A useful note from our colleague Sanjay Beri, originally posted at Technology’s Legal Edge.
I was recently reminded that the term “reseller” agreement can often mean different things to different people. Misunderstandings about these types of relationships creates the potential for miscommunication and wasted time drafting the wrong terms.
A client recently asked me for a form of reseller agreement to engage resellers to help distribute the client’s software based product. “You know, just grab something off the shelf that will work” went the common refrain. As I talked to the client about the type of arrangement he was seeking, however, it became clear that the client was still in the process of making a number of business decisions that would greatly impact pulling the right “form” or, more likely, drafting the right terms. Given this discussion, I thought it might be useful to impart a few high level questions that I found useful in guiding the conversation. For ease, I’ll simply refer to my client from the conversation above as the “licensor” and the ultimate user of the product as the “end customer”:
(i) What type of relationship will the reseller have with the end customer (for example, will the reseller be entering a negotiation with the end customer or merely be passing through terms dictated by the licensor)?
(ii) Will the licensor need a direct contractual relationship with the end customer or need rights to prevent the end customer from taking particular actions with respect to the licensor’s product?
(iii) Will the reseller be modifying or bundling licensor’s product in any way for redistribution?
(iv) Will the reseller or licensor have direct support obligations with the end customer?
Having precise discussions and clarity around these points is crucial for both the lawyer and the client. By having these basic discussions, the parties can save lots of drafting time, and unintended delays in ensuring that the terms provided match up with the business objectives of the client.