ThinkstockPhotos-466732957When setting up a software escrow one of the most critical areas to review should be the Trigger events also known as Release Conditions.  Here are a few common events that trigger the release of the code you put into escrow.

  • The software provider files for bankruptcy. This is, of course, a dreaded event, but it’s surprisingly more common than you might think.  When your software provider or the designer of your source code files for bankruptcy, you are within your rights to ask for the release of the source code.
  • Breach of agreement. Let’s say your software provider is required to provide certain maintenance or upgrades to the source code.  If you discover this isn’t the case (say, through an audit as part of your escrow agreement), then you may want to ask for an escrow release of the source code.

  • A change in provider circumstances may trigger a release of the source code. Sometimes it isn’t bankruptcy that causes an unexpected change in plans.  What if your software provider is acquired by another company and this changes the maintenance plan for the software?  This might be a triggering event, depending on how the acquisition handles previously existing agreements.
  • Note that a dispute with the provider is not necessarily a triggering event. Unless the dispute is a true breach of contract, a simple dispute on services is not enough to trigger a source code release.
  • “Force Majeure.” In other words, things that are completely uncontrollable, such as acts of war or what is commonly termed “acts of God,” meaning natural disasters.

Triggering events don’t have to be the end of the world.  But they can be without an escrow in place to protect critical software functions.  Knowing your triggering events can help you determine your rights.  To see sample legalese look here.