GUIDANCE NOTE

EASY GUIDE TO USING ESCROW SERVICES

An escrow agreement is commonly used where a developer (licensor) licenses software to a third party
(licensee). There will (or should) be a main software licence agreement in place between the licensor and the
licensee. Under this software licence agreement, there will often be a provision specifying that the source code
for the software is to be held in escrow so that if certain specified events occur (e.g. the licensor’s bankruptcy),
the licensee will be able to have access to the source code and continue to maintain and support the software he
has been licensed (and paid for).
The escrow agreement will be between the licensor, licensee and an independent escrow agent such as NCC.
This arrangement protects the licensee’s investment in the software and ensures he will be able to continue to
use it no matter what happens to the licensor. It also offers the licensor protection in that he does not have to
give the source code to the licensee and risk unlicensed use of the same by the licensee.
The following guidance is based on the example of escrow services offered by NCC in order to give you an idea
as to how to enter into an escrow agreement. There are other companies which offer escrow services.
PROCESS
1. Decide whether you require a single licensee agreement or a multi licensee agreement.
a. Single licensee = for bespoke software which has been developed for / commissioned by one
client (e.g. websites).
b. Multi-licensee = for generic software which is being licensed to more than one licensee (e.g.
Microsoft Office).
2. Decide whether amendments need to be made to the standard template (whether single or multi-
licensee).
a. Standard template = complete order form and send to NCC. NCC will then send agreements
to parties for signature.
b. Non-standard template = complete order form and send with requested amendments to NCC.
NCC’s legal team will amend the agreements accordingly and send to parties for agreement and
signature.
COSTS
 One-off fee to be paid when sending in order form:
 Single licensee: £995
 Multi-licensee: £995
 Annual fee, 1st instalment invoiced when agreements have been signed:
 Single licensee: £845
 Multi-licensee: £715
 If amendments are required to the standard template agreement:
 One-off fee of £395 (based on 2 hours’ work by NCC’s legal team).
Yasmin Joomraty
Page 2
20 October 2008

Laurence Kaye Solicitors

© Laurence Kaye 2008
T: 01923 352 117
E: laurie@laurencekaye.com
www.laurencekaye.com
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This guidance note is not intended to be exhaustive and it does not constitute or substitute legal
advice, which should be sought on a case by case basis.
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