TECHNOLOGY CONTRACTS GLOSSARY

Scheduled Maintenance

See Maintenance, Scheduled.

Schedules

See Exhibits and Schedules.

Self Help

The ability of a party to retrieve assets or obtain remedies by taking practical business action. Self help can be legally problematic if it results in breach of the peace (e.g, violent repossession of tangible property); or if it has not been disclosed or agreed in advance (e.g., use of timers or access mechanisms to remotely "shut down" a computer system used by a customer who has not paid).

Sell-Off Period

Used in licenses in which physical products are produced (e.g., audio CDs or printed paper books). The licensee may have a limited time period after termination of a License agreement to continue to complete work in process (in other words, the products in the manufacturing pipeline) and sell off the work in process and inventory. Also called Wind-Down Period.

Service Level Agreement (SLA)

A Covenant in a contract to provide a level of service (LOS) to meet a specified metric. An example would be a minimum Uptime Guarantee for a web service. Service level agreements often are not free-standing agreements, but instead are contained within Maintenance and Support Agreements or other service agreements.

Set-off

In simple terms, withholding of payments under one transaction, contract or circumstance in order to recover debts owed under another transaction, contract or circumstance. Set-off rights are generally part of the law, such as California Code of Civil Procedure Section 431.70, and generally are not stated in technology contracts. Cross-Collateralization can be viewed as a type of explicit set-off in a contract.

Severability Clause

A contract provision that confirms a court's power to delete or even modify terms in a contract that are illegal or unenforceable. Sometimes referred to as a "blue pencil" clause particularly for non-competition agreements, because editors at one time used blue pencils to mark up text being edited.

Severity Level

The importance of an error in a technology product or service, which then may determine the required Response Time and level of effort to remedy the error. Used in Maintenance and Support Agreements.

Shrinkwrap Agreement

A type of agreement developed for personal computer software sold offline, in which the end user agrees to the agreement by the act of breaking the shrinkwrap or other packaging. It is typically not negotiable. This type of agreement becomes less and less important as software distribution migrates to the web, where Clickwrap and Browsewrap agreements are common.

Single Point of Contact (SPOC)

A person appointed by a party to a contract to be the contact person for interactions with the other party. A single point of contact is especially important when two large organizations need to communicate with each other efficiently. The most complex agreements may even include several single points of contact in different areas, such as customer support, engineering, and legal, as well as a main business contact.

Site License

A License that covers all personnel located at a particular site, usually for a single fee. Contrast with Enterprise License and Per-Seat License.

Six Sigma

A process improvement methodology intended systematically to identify and reduce unexpected variation in processes (such as business processes) with the goal of improving quality. Invented by Motorola and adopted by General Electric, DuPont and other major corporations.

Slander

See Defamation, Libel and Slander.

Software Development Agreement

An agreement similar to an Independent Contractor Agreement, but more focused on software development, and with more detail concerning the software development process.

Software Development Kit (SDK) License

An agreement to permit use of a set of software tools for the development of software.

Sole Remedy

A provision in a contract that limits the Remedies that a party may pursue against the other party. For example, a services agreement may limit the buyer's Remedies to refund or re-performance of the services, and exclude Remedies such as Damages for breach of contract. Or, Indemnification may be specified as the sole Remedy for Breach of third-party claims, which would exclude any Direct Damages for Breach of contract (in other words, one party would defend a second party and pay for the claims made by a third party against the second party, but the first party would not be liable for breach of contract to the second party).

Some Rights Reserved

An phrase used by the Open Content organization Creative Commons to indicate that some rights to a Work are available for unrestricted use, while others are reserved to the creator.

Source Code

The high-level, human readable form of computer program code. In proprietary licensing models, source code may be very valuable because it would enable other persons such as competitors to Reverse-Engineer, modify and duplicate a company's proprietary software products. In Open Source License models, this type of Reverse-Engineering and modification is encouraged, and therefore in those models, the emphasis is on requiring licensees to make the source code available.

Source Code Escrow

An arrangement in which proprietary Source Code is deposited on a confidential basis with an independent third party escrow agent, and released upon certain Escrow Release Trigger Events. Source code escrows are important in proprietary licensing models in which the licensor does not wish to release its Source Code to others, or has not received a sufficient payment to justify such release, and instead has released only Object Code. The licensee, however, may be concerned that it will have no ability to maintain and repair the software in the event the licensor ceases to exist, files for bankruptcy, or defaults in its Maintenance and Support obligations. A source code escrow is a common approach to reduce these risks. However, in practice, these source code escrow may not be updated frequently enough, and the code may not have sufficient documentation to be usable after a source code escrow release. One approach for those issues is to use a "verified" source code escrow, in which the escrow agent (or a third-party consultant) examines and verifies the usability of the Source Code. Although this sounds good in theory, it may not be practical depending on the situation. Some software owners with a large customer base of licensees create a "master" source code escrow with a single escrow agent, and simply add each customer as a beneficiary of the master escrow. Source code escrows generally are unnecessary for Open Source Software.

Specifications

The written requirements for software or another technology to be developed.

Statement of Work (SOW)

In a services or technology development project, a document that describes the technology to be developed, Specifications and requirements for Acceptance of the technology, Deliverables, Milestones, Milestone Schedule, and Payments. Companies frequently use a single "master" agreement, and then attach multiple statements of work for specific projects. Statements of Work are often attached to Independent Contractor Agreements and Software Development Agreements. Also known as a Schedule of Work, Task Order, or Work Order.

Statute of Limitations

A limitation on the time period that someone can bring a legal claim against someone else, for example, a time limitation on one party filing a lawsuit against the other party to the contract for breach of that contract. Some contracts include a "private" statute of limitations that contractually shortens the time limit for bringing a claim or filing a lawsuit under the contract.

Strict Conformity

A standard by which work product or Deliverables are measured against Specifications or other Acceptance criteria. "Strict" means that the work product must conform or comply to a detailed level, possibly even without small defects. Although it is often requested, in many situations, this standard may not be realistic and can even be counter-productive.

Subcontracting

The hiring of a third person to do some of a party's work under a contract. Subcontracting may be considered a delegation of the party's obligations under the contract.

Sublicense, Sublicensing

The further outbound Licensing to other persons of rights received in a License. The rights sublicensed out cannot be broader than the rights received.

Substantial conformity

A standard by which work product or Deliverables are measured against Specifications or other Acceptance criteria. "Substantial" means that the work product must conform or comply without any major or Material deviation, even it does have small defects. Successor An entity who holds or who has "succeeded to" the assets rights, and obligations of another entity, for example, the surviving entity of a merger of two companies.

Support Plan

A Maintenance and Support Agreement for mass market products. Generally pre-packaged and non-negotiable.

Supremacy Clause

Article VI, paragraph 2 of the United States Constitution, which establishes the Constitution, federal statutes, and U.S. treaties as "the supreme law of the land" in the U.S. The Supremacy Clause is important to technology transactions because many important Intellectual Property rights (such as Patents, Copyrights, and federally registered Trademarks) and other important online activities (such as electronic signatures and liability for User Generated Content) are covered by federal statutes, and certain Intellectual Property is governed in part by U.S. treaties, but contract law is generally covered by state law. Even though federal law and U.S. treaties are supreme over state law, working out the areas of conflict and overlap is very complicated.

Survival (of Rights or Contract)

The continuing effectiveness and enforceability of rights or obligations under a contract, even after it terminates or expires. Because surviving rights often can survive indefinitely, it is worthwhile to check the contract provisions that describe them.