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A Source Code License Agreement Short Form is a concise contract that grants a licensee defined rights to access, use, and sometimes modify a licensor's proprietary software source code. Unlike a full software license agreement, the short form strips away extended warranty, indemnification, and multi-tier support clauses to deliver the essential terms β permitted use, restrictions, fees, confidentiality, and termination β on a single page. It is designed for business-to-business code sharing where both parties are technically sophisticated and the arrangement is straightforward enough that a lengthy agreement creates more friction than protection.
Sharing source code without a written agreement leaves three critical questions unanswered: who owns the code, what the recipient is allowed to do with it, and what happens when the relationship ends. Without clear permitted-use and restriction language, a licensee may redistribute, resell, or build competing products on your codebase β and you will have no contractual basis to stop them. Missing confidentiality terms means copyright law alone must protect the code, which does not prevent disclosure to third parties. A properly completed short-form license agreement closes all three gaps in under 15 minutes, giving both parties a clear, enforceable record of exactly what was agreed before a single line of code changes hands.
| If your situation is⦠| Use this template |
|---|---|
| Simple one-off code sharing with a contractor or client | Source Code License Agreement Short Form |
| Ongoing commercial software licensing with royalties | Software License Agreement |
| Distributing open-source code with contribution terms | Open Source Software License |
| Granting a reseller the right to sublicense your software | Software Reseller Agreement |
| Hiring a developer to build software owned by your company | Software Development Agreement |
| Protecting source code shared under an NDA before licensing | Non-Disclosure Agreement (NDA) |
| Transferring full ownership of source code to a buyer | Intellectual Property Assignment Agreement |
Why it matters: Without stating whether the license is exclusive or non-exclusive, the licensor may inadvertently be contractually blocked from licensing the same code to other customers.
Fix: Explicitly label the grant as exclusive or non-exclusive in the Grant of Rights field and confirm the choice reflects your commercial intent.
Why it matters: A description like 'all software owned by licensor' can inadvertently cover unrelated codebases, creating liability the licensor never intended.
Fix: Name the specific software, version, and repository reference. Attach a file manifest as Exhibit A if the codebase spans multiple components.
Why it matters: Copyright alone does not prevent a licensee from sharing the code with third parties. Without a confidentiality clause, there is no contractual remedy for disclosure.
Fix: Add a confidentiality obligation that requires the licensee to restrict access to named personnel and prohibit any disclosure without written consent.
Why it matters: When the license ends, the licensee may retain and continue using copies of the code without a clause requiring deletion and written certification.
Fix: Require the licensee to delete all copies and provide written certification of destruction within a defined number of business days after termination.
Enter the registered legal name, address, and contact email for both the licensor and the licensee. Confirm the licensor is the actual legal owner of the source code.
π‘ If a freelancer wrote the code, confirm IP ownership has already been assigned to the licensor's entity before executing this agreement.
Name the software, include the version number, and reference a repository URL or attach a file manifest as Exhibit A. Specificity prevents scope disputes later.
π‘ A GitHub commit hash or release tag is the most precise identifier for a versioned codebase.
State clearly whether the license is exclusive or non-exclusive, what the licensee may do (use, modify, integrate), and what is prohibited (redistribute, sublicense, sell).
π‘ If the licensee only needs to run the software β not modify it β limit the grant to 'use' only. A modify right is much broader.
Enter the one-time license fee, recurring royalty percentage (if any), payment schedule, and currency. If the license is free, write '$0' explicitly rather than leaving the field blank.
π‘ Tie royalty payments to net revenue rather than gross to account for returns, taxes, and payment processor fees.
Specify that the licensee must treat the source code as confidential, limit access to authorized personnel, and bind those personnel to equivalent obligations.
π‘ Reference any existing NDA between the parties so confidentiality obligations stack rather than conflict.
Set the start date, license duration, notice period for voluntary termination, and the specific breaches that trigger immediate termination without notice.
π‘ For short-term project licenses, a fixed end date is cleaner than an open-ended term with a notice period.
Require deletion and written certification of all code copies upon termination, then select the governing jurisdiction closest to the licensor's place of business.
π‘ Include a survival clause listing which obligations β confidentiality, IP ownership β continue after the agreement ends.
A source code license agreement is a contract that grants a licensee the right to access, use, and in some cases modify a licensor's software source code under defined conditions. It specifies what the licensee may and may not do with the code, how much they pay, how long the license lasts, and what happens when it ends. Without one, sharing source code creates ambiguity about ownership, permitted use, and confidentiality.
Use the short form for straightforward, single-purpose arrangements β a contractor integrating one module, a client receiving a finished codebase, or a partner accessing a utility library. The full software license agreement is better suited to commercial SaaS licensing, multi-product arrangements, or deals involving sublicensing, warranty terms, and indemnification. When the deal is simple and both parties are sophisticated, the short form covers the essential bases in a fraction of the time.
In most jurisdictions, a written agreement becomes binding when both parties indicate their acceptance β typically through signature, but also through conduct or electronic acknowledgment. A signature block is recommended because it creates a clear, timestamped record of agreement that is easy to enforce. Without it, establishing exactly when and on what terms each party agreed becomes a factual dispute.
An exclusive license means only the named licensee can exercise the granted rights β the licensor cannot grant the same rights to any other party during the term. A non-exclusive license allows the licensor to license the same code to multiple parties simultaneously. Most commercial arrangements use non-exclusive licenses unless the licensee is paying a premium specifically for exclusivity.
Only if the agreement explicitly permits it. The default position in most jurisdictions is that sublicensing is prohibited without the licensor's written consent. If you intend to allow sublicensing β for example, to let a client embed the code in a product they sell β add a specific sublicensing clause with any conditions, such as written notice and revenue-sharing requirements.
The licensee should be required to immediately cease using the code, delete all copies from its systems, and provide the licensor with written certification of deletion within a defined window β typically 10 business days. Without this clause, the licensee may retain and continue using the code after the license has ended, which is effectively unauthorized use.
Yes, if a confidentiality clause is included. Copyright law protects against unauthorized reproduction and distribution but does not prevent a licensee from disclosing the code to third parties. A confidentiality clause creates a separate contractual obligation β with its own remedies β to keep the source code private and restrict access to authorized personnel.
For a straightforward code-sharing arrangement between two sophisticated parties, this template is typically sufficient without legal review. Consider engaging a lawyer if the license involves significant royalties, if the code is a core competitive asset, if sublicensing is contemplated, or if the parties are in different countries with conflicting IP laws. A one-hour legal review generally costs $200β$400 and is worthwhile for high-value codebases.
A full software license agreement covers compiled software delivered to end users and typically includes warranty disclaimers, limitation of liability, indemnification, and multi-tier support terms. The short form is designed for source code shared between two parties in a business-to-business context. When the deal involves a consumer-facing product or significant commercial liability exposure, use the full agreement.
An NDA protects confidential information before or during negotiations but does not grant any usage rights. A source code license agreement grants defined usage rights and includes confidentiality as one of several terms. Use an NDA when you need to share the code for evaluation only; use the license agreement once you are ready to grant actual usage rights.
A software development agreement governs the creation of new software by a developer for a client, including IP ownership of the output. A source code license agreement governs usage rights to code that already exists. If you are commissioning new code, use a development agreement; if you are sharing existing code, use the license agreement.
An IP assignment transfers full ownership of the source code from one party to another permanently. A license agreement retains ownership with the licensor and grants only defined usage rights. Use an assignment when the buyer needs to own the code outright; use a license when the licensor wants to retain ownership and control reuse.
Used to grant integration partners or white-label clients access to a specific module or API implementation while retaining full IP ownership.
Agencies and consultancies use it to deliver client projects with defined post-delivery code usage rights, preventing unauthorized resale or redistribution.
Embedded software licensed to equipment manufacturers under a short-form agreement tied to unit volume and deployment restrictions.
Fintech providers license proprietary calculation engines or data-processing code to banks and brokers with strict confidentiality and audit-trail requirements.
| Path | Best for | Cost | Time |
|---|---|---|---|
| Use the template | Developers, agencies, and small businesses sharing source code in a straightforward single-purpose arrangement | Free | 10β15 minutes |
| Template + professional review | Arrangements involving royalties, exclusivity, or code that is a primary business asset | $200β$400 (one-hour attorney review) | 1β2 days |
| Custom drafted | Multi-party licensing, sublicensing structures, cross-border IP, or high-value commercial code deals | $800β$2,500+ | 1β2 weeks |
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