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I'm not a lawyer or law student in any capacity, but I've read in multiple sources that a contract is not valid unless there is consideration for both parties.

With this in mind, how can licenses for free and open-source software be considered valid? There is no consideration for the developer.

I'm interested in all western jurisdictions (e.g. US, EU) but if your answer focuses on just one that's more than fine.

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    The ability to use the copyrighted code is consideration for the consumer accepting the license, the ability to access derived code under the terms of the license is the consideration for the original developer. – user4210 Jan 27 '19 at 8:21
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    What makes you think that a license needs to be a contract to be valid? It can be just a permission. – Greendrake Jan 27 '19 at 8:27
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    @Moo "The ability to access derived code under the terms of the license is the consideration for the original developer." That only applies to copyleft licenses such as the GPL. – orlp Jan 27 '19 at 8:32
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    You are creating a liars-paradox: the user gets to use (and/or redistribute and/or the right to modify) the software, so they definitely get something. So what does the creator get? The right to have a say how and when those actions can be done. If you say that isn’t needed and so they don’t have a contract, then nobody can use it. If nobody can use it, then it doesn’t matter what the terms are. – jmoreno Jan 27 '19 at 15:37
  • I can legally create derived works of GPL-licensed code without giving anything to the original developer, if I do it the right way. – gnasher729 Jan 27 '19 at 23:50
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According to US law, the GPL is a license, not a contract. This means it is valid without consideration, it also means if you are in violation of the license, then you are committing copyright infringement, instead of being in breach of a contract.

In Germany, the GPL is a contract. And that's fine, because German law doesn't require consideration for a contract to be valid. It's interesting in that the GPL license doesn't require you to state whether you agree to the license/contract or not. But if you don't agree to the contract then there is no contract, and you have no right to use the software.

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  • Maybe change 'use' in the last sentence to something else? GPL explicitly disavows it is a licence to use the software. – richardb Jan 29 at 23:38
  • In Germany, it’s a contract. GPL allows you to use the software, but that only counts if you accept the contract. Now the GPL doesn’t ask for any evidence that you accept the contract, so you can claim at any time you accepted it, and nobody has any intention of suing you for using the software, but the could. – gnasher729 Jan 30 at 9:50
  • GPLv3 section 9: "You are not required to accept this License in order to receive or run a copy of the Program" – richardb Jan 30 at 11:27
  • @richardb That’s in a license which in Germany is a contract which in Germany has no effect if you don’t accept it. So it has no effect. – gnasher729 Jan 31 at 7:49
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If I allow you to use my pen, I can withdraw that permission. If I have a contract with you to use my pen for a year, and you pay be $5, I cannot withdraw that permission. "Consideration" does not have to be money, it can be anything of value. By including some "consideration" language (I allow you to use my stuff if you do something non-monetary that is worth something to me, like distribute my software), then you have a contract. This article discusses the problem of bare licenses and copyright, in particular with making irrevocability more iron-clad via contract.

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Except for common law jurisdictions, a license does not need to be a contract to be valid. A license can be just a permission subject to conditions.

If I allow you to borrow my pen to fill in a form that is a license. If you do not return the pen to me after finishing with the form, you are in breach of the license and I can demand the pen back.

Same with many open source licenses: you are just allowed to use the software for free subject to conditions.

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It's true that a "mere license" does not need to be supported by consideration. But that's not the case with open source licenses. They're not mere licenses.

Open source software licences are legally binding. One of the reasons for that is because person provides consideration (the legal expressions is "consideration moves from the promisee"). Consideration doesn't need to be money.

Taking one of the most basic linceses, BSD-2 License as an example:

  1. consideration of the developer(s): supplying a copy of the source code. The BSD-2 says: "THIS SOFTWARE IS PROVIDED BY THE COPYRIGHT HOLDERS AND ..."
  2. consideration of the licensee: to adhere to the conditions of receiving the source code, which appears in clauses 1 and 2. There is further consideration in the limitations of liability, in the last paragraph of the licence.

There's a synopsis of consideration here which may help.

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Consideration is not (necessarily) money

While the most common type of contract is the supply of goods and services (as consideration) on one side in return for the payment of money (as consideration) on the other it doesn't have to be that way. A promise to do or refrain from doing anything1 is good consideration. A licence contains both.

The licensor promises not to sue the licensee for copyright (say) infringement in return for the licensee promising to do and not do the things in the terms. Consideration is provided on both sides.

There is a mistaken belief that a commercial2 licence is somehow different from a contract - a licence is a contract. If a person wants to give something away - they have to give it away. A gift with conditions subsequent attached is not a gift - requiring someone to only use your "gift" in accordance with some rules makes it not a gift.

1 Subject to the usual restraints: illegal acts are not good consideration, things already required by law are not good consideration etc.

2 Governments also issue licences - to drive, to operate a business etc. - these are not the same as commercial licences and are not contracts.

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  • Two weak points here which make this answer very arguable at least: 1) Consideration v condition (see your link); 2) Intention to create legal relations: if there was none in Australian Woollen Mills, why would any be in an open source licence? – Greendrake Apr 27 at 4:49
  • @Greendrake 1) which part of which link 2) because the purchaser did not buy wool from the government. The government offered a subsidy to buyers of wool. The plaintiff bought wool from a third party. The subsidy was withdrawn. The government never intended to enter a contract with the plaintiff - the subsidy was a governmental function, not a contractural obligation. With a licence/licensor they are in direct relationship and both intend to be bound by the terms of the licence/contract. – Dale M Apr 27 at 5:59
  • 1) Consideration v condition: a promise to refrain from using open source software in certain way is arguably a condition, not consideration; 2) The government did not sell wool. It offered subsidy to whoever purchases it from third parties (to encourage the market), paid some but then stopped. – Greendrake Apr 27 at 6:12
  • @Greendrake condition and consideration are not mutually exclusive. In a contract requiring payment of money, the payment is the consideration and if it is not paid, then a condition of the contract has been broken. – Dale M Apr 27 at 21:51
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I think that there probably is consideration to be found in an open source licence, I wrote my dissertation on this question 10 years ago: http://willhardy.com.au/legal-essays/oss-consideration/view/

But even when there is no consideration, you can have a bare licence without a contract. This interestingly has some important consequences, for example: a bare licence would be revocable, a contractual licence would not.

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