Pub. 57 2016-2017 Issue 1

14 Negotiating Software Contracts – Successfully Negotiating a Warranty Section A warranty is one of the most important contract provisions in a software contract.The warranty section deals with the performance of the software and what the licensor promises the software will or will not do. In a software contract these performance warranties should be heavily negotiated but usually they are overlooked. Because so many factors can affect the performance of the software, publishers seek to limit their warranty, and provide limited remedies in the event of a breach. It’s important for businesses who license software to have a strategy in place to successfully negotiate this section. But what exactly are the pitfalls when negotiating a warranty provision, and how do you successfully navigate it? One of themajor pitfalls in negotiating a warranty is contained in the structure of the contract provision itself and the intent of the software licensor. Many contracts include boilerplate lan- guage, thus, contract negotiatorsmust develop a systematicway to review the language and then develop a strategy to address the warranty concerns for their side of the deal. To do this, the partiesmust first understand the risks involvedwith a particular software license and negotiate for the specific risk type. The best way to put this into action is to review the warranty language and put the language into a more concrete roadmap to negotiate the contract by asking the following questions: (1) what are the licensor’s objectives in the warranty section, (2) what are licensee’s objectives in the warranty section, (3) what