Shrink Wrap Agreement for Software: What You Need to Know

If you`re purchasing software for your business, you may come across terms like “shrink wrap agreement” or “click-wrap agreement.” While these types of agreements are commonly used in the tech industry, they can be confusing and potentially risky if you don`t fully understand what you`re agreeing to.

What is a shrink wrap agreement?

A shrink wrap agreement is a type of software license agreement that is typically included with software packages. It is called a “shrink wrap” agreement because the terms of the agreement are printed on the outside or inside of the package, and the package is “shrink wrapped” to prevent tampering before purchase.

What are the terms of a shrink wrap agreement?

The terms of a shrink wrap agreement can vary, but they typically include clauses related to:

– Ownership of the software

– Limitations on use

– Restrictions on copying or distribution

– Warranties

– Disclaimers of liability

While these terms may seem straightforward, it`s important to read them carefully before agreeing to them. Some shrink wrap agreements may contain language that limits your ability to modify or resell the software, or that waives your rights to sue the software company for damages.

What is a click-wrap agreement?

A click-wrap agreement is similar to a shrink wrap agreement, but instead of being printed on the outside or inside of a package, the terms of the agreement are displayed on the screen of the computer or device that is being used to download the software. To agree to the terms, the user must click a button or check a box indicating that they have read and accept the terms.

What are the risks of accepting a shrink wrap or click-wrap agreement?

The biggest risk of accepting a shrink wrap or click-wrap agreement is that you may be unknowingly agreeing to terms that could be detrimental to your business. For example, if you agree to a shrink wrap agreement that limits your ability to modify or resell the software, you may find that you are unable to make necessary changes to the software or that you are unable to recoup any of the money you spent on the software if you no longer need it.

It`s also important to note that not all shrink wrap or click-wrap agreements are legally enforceable. Courts have found that some agreements are invalid if the terms are deemed unconscionable or if the agreement violates consumer protection laws.

How can you protect yourself?

To protect yourself when agreeing to a shrink wrap or click-wrap agreement, it`s important to read the terms carefully and to consult with legal counsel if you have any questions or concerns. You may also want to consider purchasing software from vendors that offer more transparent licensing agreements, or that allow you to negotiate the terms of the agreement before making a purchase.

In conclusion, if you`re considering purchasing software for your business, it`s important to be aware of the terms of the shrink wrap or click-wrap agreement that may be included. By taking the time to read and understand these terms, you can avoid potentially risky agreements that could harm your business.