SaaS, ASP Agreements – Source Code and Object Code

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

Source Code

Source code is the version of a computer programme 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 which is the source code. This file is human-readable but cannot be executed directly by a computer. The source code needs to be translated into object code by compiling it into a format the computer can interpret.

However, modern source code can often be the same as the object code with no compilation required. An example of such code is HTML which is used to build most web sites.

Object Code

Object code is the version of a computer programme that is created by the source code being 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.

Importance of the Source Code

When the source code is translated into the object code, a lot of information is lost. Therefore the object code cannot be used to fully reconstruct the original source code. The source code is the most permanent form of the programme. Accordingly it is advisable to have the source code held by a third party in escrow, to ensure that you have access to the source code in the event of the insolvency, or access and maintenance issues with the software supplier.


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