Software Licence Agreement (UK)
This Software Licence Agreement (the “Agreement”) is entered into on [Effective Date] (the “Effective Date”) by and between:
[Licensor Name], [Who Licensor], with its registered or principal address at [Licensor Address], [Licensor City], [Licensor County], [Licensor Postcode], England (hereinafter referred to as the “Licensor”); and
[Licensee Name], [Who Licensee], with its registered or principal address at [Licensee Address], [Licensee City], [Licensee County], [Licensee Postcode], England (hereinafter referred to as the “Licensee”).
The Licensor and the Licensee are referred to collectively in this Agreement as the “Parties” and individually as a “Party”.
BACKGROUND
WHEREAS, the Licensor is the owner of certain software known as [Software Name] and all associated intellectual property rights therein; and
WHEREAS, the Licensee wishes to obtain a licence to use the Software on the terms and conditions set out in this Agreement;
NOW, THEREFORE, in consideration of the licence fee paid and the mutual obligations set out herein, the Parties agree as follows:
1. DEFINITIONS
1.1 In this Agreement, the following terms shall have the meanings set out below:
- “Software” means [Software Name], [Software Description], together with all updates, modifications, and new versions provided by the Licensor under this Agreement.
- “Authorised User” means any employee, officer, contractor, or agent of the Licensee who is permitted to access and use the Software under the terms of this Agreement.
- “Documentation” means any user guides, technical manuals, and online help materials provided by the Licensor in connection with the Software.
- “Intellectual Property Rights” means all copyright, database rights, patents, trade marks, design rights, and any other intellectual or industrial property rights, whether registered or unregistered, in the United Kingdom and worldwide.
- “Permitted Purpose” means [Permitted Use].
2. GRANT OF LICENCE
2.1 Subject to the terms and conditions of this Agreement and payment of the Licence Fee, the Licensor hereby grants to the Licensee a [Licence Type] licence to use the Software within the territory of [Territory] solely for the Permitted Purpose during the Licence Term.
2.2 The licence granted under clause 2.1 includes the right for Authorised Users to access and use the Software in object code form only, in accordance with the Documentation.
2.3 Save as expressly permitted by this Agreement or by law (including under section 50B and section 296A of the Copyright, Designs and Patents Act 1988), the Licensee shall not copy, modify, adapt, translate, reverse engineer, decompile, disassemble, or create derivative works based on the Software.
2.4 The Licensee shall not sublicence, rent, loan, sell, transfer, or otherwise make available the Software or any rights under this Agreement to any third party without the prior written consent of the Licensor.
3. LICENCE FEE AND PAYMENT
3.1 In consideration of the rights granted under this Agreement, the Licensee shall pay to the Licensor the licence fee of £[Licence Fee] (the “Licence Fee”), payable [Payment Schedule].
3.2 All sums payable under this Agreement are exclusive of value added tax (VAT), which the Licensee shall pay at the prevailing rate where applicable, subject to receipt of a valid VAT invoice.
3.3 Without prejudice to any other right or remedy available to the Licensor, if the Licensee fails to pay any sum due under this Agreement by the due date, the Licensor shall be entitled to charge interest on the overdue sum from the due date until actual payment at the rate of 8% per annum above the Bank of England base rate, pursuant to the Late Payment of Commercial Debts (Interest) Act 1998.
4. LICENCE TERM AND TERMINATION
4.1 This Agreement shall commence on the Effective Date and shall continue for [Licence Term] (the “Licence Term”), unless terminated earlier in accordance with this clause 5.
4.2 Either Party may terminate this Agreement immediately on written notice to the other Party if the other Party:
- commits a material breach of this Agreement that is incapable of remedy, or fails to remedy a remediable breach within 30 days of receiving written notice specifying the breach and requiring its remedy;
- becomes insolvent, is subject to an administration order, enters into voluntary arrangement with its creditors, goes into liquidation or receivership, or ceases to trade; or
- undergoes a change of control without the prior written consent of the other Party.
4.3 The Licensor may terminate this Agreement immediately on written notice if the Licensee uses the Software outside the scope of the licence granted or in breach of any applicable law.
4.4 On termination or expiry of this Agreement, the Licensee shall immediately cease all use of the Software and promptly delete or destroy all copies of the Software in its possession or control, certifying such deletion or destruction to the Licensor in writing on request.
5. INTELLECTUAL PROPERTY RIGHTS
5.1 All Intellectual Property Rights in the Software and Documentation shall remain the exclusive property of the Licensor. Subject to section 3(1)(b) of the Copyright, Designs and Patents Act 1988, the Software is protected as a literary work under copyright law in the United Kingdom.
5.2 This Agreement does not transfer or assign any Intellectual Property Rights in the Software to the Licensee. The Licensee acquires no right, title, or interest in or to the Software except the right to use it in accordance with the terms of this Agreement.
5.3 The Licensee shall not remove, alter, or obscure any copyright notices, trade mark notices, or other proprietary notices contained in or on the Software or Documentation.
5.4 The Licensee shall promptly notify the Licensor in writing if it becomes aware of any actual or suspected infringement of the Licensor’s Intellectual Property Rights in the Software.
6. DISCLAIMER OF WARRANTIES
6.1 Save as expressly set out in this Agreement and to the maximum extent permitted by law, the Licensor provides the Software on an “as is” basis and makes no representations or warranties, whether express, implied, statutory, or otherwise, in respect of the Software, including but not limited to any implied warranties of merchantability, fitness for a particular purpose, or non-infringement.
6.2 To the extent that the Licensee is a consumer (as defined in the Consumer Rights Act 2015), nothing in this Agreement shall exclude or limit any statutory rights which the Licensee may have in respect of the Software as digital content under Chapter 3 of the Consumer Rights Act 2015, including rights in respect of satisfactory quality, fitness for purpose, and compliance with description.
7. DATA PROTECTION
7.1 Each Party shall comply with all applicable data protection legislation, including the UK General Data Protection Regulation (UK GDPR) as incorporated by the Data Protection Act 2018, in connection with any personal data processed under or in connection with this Agreement.
7.2 Where the Licensor processes personal data on behalf of the Licensee in connection with the Software, the Licensor acts as a data processor and the Licensee acts as a data controller. The Parties shall enter into a separate data processing agreement where required by Article 28 of the UK GDPR.
8. LIMITATION OF LIABILITY
8.1 Nothing in this Agreement excludes or limits either Party’s liability for: (a) death or personal injury caused by its negligence; (b) fraud or fraudulent misrepresentation; or (c) any other liability which cannot be excluded or limited by English law.
8.2 Subject to clause 12.1, neither Party shall be liable to the other for any loss of profits, loss of business, loss of data, loss of goodwill, or any indirect, special, or consequential loss or damage, whether arising in contract, tort (including negligence), breach of statutory duty, or otherwise, even if advised of the possibility of such loss.
8.3 Subject to clauses 12.1 and 12.2, the Licensor’s total aggregate liability under or in connection with this Agreement shall not exceed the total Licence Fees paid or payable by the Licensee in the 12 months immediately preceding the event giving rise to the claim.
9. CONFIDENTIALITY
9.1 Each Party undertakes to keep confidential all information of a confidential nature received from the other Party in connection with this Agreement (including the source code if disclosed) and to use such information only for the purposes of this Agreement.
9.2 This clause shall survive termination or expiry of this Agreement for a period of five years.
10. GENERAL PROVISIONS
10.1 Entire Agreement. This Agreement constitutes the entire agreement between the Parties in relation to its subject matter and supersedes all prior representations, agreements, and understandings.
10.2 Amendment. No amendment to this Agreement shall be effective unless made in writing and signed by duly authorised representatives of both Parties.
10.3 Waiver. No failure or delay by either Party in exercising any right or remedy shall constitute a waiver of that right or remedy.
10.4 Severability. If any provision of this Agreement is held to be invalid or unenforceable, the remaining provisions shall remain in full force and effect.
10.5 Assignment. The Licensee may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the Licensor. The Licensor may assign this Agreement to any successor entity or acquirer of its business.
10.6 Third Party Rights. A person who is not a Party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any of its terms.
10.7 Notices. Any notice required under this Agreement shall be in writing and may be delivered by hand, first-class post, or email to the addresses set out below: Licensor: [Licensor Email]; Licensee: [Licensee Email].
10.8 Computer Misuse. The Licensee shall not use the Software in any manner that constitutes an offence under the Computer Misuse Act 1990, and shall not attempt to gain unauthorised access to any computer systems connected to or interfacing with the Software.
11. GOVERNING LAW AND JURISDICTION
11.1 This Agreement and any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with it or its subject matter or formation shall be governed by and construed in accordance with the laws of England and Wales.
11.2 Each Party irrevocably submits to the exclusive jurisdiction of the courts of England and Wales to settle any dispute or claim arising out of or in connection with this Agreement.
IN WITNESS WHEREOF, the Parties have executed this Software Licence Agreement as of the Effective Date first written above.
THE LICENSOR
Full name: [Licensor Name]
Address: [Licensor Address], [Licensor City], [Licensor County], [Licensor Postcode], England
THE LICENSEE
Full name: [Licensee Name]
Address: [Licensee Address], [Licensee City], [Licensee County], [Licensee Postcode], England
Licensor
________________
Signature
Date: ________________
Licensee
________________
Signature
Date: ________________
What Is a Software Licence Agreement (UK)?
A Software Licence Agreement in the United Kingdom grants permission to use the owner's rights or brand and sets the scope, territory, fees, and duration of that licence, and is shaped by the Designs and Patents Act 1988.
Under English law, software is protected as a literary work under section 3(1)(b) of the Copyright, Designs and Patents Act 1988 (CDPA 1988). This means that copying, adapting, distributing, or performing software without the copyright owner's permission constitutes copyright infringement. A licence agreement is therefore the legal mechanism by which the Licensor authorises the Licensee to carry out acts that would otherwise be restricted by copyright. The agreement defines the precise scope of these permitted acts — whether the licence is exclusive or non-exclusive, what purposes the software may be used for, how many users or installations are permitted, and in which territories the licence applies.
The Computer Misuse Act 1990 adds a further layer of protection by making it a criminal offence to access computer systems without authorisation. A software licence agreement should expressly prohibit the Licensee from using the software in any manner that would constitute an offence under the Computer Misuse Act 1990. Where the software is supplied to a consumer, the Consumer Rights Act 2015 (Chapter 3) also applies, imposing statutory rights in relation to the quality, fitness for purpose, and description of digital content that cannot be excluded by contract.
England and Wales is a leading jurisdiction for technology contracts. English law is widely chosen as the governing law of software licences by parties from across the world, because of the predictability of English common law, the expertise of the English courts in technology disputes, and the availability of effective remedies including injunctive relief to prevent ongoing infringement.
The legal framework governing the Software Licence Agreement (UK) in United Kingdom draws on several key statutes and regulatory bodies. Under the Companies Act 2006, Companies House maintains the register of UK companies. Section 386 of the Companies Act 2006 sets accounting record obligations. The Competition and Markets Authority (CMA) enforces the Consumer Rights Act 2015. The Financial Conduct Authority (FCA) regulates financial services under the Financial Services and Markets Act 2000. The High Court of Justice has jurisdiction under the Senior Courts Act 1981. Parties executing a Software Licence Agreement (UK) in United Kingdom should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Companies Act 2006 sets the foundational requirements.
When Do You Need a Software Licence Agreement (UK)?
A Software Licence Agreement is needed whenever a software owner wishes to permit another party to use their software on terms they have defined. The agreement is appropriate across a wide range of scenarios in England and Wales.
The most common situations requiring a software licence agreement include: a software development company licensing a bespoke or off-the-shelf software product to a business client; a technology startup licensing its platform to enterprise customers for internal use; a business acquiring the right to use a proprietary software tool, accounting package, or CRM system; a software developer engaging a corporate client under a project that involves deploying licensed software; and an employer licensing software to be used by employees in the course of their work.
A written software licence agreement is particularly important where the software has significant commercial value, where the Licensor needs to restrict how the software is used to protect its business model, or where the Licensee needs to have certainty about the scope of the rights it is acquiring. Without a written agreement, the scope of any implied licence and the allocation of risk between the parties are uncertain, and disputes can be difficult and costly to resolve.
The agreement is also important for tax and accounting purposes. Under HMRC guidance, the tax treatment of software payments (as revenue expenditure or capital expenditure) can depend in part on whether the payment is characterised as a licence fee or a purchase price. A written licence agreement clearly establishes the commercial character of the transaction.
If the software will process or store personal data, the licence agreement should address data protection obligations under the UK GDPR (Data Protection Act 2018), particularly if the Licensor will process personal data on the Licensee's behalf as a data processor. In such cases, the parties must enter into a separate data processing agreement under Article 28 of the UK GDPR.
What to Include in Your Software Licence Agreement (UK)
A well-drafted Software Licence Agreement for use in England and Wales should contain several critical provisions that are specific to the UK legal framework and the nature of software as a form of intellectual property.
The grant of licence clause is the most important provision. It must clearly specify: (1) whether the licence is exclusive, sole, or non-exclusive; (2) the territory in which the licence applies; (3) the permitted purposes for which the software may be used; (4) any limitation on the number of authorised users or installations; and (5) whether the licence is perpetual or time-limited. The scope of the licence defines the boundary between permitted use and infringement, so precision in drafting is essential.
The intellectual property ownership clause must expressly state that the Licensor retains all rights, title, and interest in the software, including all copyright and other intellectual property rights. It should also address what happens to any modifications, derivative works, or enhancements made by or on behalf of the Licensee — in most commercial licences, any such modifications remain the property of the Licensor.
The restrictions on use clause should prohibit reverse engineering, decompilation, disassembly, and sublicensing, while making clear that these restrictions are subject to the statutory exceptions in sections 50A to 50C of the CDPA 1988 (which cannot be excluded by contract). The Computer Misuse Act 1990 should be expressly referenced to make clear that misuse of the software is a criminal matter.
The licence fee and payment clause should clearly state the licence fee, whether it is a one-time payment or recurring, the payment schedule, and the consequences of late payment — typically interest under the Late Payment of Commercial Debts (Interest) Act 1998 at 8% above the Bank of England base rate for B2B contracts.
The limitation of liability clause is critical in UK software licences. English law permits parties in commercial contracts to exclude or limit liability, subject to the test of reasonableness under the Unfair Contract Terms Act 1977. For consumer contracts, the Consumer Rights Act 2015 applies stricter rules. A well-structured limitation clause will exclude indirect and consequential losses and cap total liability at a commercially appropriate level, typically related to the licence fees paid.
Additional compliance elements for a Software Licence Agreement (UK) used in United Kingdom include: Under the Companies Act 2006, Companies House maintains the register of UK companies. Section 386 of the Companies Act 2006 sets accounting record obligations. The Competition and Markets Authority (CMA) enforces the Consumer Rights Act 2015. The Financial Conduct Authority (FCA) regulates financial services under the Financial Services and Markets Act 2000. The High Court of Justice has jurisdiction under the Senior Courts Act 1981. Forms-legal.com provides this template as a starting point for United Kingdom-compliant documentation.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Software Licence Agreement (UK) (United Kingdom) [Legal document template]. Forms Legal. https://forms-legal.com/uk/business/contracts/software-licence-agreement-uk
"Software Licence Agreement (UK) (United Kingdom)." Forms Legal, 2026, https://forms-legal.com/uk/business/contracts/software-licence-agreement-uk.
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title = {Software Licence Agreement (UK) (United Kingdom)},
year = {2026},
howpublished = {\url{https://forms-legal.com/uk/business/contracts/software-licence-agreement-uk}},
note = {Free legal document template. Based on Companies Act 2006}
}Also available for these jurisdictions:
Frequently Asked Questions
A Software Licence Agreement provides several layers of legal protection in England and Wales. Under section 3(1)(b) of the Copyright, Designs and Patents Act 1988 (CDPA 1988), computer programs are protected as literary works, meaning the source code and object code of software are automatically protected by copyright from the moment they are created. A software licence agreement makes this protection enforceable between the parties by clearly stating that the Licensor retains ownership of all intellectual property rights in the software and that the Licensee's right to use it is conditional on compliance with the agreed terms. Without a written licence agreement, disputes about the scope of permitted use, payment obligations, and liability are much harder to resolve. The agreement also protects against misuse by clearly prohibiting reverse engineering, decompilation, and sublicensing without consent — restrictions which are enforceable under English law, subject to the statutory exceptions in sections 50A to 50C of the CDPA 1988.
The three types of licence differ in the extent to which the Licensor can grant rights to other parties. A non-exclusive licence is the most common arrangement: the Licensor can grant identical licences to as many licensees as it wishes, and both the Licensor and multiple licensees can use the software simultaneously. A sole licence means the Licensor grants rights only to the named Licensee and will not grant the same rights to any other third party — but the Licensor itself retains the right to continue using the software. An exclusive licence is the most restrictive for the Licensor: it cannot use the software itself or grant rights to any other party within the defined territory and scope. Under section 92 of the Copyright, Designs and Patents Act 1988, an exclusive licensee of a copyright work has the right to bring proceedings for infringement in their own name, which is a significant commercial benefit not available to non-exclusive licensees.
Yes, a software licence agreement can and should prohibit decompilation and reverse engineering, but these restrictions are qualified by sections 50A to 50C of the Copyright, Designs and Patents Act 1988. Section 50B provides that a lawful user of software is permitted to decompile it for the purpose of creating an independent interoperable program, and only to the extent necessary for that purpose. Importantly, this right cannot be excluded by contract: any term of a licence agreement which purports to prevent a lawful user from exercising this statutory right is void. However, decompilation for other purposes — such as copying the code, developing a competing product, or reverse engineering the algorithm — is not protected by this exception and can be validly prohibited in the licence agreement. The Computer Misuse Act 1990 also provides criminal law protection against unauthorised access to computer systems.
The Consumer Rights Act 2015 (CRA 2015) applies where a trader supplies digital content (including software) to a consumer — that is, an individual acting outside their trade, business, craft, or profession. Chapter 3 of the CRA 2015 introduced specific statutory rights for digital content that the parties cannot contract out of. Under the CRA 2015, digital content must be of satisfactory quality, fit for purpose, and as described. If the software fails to meet these requirements, the consumer has the right to a repair or replacement, and if that is not possible, a full or partial refund. A trader cannot exclude or restrict these statutory rights in a business-to-consumer licence agreement. However, between two businesses (B2B), the CRA 2015 Chapter 3 does not apply, and the parties have greater freedom to allocate risk through the licence agreement, subject to the Unfair Contract Terms Act 1977.
In the United Kingdom, the supply of software under a licence agreement is generally subject to value added tax (VAT) at the standard rate (currently 20%), regardless of whether the software is supplied on physical media or delivered digitally. The licence fee stated in the agreement is typically expressed exclusive of VAT, with a clause providing that the Licensee shall pay VAT in addition upon receipt of a valid VAT invoice. A UK VAT-registered business can usually recover input VAT on software licences used for business purposes through its VAT return. Where the Licensor is supplying software from the UK to a business customer in another country, the VAT treatment may vary depending on the jurisdiction, and specific VAT advice should be sought. HMRC has issued guidance on the VAT treatment of electronically supplied services, which covers most software licences.
Insolvency of either party can have significant consequences for a software licence agreement in England and Wales. If the Licensor becomes insolvent, the software licence may be affected depending on how the insolvency is structured. An administrator appointed under the Insolvency Act 1986 may seek to continue the licence as part of the business, sell the intellectual property rights together with existing licences, or disclaim unprofitable contracts. The Licensee should confirm the licence agreement contains provisions addressing insolvency, including rights to use the software in escrow arrangements. If the Licensee becomes insolvent, the Licensor may exercise a contractual right to terminate, subject to any insolvency moratorium. This template includes termination rights on insolvency of either party, which is standard practice in English commercial software licences.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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