FAQ Software Escrow Agreement

Software Escrow

What is a software escrow agreement?

A software escrow agreement is a contract between a software vendor, its client and a third party escrow agent, allowing the client to access the software source code under some specific conditions, such as the vendor's bankruptcy or inability to maintain the software. These conditions are called release conditions and are negotiated by the parties in the contract. Once the contract is signed, the software vendor makes a deposit of its source code with the Escrow agent. The escrow agent will only release the source code to the client if one of the agreed release conditions occur.  A software escrow contract brings reassurance and peace of mind to the client by ensuring the continuity of their business critical software.

What should be included in a software escrow?

Depending on the type of software, here is the list of the elements that Vaultinum usually recommends to escrow.

For ON PREMISE software: Source code, Object code, Executable code, technical documentation used to design and produce the software, tools needed to develop, compile and/or deploy the software.

For SAAS : Access codes to the platform,  Deployment procedure (written documentation, Infrastructure as Code or AMI machine package), Documentation (user, technical or deployment guides, contracts with cloud or managed service providers), Database if dedicated to a single customer or Database common to several customers if a split by customer is possible.

How long does it take to sign a software escrow?

Like for any contract, there is usually a negotiation period before the parties agree on the terms of the contract and sign it. There is no exception for a software escrow agreement. Therefore the time it takes to sign a software escrow agreement can vary from a few days to a couple of months, depending on how easily both parties will agree on the terms of the contract.

What happens when the release conditions agreed in an escrow agreement occur?

If one of the agreed release conditions occur, then the beneficiary is entitled to ask Vaultinum to release the source code to them. However, at Vaultinum we have a very strict access procedure which involves several verification steps. First, the beneficiary needs to notify Vaultinum and submit the software escrow agreement along with a valid licence between them and the supplier and evidence that the release condition has been met. Then an access commission will review the documents provided and decide whether they are sufficient to grant access within the framework of the software escrow.

Who pays for a software escrow?

The short answer is -it depends. In some cases, the software vendor supports the cost of the software escrow, in some others it will be the responsibility of the client and sometimes the fees may even be shared between the software vendor and the beneficiary. It all depends on what has been negotiated between both parties and the type of software escrow required. If there is a request from the beneficiary for a verified or a controlled escrow, the extra cost will most likely be supported by the beneficiary.