Subscription agreements and software licences: what your SaaS or IP business needs in writing

A subscription agreement defines recurring access and payment terms. A licence agreement grants rights to use IP without transferring ownership. Here is what each must contain.

Subscription agreements and software licences

Two of the most common contracts in the digital economy are often drafted too loosely. A subscription agreement that lacks auto-renewal and refund terms creates customer disputes. A licence agreement that omits scope and sublicensing restrictions leaves your IP exposed. Here is what each document must say.

Subscription agreement

A subscription agreement governs ongoing access to a service or product in exchange for recurring payment. It is the commercial backbone of any SaaS, media, membership or subscription-box business.

Core sections

1. Subscription tiers and features Define exactly which features each tier includes. Avoid “as described on our website” — website content changes; contract terms should not.

2. Pricing and billing

• Billing frequency (monthly, annual, multi-year).
• Price-change notice period — EU consumer law typically requires 30 days’ advance notice before a price increase.
• Automatic renewal clause: state clearly that the subscription renews unless cancelled, and specify the cancellation window before renewal.
• Late payment: interest rate and right to suspend access on non-payment.

3. Free trials and promotional periods If a free trial converts to a paid subscription automatically, the conversion mechanism must be clear and the customer must have actively agreed to it. In the EU, pre-ticked boxes are not valid consent.

4. Cancellation and refunds

• B2C: EU Distance Selling rules give consumers a 14-day right of withdrawal for digital services — though this can be waived for immediate digital delivery with explicit consent.
• B2B: no statutory withdrawal right; cancellation terms are fully negotiable.
• Refund policy for partial periods.

5. Acceptable use What the subscriber may and may not do. Sharing credentials, reselling access, scraping data — list the prohibitions explicitly.

6. SLA and support Uptime commitment, response times, scheduled maintenance windows.

7. Termination Your right to terminate for breach; subscriber’s right to terminate on notice; data export window after termination.

A note on auto-renewal

In several EU member states (Germany, France, Netherlands), automatic renewal clauses in B2C contracts must meet heightened requirements: clear pre-contractual disclosure, prominent reminder before renewal, and easy cancellation. Failure to comply can make the renewal clause unenforceable.

Licence agreement

A licence grants permission to use intellectual property — software, content, brand, patent — without transferring ownership. The licensor retains title; the licensee gets defined rights.

Key licence parameters

| Parameter | Options | |---|---| | Scope | Named users, concurrent users, site licence, enterprise | | Exclusivity | Exclusive, sole, non-exclusive | | Territory | Worldwide, regional, country-specific | | Duration | Perpetual, time-limited | | Sublicensing | Permitted, prohibited, permitted with consent | | Modifications | Permitted (with or without share-alike), prohibited |

What a licence agreement must contain

1. Grant clause — the operative language that confers the licence. Be precise: “a non-exclusive, non-transferable licence to use the Software solely for the Licensee’s internal business purposes.”
2. Restrictions — what the licensee cannot do: reverse-engineer, decompile, create derivative works, sublicence without permission.
3. IP ownership confirmation — the licensor owns the IP; the licence does not transfer any title.
4. Fees and payment — upfront, recurring, or royalty-based. For royalty licences, define the royalty base, rate, reporting obligations and audit rights.
5. Warranty and disclaimer — the licensor warrants it has the right to grant the licence; disclaims all other warranties.
6. Indemnification — the licensor indemnifies the licensee against third-party IP infringement claims.
7. Termination and effect — what happens to licensee’s rights on termination; obligation to destroy or return materials.

Software licence vs. SaaS subscription

A software licence historically covered on-premise installation (the licensee gets a copy). A SaaS subscription provides cloud-hosted access without a copy. The legal distinction matters for accounting (capitalised asset vs. operating expense) and for what happens if the vendor goes bankrupt — a licensee with an on-premise copy retains access; a SaaS subscriber does not.

zipzipdoc generates both documents. Describe your product model, pricing structure and IP ownership preferences — the AI drafts the correct agreement type.

Related contract types: Subscription agreement · License agreement

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