What Should Be in a SaaS Contract?
Software as a Service (SaaS) has become the cornerstone for businesses seeking efficient and scalable solutions. However, many companies overlook the critical aspect of their SaaS contracts or agreements. This can lead to security lapses and data protection issues, especially when managing multiple SaaS subscriptions.
What is a SaaS Agreement?
A SaaS agreement is a legally binding contract that establishes the terms and conditions of the relationship between the SaaS vendor and the buyer. This contractual document is more than a formality, it's a crucial safeguard that protects the interests of both parties. Legal teams are often involved in drafting and finalising SaaS agreements to ensure clarity and fairness.
Key Components of a SaaS Agreement
The following details should be included in a SaaS contract:
Terms and Conditions
Service delivery: How the SaaS services will be delivered and how they can be used by the buyer.
Privacy policy: How user data will be handled, stored, and protected.
User restrictions: Limitations on the number of users, their roles, or specific use cases.
Geographical usage policy: Where the SaaS services can be accessed or limitations on usage in certain regions.
License Agreement
Intellectual Property (IP): Who owns the intellectual property (IP) rights for the software and any associated developments.
Confidentiality: Confidential information will be handled to protect both the vendor's proprietary information and the buyer's data.
Limitations of liability: The extent to which each party is liable for damages or losses.
Subscription Terms
Acknowledgement: The buyer's responsibility to acknowledge and accept the terms of the subscription.
Policy changes: How and when buyers will be informed of any changes to the terms and policies.
Longer contractual terms may offer cost discounts, but carefully balance this against the flexibility your business requires.
Response Time
Issues: The maximum acceptable response time for critical issues that require immediate attention.
General support: The response time for general support queries and issue resolution.
Additional requests: The timeframe for addressing and implementing requested additional features or functionalities.
Uptime: The minimum percentage of time that the SaaS software is guaranteed to be operational.
Penalties and Exclusions
Penalties: The penalties the SaaS provider will incur if they fail to meet specified guarantees.
Exclusions: Situations or events where the provider will not be obligated to pay penalties.
Billing and Pricing
Your SaaS contract should go beyond just stating service charges, it should provide a detailed breakdown of cost considerations to ensure transparency and avoid unexpected expenses.
Billing: How billing will be structured, including payment intervals and methods.
Pricing structure: The costs associated with the SaaS subscription and any variable charges.
Limitations on the number of users covered in the base price and specify the cost of adding extra users.
Whether prices are fixed throughout the agreement's term and, if not, how price increases will be agreed upon or controlled.
Security and Compliance
Security Measures: The security protocols and measures implemented by the SaaS provider to protect user data.
Compliance Requirements: Legal or industry-specific compliance requirements that the SaaS service must adhere to.
Performance Metrics
Performance Metrics: Specific metrics, such as response times, system availability, and overall system performance.
Key Performance Indicators (KPIs): Measurable indicators that will be used to assess the overall effectiveness and performance of the SaaS service.
Data Protection
Comprehensive GDPR-Compliant Provisions: Thorough GDPR-compliant data protection provisions, including an indemnity from the software provider in case of a breach.
Termination
The ease of termination and any financial penalties for early termination. Ensure the termination clause allows for flexibility if business needs change.
Ability to terminate but also the practicalities of exiting the contract.
How easy it is to exit or terminate the contract. Assess potential difficulties in moving to another provider to avoid being tied down longer than desired.
Be aware of the risk of lock-in, especially regarding data backup. Ensure that terminating the SaaS contract won't negate the cost benefits, and explore providers who don't create unnecessary lock-in scenarios.
By carefully considering these additional details, businesses can enter into SaaS agreements with a comprehensive understanding of the terms, potential costs, and safeguards to protect their interests and SaaS companies can create agreements that are reliable and robust.
How Can Gerrish Legal Help?
Gerrish Legal is a dynamic digital law firm. We pride ourselves on giving high-quality and expert legal advice to our valued clients. We specialise in many aspects of digital law such as GDPR, data privacy, digital and technology law, commercial law, and intellectual property.
We give companies the support they need to successfully and confidently run their businesses whilst complying with legal regulations without the burdens of keeping up with ever-changing digital requirements.
We are here to help you, get in contact with us today for more information.