The notion of "leasing" software can be appealing to vendors and buyers. Buyers typically pay the licensing fee in monthly installments and avoid a substantial initial payment. vendors establish a payment stream and receive a financing charge. The financing appeal of the lease triggers the analogy.

However, the parallel ends with the financing elements of leasing. "Leasing" arrangements are best suited for equipment and real estate purchases and typically include provisions that are nonsensical in a software transaction.

Examples include the right of the lessor to repossess the asset in the event of default for purposes of mitigating damages. Repossessing software has no remedial benefit since additional copies can be produced more inexpensively than recovering a compromised copy from a licensee in default. Other examples of inappropriate provisions include security deposit requirements, granting of security interests in the asset and buy-out provisions conveying title to the asset. The Lease Agreement is simply not well suited for software licensing transactions.

The appeal of the deferred payment arrangements for software is best accomplished by simply amending the payment terms of the license to allow for installments. Because software is licensed, all of the other terms apply without need for modification.