A licence agreement is very useful for those wishing to grant someone the right to use something for a set period of time and on certain conditions. You might have certain business assets that you wish to allow someone else to use. For this type of arrangement, you ought to speak with a contract lawyer to have a licence agreement drawn up.

In most normal circumstances, the licensee pays a fee in exchange for the right to use of the asset. For instance, you may wish to:

  • Purchase some computer software. Often, part of the conditions of use of this software is to enter into a licence agreement with the company agreeing to the terms and conditions of use of their products;
  • Purchase a franchise outlet and become a franchisee – in doing so you are agreeing to enter into a licence agreement with the franchisor that allows you to operate the franchise by using their trademarks, patents and any other intellectual property that is owned by the franchisor. You agree to abide by the terms and conditions of the franchisor when you enter into a franchise agreement.

For the sake of brand protection, licence agreements are extremely useful. At the same time, licence agreements allow businesses to profit from third parties that wish to use the IP or designs of another business. If the Licence Agreement pertains to the use of software, it might be more appropriate to speak with an IT lawyer instead of a contract lawyer.

What are the most important provisions in a licence agreement?

There are several clauses that ought to be drafted into any licence agreement by the contract solicitor. A good contract solicitor will always include the following:

  • Scope – What does the Licence Agreement cover in terms of products? What is the licensee entitled to do with the products? What is the term for use of the products?
  • Training & Support – Will there be an obligation on the licensor to provide training or support in regards to the use of the product?
  • Fees – How will the licensor be paid? In instalments? Upfront fee?

These terms will structure the Agreement so that there is less chance of any conflict between licensee and licensor arising. Having a contract lawyer draft the Agreement will ensure there is no confusion as to the terms and conditions of the agreement.

Conclusion

It is always a good idea to get a business solicitor or a contract solicitor to review the Licence Agreement, or better yet, draft it from scratch. This will ensure you and the other various parties are completely aware of their respective rights and responsibilities under the Agreement. In the event that there is a dispute, the terms and conditions of the Agreement should be drafted such that there is no confusion as to who is responsible.

Be wary of taking advantage of free templates or precedents. Your circumstances will inevitably be unique and a contract lawyer should play some part in advising you on the most appropriate form and structure of a Licence Agreement. Give your business the protection it requires by formalising the Agreement with an experienced contract lawyer.

To get the ball rolling, contact LegalVision on 1300 544 755.

Lachlan McKnight

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