Supplier Audit Rights in Technology Agreements
In a recent article, we discussed contractual audit provisions that give the buyer of technology goods and services the right to verify that the supplier is meeting its commitments. In this article, we consider audit rights in the supplier's favor.
August 07, 2015 at 07:00 AM
8 minute read
In a recent article, we discussed contractual audit provisions that give the buyer of technology goods and services the right to verify that the supplier is meeting its commitments. In this article, we consider audit rights in the supplier's favor.
Suppliers typically request audit rights when key buyer obligations or supplier rights hinge on factors that would otherwise be invisible to the supplier. For example, suppliers' fees are often based on their customers' consumption of a product. Particularly in the case of on-premises software, a supplier does not have direct knowledge of the customer's consumption behavior (e.g., where license fees are based on the number of users, the number of instances of the software, the number of CPU cores, processing speed or other metrics known only to the buyer). Therefore, many software license agreements include audit provisions that give the supplier a right to verify the metrics on which license fees are based.
The risk to buyers of supplier audit rights is not always apparent. Certainly most buyers do not intend to violate the terms of an agreement and may not therefore object to the idea of allowing the supplier to verify the buyer's compliance from time to time.
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Trending Stories
- 1Wine, Dine and Grind (Through the Weekend): Summer Associates Thirst For Experience in 'Real Matters'
- 2The Law Firm Disrupted: For Big Law Names, Shorter is Sweeter
- 3The 'Biden Effect' on Senior Attorneys: Should I Stay or Should I Go?
- 4BD Settles Thousands of Bard Hernia Mesh Lawsuits
- 5Elder Litigators Confront Tough Questions in Last Act of Careers
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250