Software Escrow Agreement India

Software Escrow Agreement in India: Everything You Need to Know

As more and more businesses continue to rely on software for their operations, it`s becoming increasingly important to protect companies` investments from risks such as vendor bankruptcy or disruption of service. One way to do this is through a software escrow agreement.

A software escrow agreement refers to an agreement between a software developer, end-user, and a neutral third-party escrow agent. The agreement stipulates that the source code and other critical software materials will be deposited in escrow and be held by the escrow agent, until such time as the software developer is unable to provide support to end-users. At this point, the source code and other materials will be released to the end-user.

Why Use a Software Escrow Agreement?

The main reason for entering into a software escrow agreement is to provide end-users with assurance that they will have access to critical software materials, should the need arise. For example, if a software vendor goes out of business, the end-user will still have access to the source code, which is necessary for the maintenance and support of the software.

A software escrow agreement can also mitigate risks associated with software projects that are particularly complex and/or expensive. If something goes wrong with the software development project or the software itself, the escrow agreement can help ensure that all parties involved are protected.

What is the Legal Framework for Software Escrow Agreements in India?

Software escrow agreements in India are governed by the Indian Contract Act, 1872, which outlines the basic legal framework for such agreements in the country. Additionally, there are other applicable laws and regulations, such as the Information Technology Act 2000 and the Indian Copyright Act 1957.

The main purpose of these laws and regulations is to ensure that the terms of the software escrow agreement are legally enforceable and to safeguard the interests of all parties involved.

What are the Key Provisions of a Software Escrow Agreement?

A software escrow agreement typically includes the following key provisions:

1. Definition of the software and materials to be deposited in escrow.

2. Identification of the parties involved in the agreement, including the escrow agent.

3. Description of the release conditions under which the escrowed materials will be released to the end-user.

4. Procedures for the deposit and release of materials from escrow.

5. Confidentiality provisions to protect the software developer`s intellectual property rights.

6. Provisions regarding the rights and obligations of all parties involved in the agreement.

7. Dispute resolution provisions.


A software escrow agreement is an important legal document that helps protect the interests of software vendors and end-users alike. It can provide much-needed assurance that critical software materials will be available, even in the event of unforeseen circumstances.

In India, software escrow agreements are governed by various laws and regulations, including the Indian Contract Act, 1872, and the Information Technology Act, 2000. As such, it is important to seek legal advice and ensure that all the necessary provisions are included in the agreement to make it legally binding and enforceable.

You may also like...