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After much thought and deliberation on this issue, I have come to the conclusion the language in the new Product Terms is not by chance, and is well thought out and deliberate. Based on this I would say that contractors cannot use their volume licensed based MSDN to cover them for non-production systems while working at client sites. This would also prevent MSDN users from utilizing any MSDN software on their home systems, including Visual Studio. Despite the fact that the July 2015 Microsoft Visual Studio 2015 and MSDN Licensing white paper states they can, the Product Terms has legal precedence over the whitepaper and clearly states they cannot.
It would be very helpful if Microsoft would come forward and clarify this, but I do not expect that to happen. I am on the lookout for an update to the Microsoft Visual Studio 2015 and MSDN Licensing white paper, and will report back if changes are made to its language.
I strongly encourage all customers this issue impacts to speak directly with Microsoft, and only accept written guidance from them.