Free Software Distribution Agreement Template

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Date: _________________

By:__________________________________________

Name:

Title:

Date: _________________

By:__________________________________________

Name:

Title:

How-to guides, articles, and any other content appearing on this page are for informational purposes only, do not constitute legal advice, and are no substitute for the advice of an attorney.

Software distribution agreement: How-to guide

In the highly competitive world of modern business, a company must have great products, excellent marketing, and top-notch customer service. Organizations must also seek strategic partnerships to encourage continued growth and long-term stability.

Businesses choose their associations based on many factors. In some cases, one company may be adept at technological development, and another may be an expert in creating efficient distribution chains. The two organizations can get together and ensure the software gets to end users quickly and economically.

In such instances, a software distribution agreement is valid. Such agreement is between a provider and a distributor. Herein, both parties agree that one or many distributors will sell the provider’s software at a reasonable price.

Key terms of software distribution agreements

The following instructions will help you understand the terms of your software distribution agreement. Please review the entire document before starting your step-by-step process.

Introduction of parties

This section identifies the document as an agreement for the distribution of software. Add the effective date of the document, the parties involved, and the type of organization(s) they are.

In the document, the “provider” is the party creating the software, and the “distributor” is the party distributing it. They’re collectively referred to as “parties.”

Recitals

The “whereas” clauses, referred to as recitals, define the world of the agreement and offer key information about the parties. This section reiterates the parties’ desire to agree on the software distribution.

Describe each party’s business in general terms. Also, describe the software that is the subject of the agreement. Be specific. If more than one item is being distributed, list each separately and provide some identifying details.

No exclusivity

This section appoints the distributor as a distributor for the provider and states that this is a “non-exclusive” arrangement. In other words, the distributor isn’t the only company or person entitled to sell the software.

Distribution, marketing, and support

The provider here promises to give the distributor access to the software so the distributor can sell it. Use this section to get acknowledgment on the terms, e.g.,

The distributor doesn’t own the software; they only have the license to use and sell it.
The distributor is free to market or sell the software as they see fit, as long as it follows all of the terms and conditions of this agreement.

Fees

The distributor must pay a fee for each software sale on its site. Structure this arrangement to suit your business. Depending on the distributor's sales, define whether they’ll pay a certain amount to the provider or would prefer to specify a fee for each sale.

Payment of fees

This section mentions that the distributor pays the amounts owed to the provider within a certain period at the end of every month. In the written notice, mention how long the distributor has to make these payments. Note that the distributor must also provide a payment statement explaining what sales were made and what deductions were taken.

Minimum retail price

This section allows the distributor to set the sale price for the software from the initial release date. The provider can also suggest a minimum retail price for the software.

Representations and warranties

This section lists the provider’s “representations” to the distributor to ensure there are no misunderstandings. Define the conditions required for the distributor to enter the arrangement, such as:

The provider prepares the software and owns all of its intellectual property.
The provider owns the software.
The software doesn’t infringe on anyone else’s property rights.
The software will do what it promises it’ll do.
Provider can give the distributor the authority to sell the software.

Term and termination

Term: The term of an agreement is how long it’ll last. This section lets you establish how long you want this period (e.g., six months, one year, etc.). You can terminate it after a defined period or let it automatically renew on the renewal date. You can also specify the number of times the agreement will follow automatic renewal.
Termination: This section gives both parties the right to terminate the agreement at any time for any reason, just by providing notice to the other party. They must add a number of days ahead of time that a party must give notice that it wants to end the agreement.
Responsibilities on termination: Once the agreement is terminated, the distributor must remain responsible and complete the arrangement. More specifically, the distributor has to stop selling the software, take it down from its site, and return any remaining hard copies to the provider (or destroy any electronic copies).

No employment relationship

This section explains that both the parties aren’t employees or partners to each other. This distinction is important for legal reasons, including insurance coverage requirements, liability, and taxes. The agreement shall emphasize this divide, but both parties should keep the line between independent contractors and employees in performing their duties. Every state’s or country’s laws govern the independent contractors. Ensure that the agreement follows local restrictions.

Limitation of liability

This section mentions that both parties aren’t liable for numerous damages, such as consequential, punitive, and direct or indirect damages. Both parties may be unwilling to accept responsibility for any harm that could, in some tenuous way or another, be related to the agreement or some sale that did or didn’t happen on the site.

Indemnification of distributor

This provision describes the occasions when the provider will be responsible for any losses the distributor experiences. Specifically, the provider will pay damages that the distributor suffers if the provider has committed any substantial breach of this agreement. The distributor must notify the provider about any developing lawsuits so the provider can assist in defending against these claims. This makes sense since the provider will be responsible for paying any damages if the case is lost.

Confidential information

This section defines confidential information for purposes of the agreement and explains how each party will treat the other party’s confidential information and trade secrets, e.g.,

A party can use the information only for purposes intended by the agreement. For example, if the information was disclosed to help the distributor sell the software, the information can be used only for that purpose.
If a court orders the disclosure of information, the party ordered to disclose it must talk to the other party before making the disclosure.

Interruption of service

The internet is unreliable. Connections fail occasionally, or websites are unavailable to the public. Suppose any of these circumstances occur and potential customers can’t access the site. In that case, the parties agree that the distributor won’t be liable to the provider for any damages (e.g., lost sales).

Assignment

This section explains that each party must obtain the other’s written permission before assigning its obligations and interests.

No implied waiver

This clause explains that if either party allows the other to ignore or break an obligation under the agreement, it doesn’t mean that the party waives any future rights to require the other to fulfill those (or any other) obligations.

For example, consider the distributor’s obligations to provide monthly statements. Imagine that the distributor hasn’t delivered these reports for six months, but the provider hasn’t said anything about it. Later, the provider can require the obligations statements, as required in the agreement. If the distributor claims that this right was “waived” because the provider didn’t enforce it before, the provider can point to this section that mentions—a party’s failure to enforce the provision at one point doesn’t mean it can’t enforce it later.

Notice

In this section, add the mailing address of the provider and the distributor where all the official or legal correspondence should be delivered.

Governing law

The provider may work in one state and the distributor in another. A governing law provision allows the parties to choose the state laws used to interpret the agreement.

Compliance with laws

In this section, the parties promise that their actions under the agreement won’t violate the applicable laws.

Severability

This clause protects the terms of the agreement as a whole, even if one part is later invalidated. For example, if state law prohibits arbitration clauses, it won’t undo the agreement. Instead, only the section dealing with arbitration would be invalidated, leaving the remainder of the agreement enforceable.

Entire agreement

In this section, the parties acknowledge that this document is the agreement they’re signing.

Headings

This confirms that the headings at the beginning of every section are for organizational purposes only and shouldn't be used to interpret the agreement.

Frequently asked questions

What is a software distribution agreement?

When a company specializing in software development works with a company specializing in distribution, there can be significant rewards for both. Sell more software with a successful partnership using the software distribution agreement. It allows both companies to create a supply chain that gets the software to more customers.

How do you structure a distribution agreement?

Here's the information you'll need to complete your software distribution agreement:

Who the distributor is: Have their name and contact information ready.
Who the supplier is: Have their name and contact information ready.
Pricing: Agree on a minimum price and how much the distributor will pay the supplier.
Timeline: Know how long you want the agreement to last and if you want it to be renewed.

When should you use an exclusive software distribution agreement?

If you want to ensure that the company has only one distributor for its software, use an exclusive distribution agreement. On the contrary, in a non-exclusive software distribution agreement, the developer company can hire additional distributors to offer the same products.

What information should be considered while drafting the software distribution agreement?

Identify all the prerequisites before finalizing your agreement. For example, is the distributor supporting the customer and the product, or is it the provider’s responsibility? If it is the distributor, will its employees be required to take training classes to familiarize themselves with the product?

Is it essential to review the agreement once it’s ready?

Yes, both parties should review the completed agreement carefully to ensure that all relevant points have been included. Ensure that all the terms are explicitly mentioned in the agreement. This will help both parties clearly understand their responsibilities under the agreement.

Should the agreement be notarized when signatures are added?

Yes, it’s a good idea to have your agreement notarized, as it’ll reduce the challenges to the validity of a party’s signature later. Save two signed copies of the agreement for you and the other party. Take an attorney’s help to customize and draft the document according to your business needs.




Date: _________________	By:__________________________________________
	Name: Title: