Description
A Guaranty is an agreement by one party (in this Contract, the Software Owner) to perform the obligations of another (the Distributor) where that party fails to so perform.
It is, surprisingly, an uncommon agreement but one which, if entered into, will protect the end-user from default by a distributor with whom an end-user’s contractual relationship will tend to lie if that is the party from whom the software was acquired (as in this Contract) rather than direct from the Software Owner, especially if the end-user is licensing the software because of the good reputation of the Software Owner but does not know the distributor.
In the absence of such an agreement, the end-user may, more often than not, be left unsupported when the Distributor fails to perform its obligations particularly with respect to supporting the software, as few (if any) other parties will have sufficient information (which is usually confidential) to enable them to provide support except for the Software Owner.
It is therefore surprising that such a simple agreement is not used or incorporated more frequently in the principal agreement between distributor and end-user particularly where the software is of high value or essential to the end-user’s business and its continued support of paramount importance.
This type of agreement should be entered into where the software supplier (distributor) is not the owner of the software and cannot therefore undertake in the software license and support agreement it has with the end-user to place the required source information into escrow if that is required by the end-user.
