I run a small software company that has a license agreement for a niche business application. Recently, one of our larger clients decided not to renew their license. According to our Agreement, they should cease using the software by the Termination date and take it out of their environment within a "commercially reasonable" timeframe. However, it's been several weeks since that date, and our application is still sending emails to our support team with diagnostic data indicating they continue to use it. My attorney has advised me to let this continue for now and then bill them later. I'm wondering if this approach is likely to work based on others' experiences.
5 Answers
It might be worth sending them a notice about their potential violation of the agreement. Document everything for future reference—it will be useful to have if payments become a dispute. Maybe they didn't realize the implications of their actions!
It's on the business to ensure everything is in order before ending a software contract. You should definitely consider revising your agreement to specify clear timeframes and consequences for clients who continue using the software after a contract ends. That way, you can avoid situations like this in the future. Maybe add a clause that if they use the software without payment for, say, 30 days post-termination, you'll bill them for it.
Just remember: if things don’t improve, your attorney can step in to help. You're not alone in this—many businesses face similar challenges when clients don’t follow the rules.
In my experience, building a kill switch into your software can be a lifesaver. When a client’s license expires, you could have the software check back with your servers. If they haven’t paid, you can give them a grace period and eventually shut down the application after a set time. It helps prevent hard cases like this.
Your attorney is the right person to listen to in this situation. They've got the legal expertise, and they know the specifics of the agreement you've set up.
It’s a bit surprising hearing that advice, but I suppose they know what they're doing!