SaaS Agreements – FAQs – Source Code

When negotiating a SaaS agreement you will come across the terms source code, object code and open source. What is the difference if any between source code, object code and open source?

Source Code

Source code is the version of a computer programme (SaaS software) that exists prior to the software being ready to compile and run on a computer. The source code consists of a number of statements created in a text form by a programmer. These statements are saved in a named file and are called the source code.

The source code is human-readable but cannot be executed directly by a computer. The source code needs to be translated so that a computer can interpret it. This is done by compiling the source code into a format that a computer can interpret – the object code.

Do note there are some exceptions to the above. For example, modern source code can often be the same as the object code where no compilation is required. An example of such code is HTML, which is used to build most websites.

Object Code

Object code is the version of a computer programme that is created when the source code has been translated and compiled by a special programme. The object code file contains a sequence of instructions that can be executed directly by a computer. The object code is difficult for a human to read or modify.

Open Source Code

Open source code (OSS) refers to the version of a computer programme (SaaS software) in which the source code is made available and licenced to the general public. The open source licence gives users the right to study, modify and distribute the source code free of charge. Open source code is often created as a collaborative effort in which programmers improve the source code and share changes within a community.

Importance of Source Code

When source code is translated into object code, a lot of information is lost. As a result of this it is not possible to fully reconstruct the original SaaS software source code from the object code. Accordingly, it is sometimes advisable to have the source code held by a third party in escrow to ensure that you have access to the SaaS source code in the event of the insolvency of, or access and maintenance issues with your SaaS supplier. If you do not have access to the source code you will be unable to continue to use the SaaS software.


Irene Bodle is an IT lawyer specialising in SaaS agreements with over 10 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:

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