When you purchase a software product (such as Windows or Quicken), you do not actually get ownership of the product. Rather, the owner of the software merely licenses you the right to use the software under certain terms and conditions contained in a "software license areement."

If the software is an off-the-shelf product like Microsoft Office, it comes with a software license agreement that you actually don't sign. Instead, opening the box containing the software or using the software is "deemed" to be your assent to the terms of the software license agreement. People sometimes call such agreements shrink-wrap licenses because the box containing the software also contains the license.

Shrink-wrap licenses are not negotiable—either you accept the terms or don't buy (or license) the product.

If you license some software that costs a significant amount of money (such as Oracle database software), you have the chance to negotiate the software license agreement to make sure it suits the needs of your business. When negotiating significant software licenses, remember these key points:

• Make sure that the license is broad enough for the intended use of the business
• Make sure that the license contains clear representations and warranties concerning the expected functionality of the software
• Make sure that the appropriate customer support exists, with prompt responses from the licensor to problems that arise
• Make sure that the licensor indemnifies you for any claims on infringement by third parties
• Make sure that the licensor clearly spells out the pricing for the software, and that the price is favorable
• Make sure that the licensor promptly makes available upgrades and error corrections
• Make sure the term of the license is appropriately long