What is a SaaS Agreement?
A SaaS agreement is a legal contract that governs the use of SaaS software by customers.
The agreement outlines the terms and conditions of the service, including the rights and responsibilities of both parties.
The perfect SaaS agreement will be one that you can use for all your clients, so it needs to be thorough and concise. The agreement should determine the terms and conditions of the use of your software, including the scope of the service, the payment terms, subscription pricing, liabilities, and termination.
What does a SaaS Agreement cover?
A SaaS agreement typically covers several important aspects of the service, including:
Intellectual property
The agreement specifies that the ownership of the software and any related intellectual property remains with you and confirms that no intellectual property transfers to the customer. It also outlines how the customer can use the software, whether they can modify it or create derivative works.
Confidentiality
The agreement contains provisions to protect the confidentiality of the customer's data and the provider's trade secrets.
Data security
The agreement specifies the security measures that the provider will take to protect the customer's data.
Liability
The agreement defines the liability of both parties for any damages or losses that may arise from the use of the service.
User Obligations
This would usually cover things such: restrictions on giving access to the software to third parties, preventing reverse engineering / decomplication etc and setting out the number of uses authorised to use the Software. These obligations can be tailored to reflect specific requirements for your SaaS product.
Though the basic service is hosting the software and customer data on the supplier’s servers, some businesses may offer additional services like customer support, training and maintenance which should also be covered in the T&Cs.Why does a technology business need a SaaS Agreement?
A business that offers a SaaS solution to its customers must have a SaaS Agreement to establish a clear understanding of the terms and conditions of their service.
The SaaS Agreement protects you and your customers by providing legal recourse in case of a dispute. It helps manage the risks associated with providing a SaaS solution by outlining the service level expectations and defining the scope of the service.
One could even argue that a SaaS agreement can help give you a competitive advantage. Why? Because by being transparent about your service and offering appropriate legal protection you can attract and retain customers who value reliability, security, and legal compliance.
Why does your customer need the SaaS Agreement?
When a customer buys business-critical software, they want to know the scope of the licence and their rights. Any suspension or restriction of service could have damaging implications for the customer’s business. They need the SaaS agreement to stipulate how they are entitled to use the software, and what remedy you will provide if things go wrong.