IT Examiner School

Software Escrow Agreements • Typically, an independent third party retains the source code. • Adequate documentation should also be included

• It is important that the current version of the software be the one that is escrowed. The escrowed software and documentation should be updated when the program is changed. This should be specified in the contract and verified periodically. • There are a number of complex legal issues surrounding escrow agreements

Software Contract Agreements • The vendor will want contract provisions which are in its own favor. • Depending on the size of the bank, it may or may not be able to negotiate more favorable terms. • Certain contract provisions may be of such significance that the bank may need to consider alternative vendors. • Exit provisions, data ownership, data conversion all need to be considered in the contract • Regulatory requirements clause • For mission-critical software, clauses that limit vendor liability are a dangerous practice.