Clause guide
Source Code Escrow Clause clause: meaning, risks, and what to negotiate
Provides for software source code to be held by a third party and released if defined events occur.
What it means
Source code escrow can protect customers if a software vendor fails, stops supporting the product, or becomes insolvent.
Common risks
- • Release triggers may be too narrow.
- • Escrow materials may be incomplete or outdated.
- • Access rights after release may be too limited.
What to check before signing
- • What events trigger release of the source code?
- • How often are escrow materials updated?
- • What rights do you get after release?
Negotiation ideas
- • Use clear release triggers such as insolvency or support failure.
- • Require regular deposit updates.
- • Define post-release license rights and documentation access.
Example clause
“Vendor shall deposit the source code and related documentation with an escrow agent, to be released to Customer upon Vendor insolvency or material failure to support the software.”
Frequently asked questions
What is source code escrow?
It is an arrangement where source code is held by a third party and released if specified events happen.
Related clauses
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