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Software custody protects businesses by ensuring that the source code of a third-party software is held by a custodial agent who can pass it to the licensee if the licensor fails to provide promised services. The licensor pays a fee for custody services and can elect the custody agent. Causes for intervention include inadequate maintenance, bankruptcy, or violation of the agreement.
Software custody is a prize celebrated by a company and the company that issues software that wraps a third party. In this regard, the software manufacturer, or the licensor, should place the source code of the software in an account in the power of a custodial agent, who acted as the third party. If the software company does not deliver the services it promised to the company that issued the software, also known as the licensee, the custodial agent passes the code to the licensee. The celebration of a software custody agreement protects businesses from losing the integral software to execute their operations.
It is impossible in the modern business world to operate a business without intensive use of computers. In many cases, businesses need software specifically designed to enable them to run any program they need to perform daily tasks. If a software company does not provide the promised services to the company, it could be potentially perjudicial or even lethal for that company. The software warranty deposit is a way to avoid such an unfortunate event.
The key of the software custody account is the source code. The source code is essentially the model for any specific software, however it is written in a language that humans can decipher. The possession of this information would allow a company to execute its software without having to depend on the company that issued the software in the first place. This is the information that a custodial officer would disclose if the software licensor did not fulfill his initial account.
In a typical software custody deal, the licensor pays the fee for the custody services and generally is allowed to elect the custody agent who will be charged with the source code. Doing this in this way allows a software company to elect an agent that they have used in this past. This simplifies things for the software company, since the use of the same agent allows greater simplicity in terms of contracts and billing.
There are various forms in which a licensor cannot fulfill his original agreement and make sure that the deposit agent gives the valid code to the licensee. The most common thing is if the licensor does not provide adequate maintenance of the software, which would include a flaw in updating the software or it is not available for repairs. Other causes for which the custodial agent intervenes include the licensor in quiebra, an acquisition or merger that changes the nature of the original agreement, or any action that violates the agreement that the licensor celebrated with the licensee.
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