The Skeleton of a Licence Agreement

copyright 1997 Donald M. Cameron , Aird & Berlis

Every Licence Agreement should contain a framework -a skeleton- which provides support for other clauses or systems of clauses in the Licence Agreement. Sometimes these skeletal elements are scattered throughout the Agreement and, due to awkward drafting, can be difficult to find.

The skeleton of a Licence Agreement is:

1. Identification of the parties

   Although self-evident, the Agreement should be made between the party who has the right to grant the Licence and the party who will be exercising that licence.

   Related sections include:

   • Warranties of Title
   • Indemnification
   • Limitation of Liability
   • Rights to Assign Obligations or Responsibilities

2. Definitions

   The definition clause is the dictionary for the Agreement. The parties to the Agreement can define terms like "software", "use" and "royalty" to make clear the rights and obligations of the Agreement.

Related sections include:

• the product specification
• confidential information

3. The Grant See The Grant Clause

   The Grant clause is the most important clause in any Licence Agreement. It specifies "who gets what".

   For example, a grant clause could be as simple as "the Licensor hereby grants to the Licensee a licence to Use the Software in the Territory for the Term of this Agreement". Recourse may be necessary to the Definitions clause in order to find out the meaning of the capitalized terms.

   Related sections include:

   • Term
   • warranties as to title or right to license
   • Delivery, Installation & Acceptance
   • Training
   • Prohibition from Reverse Engineering
   • Permission to make Modifications
   • Indemnification
   • Rights to Assign Obligations or Responsibilities

4. Consideration [See Consideration]

   Usually, the consideration paid by the Licensee to the Licensor is some form of royalty payment. Sometimes the Licensee grants back to the Licensor ownership of improvements or a licence to use technology owned by the Licensee.

   Related sections include:

   • royalties
   • Limitation of Liability
   • Indemnification

5. Other "boilerplate" clauses include:
   • Dispute Resolution
   • Force Majeure
   • Severability of Clauses
   • Survival of Obligations
   • Integration Clause
   • Relationship between the Parties
   • Waiver of Breaches
   • Notice
6. 
   

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