Understanding Liability in Software Escrow Agreements: Escrow London’s Approach

At Escrow London, we believe in transparency and fairness when it comes to liability in software escrow agreements. Our approach to liability is designed to protect all parties involved while maintaining a balanced and equitable arrangement. Let’s explore how our liability clauses compare to those of other software escrow vendors.

 Limited Liability

Like many escrow agents, Escrow London limits its liability in certain circumstances. Our agreement states that we are not liable for certain acts or omissions unless caused by willful misconduct or gross negligence. This is a standard practice in the industry, as it protects the escrow agent from unforeseen circumstances beyond their control.

However, where we differ is in the extent of our liability cap. While some vendors may limit their liability to a nominal amount, Escrow London’s liability is capped at :

• UK and EMEA jurisdiction with Escrow London Limited: £2,500,000 (can be extended to £5,000,000);
• USA and Canada jurisdiction with The Escrow Company: $1,000,000 (can be extended to $2,000,000);
• Australia and APAC jurisdiction with Escrow London Australia Pty Ltd: A$4,000,000 (can be extended to A$8,000,000);

for losses arising from defaults. This substantial figure demonstrates our commitment to taking responsibility for our services and provides our clients with greater peace of mind.

 Exclusions from Liability

Our agreement, like many others, excludes liability for certain types of losses. These include loss of profit, business, goodwill, contracts, revenues, anticipated savings, increased costs, data loss, and any special, indirect, or consequential losses. This is a common practice in the industry, as these types of losses can be difficult to quantify and may be disproportionate to the services provided.

 Indemnification

One area where Escrow London stands out is our approach to indemnification. We require the depositor and beneficiary to indemnify us against damages resulting from disputes between them or claims by third parties for intellectual property infringement. This provision helps ensure that we can continue to provide our services without being drawn into conflicts between the parties we serve.

Conclusion

At Escrow London we strive to provide a fair and transparent approach to liability in our software escrow agreements. While we limit our liability in certain areas, as is standard in the industry, we also offer a higher liability cap than many of our competitors. Our clear delineation of responsibilities and limitations helps all parties understand their rights and obligations under the agreement.

We believe that our approach strikes the right balance between protecting our interests as an escrow agent and providing our clients with the assurances they need. By clearly defining our liability and responsibilities, we aim to foster trust and confidence in our services, ensuring that all parties can engage in software escrow arrangements with peace of mind.

Remember, when considering a software escrow agreement, it’s crucial to carefully review the liability clauses, E&O and Professional Indemnity insurance, and discuss any concerns with your legal counsel. At Escrow London, we’re always here to answer your questions and help you understand the terms of our agreements.

We provide a free library of software escrow agreements available for download. Follow this link to download a software escrow agreement template.