Advisory Case on Structuring an Overseas Software Reseller Agreement and Adjusting the Scope of Liability

1. The Client's Situation

In concluding a non-exclusive (rather than domestic-exclusive) reseller agreement with an overseas software developer, the client received a draft English-language template contract and requested a review of the legal and commercial risks. In particular, the client was concerned about whether an excessive burden was being shifted onto it in areas such as the relationship between the EULA (End User License Agreement) and the reseller agreement, the scope of liability in the event of intellectual-property infringement, audit and reporting obligations, and the cap on damages. The client also needed to reorganize the overall contract structure so that any disputes that might arise in the future in the course of sales to domestic customers would not all be attributed to the client's responsibility.

Your Legal Team reviewed the contract as a whole and revised and supplemented each clause so as to balance the warranty, indemnification, and damages liability borne by the client against the licensor's intellectual-property warranty and IP-indemnity obligations. The team limited the reporting and audit rights to the scope necessary for the EULA flow-down and sales verification, and structured the provisions to reduce the operational burden by clarifying the annual frequency and the party bearing the costs. Clauses that directly affect sales practice - such as pricing and discount policy, the Net Cost adjustment procedure for special deals, and the division of support roles - were also reconfigured to match the client's actual sales model. In addition, while explaining the impact on the client of governing-law and dispute-resolution clauses such as New Jersey state law and AAA arbitration, the team organized and distinguished between the amendments that must be secured in the negotiation process and the points where there was room for negotiation.

As a result, the client was able to conclude the reseller agreement in a state where major risks - such as excessive warranties, unlimited liability, and frequent audit and reporting obligations - had been largely eliminated or limited to a reasonable scope. At the same time, core matters such as IP indemnity, the provision of upgrades and updates, and the handling of customer claims were clearly assigned to the licensor's responsibility, thereby reducing the client's first-line burden for disputes that could arise in the course of domestic sales. The client also shared the results of the review with its internal sales and technical teams, thereby securing a "standard negotiation points" guide that it can use in negotiating similar overseas software reseller agreements in the future.