent your critical information from slipping through the cracks of a general contract built on copy and pasted clauses? Have a neutral third party look at your contract and determine if it is, in fact, what you need. A close look at your contracts can determine if you actually need an escrow agreement for your software contracts (hint: the answer is usually “yes”).