contracts
Software License Agreement Template and How to Draft One (2026)
Adira EditorialLegal AI desk6 min read
What is a software license agreement, and when do you need one? A software license agreement is a contract where the owner of software (the licensor) grants another party (the licensee) the right to use it, on agreed terms. You need one whenever software is provided to a user or business to install or hold, rather than accessed as a hosted service. It covers what the licensee may do with the software, what it may not do, the fees, who owns the code, and what support and warranties come with it. An end user license agreement (EULA) is a common form of it for standard products. Below is a software license agreement template you can copy and adapt, followed by plain-English guidance on how to fill each clause. This is general information, not legal advice. For a high-value or custom software deal, have a qualified lawyer review your final document. ## Software license agreement template ```
SOFTWARE LICENSE AGREEMENT This Software License Agreement ("Agreement") is made on [DATE] BETWEEN: [LICENSOR LEGAL NAME], [registration / address] ("Licensor") AND [LICENSEE LEGAL NAME], [registration / address] ("Licensee") 1. DEFINITIONS "Software" means [NAME AND VERSION], including documentation and any updates provided under this Agreement. 2. LICENCE GRANT The Licensor grants the Licensee a non-exclusive, non-transferable licence to use the Software:
- Type: [perpetual / for a term of [N] years]
- Scope: [number of users / devices / sites / CPUs]
- Purpose: [internal business use only, etc.] 3. RESTRICTIONS The Licensee will not: copy the Software except for backup; sell, rent or sublicense it; reverse engineer it except as allowed by law; remove proprietary notices; or use it beyond the scope in clause 2. 4. DELIVERY The Licensor will deliver the Software by [method] by [DATE]. 5. FEES The Licensee will pay [AMOUNT] as a [one-time licence fee / annual licence fee], plus [support and maintenance fee] if applicable. Fees are [exclusive / inclusive] of applicable taxes (e.g. GST/VAT) and payable within [N] days of invoice. 6. INTELLECTUAL PROPERTY The Licensor owns all rights in the Software. The Licensee receives only the licence in clause 2 and acquires no ownership of the Software or its code. 7. SUPPORT AND MAINTENANCE [If included:] The Licensor will provide support via [channel] during [hours] and will supply updates and fixes during the [support term]. [If not included, state "No support is provided under this Agreement."] 8. WARRANTIES The Licensor warrants that, for [N] days from delivery, the Software will perform materially as described in the documentation, and that it has the right to grant this licence. Except as stated, the Software is provided "as is" to the extent allowed by law. 9. LIMITATION OF LIABILITY Neither party is liable for indirect or consequential loss. Each party's total liability is capped at the fees paid in the [N] months before the claim, except for breach of confidentiality, IP infringement, or liability that cannot be limited by law. 10. INDEMNITY The Licensor will defend the Licensee against claims that the Software infringes a third party's intellectual property, provided the Licensee notifies the Licensor promptly and allows it to control the defence. 11. CONFIDENTIALITY Each party will keep the other's confidential information secret and use it only for this Agreement. This duty continues for [N] years after termination. 12. TERM AND TERMINATION This Agreement starts on [DATE] and runs [perpetually / for the licence term]. Either party may terminate for a material breach not fixed within [N] days of notice, or on insolvency. On termination for cause, the Licensee stops using and deletes the Software. 13. GOVERNING LAW This Agreement is governed by the laws of [JURISDICTION]. Disputes will be resolved by [courts of [PLACE] / arbitration seated in [PLACE]]. SIGNED: Licensor: ____________________ Date: __________ Licensee: ____________________ Date: __________
Frequently asked questions
- What is the difference between a software license and a SaaS agreement?
- A software license grants the right to use software you install or hold, often perpetually or for a term. A SaaS agreement gives access to software the vendor hosts and runs, on a subscription. The license model turns on the grant and restrictions; the SaaS model turns on uptime, data and the hosted service.
- What is the difference between a perpetual and a term licence?
- A perpetual licence lets the customer use that version of the software indefinitely after paying, usually with separate ongoing fees for support and updates. A term licence lasts only for a set period and ends unless renewed. The template lets you choose either in the grant clause.
- Does a software license agreement need to assign IP to the customer?
- No, and it usually should not. The licensor keeps ownership of the software and grants only a right to use it. Assignment transfers ownership, which is rare in licensing. The customer gets a licence, not the code itself, unless the parties specifically agree an assignment or source-code escrow.
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