saas agreements | Saas Contracts  

Clients usually contact us to help them develop, negotiate, and execute their SaaS Contracts. We also represent clients in resolving disputes related to a SaaS Contract. 

Important Considerations for Software as a Service (SaaS) Agreements

SaaS have become an increasingly popular. Easy implementation with less maintenance on the part of your company of business does make it a solid contender. So, you contact a Service Provider and they give you a SaaS Agreement to sign. What do you do? It is important to review the agreement and make sure it is adequate. We have seen many SaaS agreements that are deficient and lack clarity. We do offer Agreement/Contract review services to our clients, where we highlight the areas that need revisions and ones where more discussions are required to avoid confusion and potential problems. We often redline such contracts for our clients so that Service Providers have an opportunity to review them and provide their feedback.

Here are some points you should negotiate and review when a SaaS contract is presented to you,

Terms of Service

 Your Business or Company should have discussions on your commitment to a particular SaaS service. If a SaaS Agreement provides for a default Term; discuss this with the provider’s representative and see if you can get it changed. Depending on the Term, you may be in a position to negotiate discounts. Long term contracts are good because they provide assurance that the service will be delivered as promised, but you also have to make sure that there are appropriate clauses to let you out of the contract should something happen or not happen, i.e. Company goes bankrupt, service expectations are not met, or violations of various contractual agreements.

Pricing and Possible Changes in the near future or during the Term:

For the most part, if a vendor agrees on pricing, they will honor it as promised, but always look out for “slick” language that leave wiggle room for SaaS Service Providers to increase or change pricing. Negotiate such language, you may even add notification language and opt-out clauses in the even you and the SaaS Service Provider are unable to come to an agreement.

Payments:

This is a hot topic for many contractual matters. Net 20? Net 30? Upfront payment? Different companies have different policies. Never assume that the Service Providers has the same payment policies you do. Discuss this during negotiations, and negotiate them if need be, but do not assume. I have had clients call me just to negotiate this very issue; they will negotiate the whole agreement having forgotten to discuss the payment issue, when the time comes to write a check, we have a problem. I will say this one more time, please discuss this with the Service Provider.

Maintenance/Support Costs:

SaaS services do require maintenance such as providing support to your staff; time spent resolving issues, upgrades etc. Many SaaS Agreements will not call this out as a separate item as they consider this an in-house item (as part and price of the service being offered), but it is good practice to look out for such clauses because they will add to the cost over time. Having this in an agreement is not bad in itself, but it should be factored into the overall cost of the product.

Service Level Agreement & Penalities:

Also known as SLA’s, they are common in the web-development, server and general web-service and software industry; commitment to provide adequate services is important. You want the service you are paying for to be reliable and have maximum uptime. You will see such commitments in your contract represented in percentages. Note: always ask to see what formulas or considerations the vendor is using in calculating their uptime. SLA’s also call out for penalties for failed delivery to failure to stay true to their promise. I have seen per occurrence penalty, tabular penalty and everything in between. It is also recommended that you take the time to flush out all possible scenarios and penalties associated with them if there a tabular model is being used. If there is a per occurrence penalty you want to be sure that it is adequate under the circumstances, push for stricter penalties to ensure reliability and commitments.

Renewal Process:

If you are entering into a contract and there is potential for long term commitments by both parties. Discuss the renewal process. How will the renewal process start? Notices? Meetings? Emails? How long will the process take? Will there be discounts? Any price hikes? Will the current contract be amended with extension on service or will there have to be a new contract? There are just some of the many questions you should consider.

Discounts:

Ask for discounts even where there are none. It never hurts to ask, and you won’t get them unless you ask for them, especially for custom services where prices and discounts are not readily published. Sign up discounts? Renewal discounts? My practice is have my clients ask for discounts whenever possible.

Data Recovery/Loss: 

Machines fail: servers, computers, networks to name a few. Is there a proper Data recover or loss policy? How will the Service Provider handles such issues, in the event of an outage or loss, how will the Service Provider work to get your data back? What happens if the data is not recoverable? You should include this in the contract.

Data Transfer:

If you have used a particular service for years, and now wish to switch, how will the data be transferred? Who is responsible for the cost of the Transfer? How long does it typically take? Some service providers include such cost in the pricing model they propose, others have a separate fee.

Customer Services:

Few of the points I’ve mentioned above can be lumped into this category. Customer Service! You as a person, small business or mid-to-large corporation purchasing a SaaS service have expectations, and they are high. You will fork up good money to ensure that these expectations are being met. Which makes it all the more important to flush out the details and have a comprehensive SaaS Agreement.

Data Security: 

This has become a hot topic. Data breaches are reality, it is happening everywhere and every day. What steps is your SaaS Service Provider taking to ensure that your services is protected and that it will not lead to any breaches that could seriously compromise your business. 

Why a Software Agreement attorney is your best friend? We can help!

The purpose of software agreements is to set the rules, roles and responsibilities of one or more parties for the Software that is to be deployed; including any short and long term maintenance of the software (updates, upgrades). Though many prefer to use templates, it can be beneficial to have an Software SaaS Agreement Attorney on your side. This is because; rarely does anyone sign a template or for that matter any contract another party present you with. You want it to be fair, and sometimes its hard to know what is fair (industry standards). There are negotiations involved, terms change, and the bargaining chips fall as they may during the process. It is important to know how various clauses, changes, edits, and additions affect you or your company, the service and disruption. An Attorney’s involvement can be invaluable in this process. They act as a gateway between you and the other parties involved, they keep you informed on the ins and outs of the contract as it changes, inform you if there is unnecessary risk on the table that requires curbing. Additionally, they develop an agreement to your preference and attempt to negotiate them favorably for you. 

Our Expereince

We have experience drafting Agreements for our clients contracting with billion dollar companies; in the valley as well as internationally. We have drafted, negotiated and executed such agreements for our clients. We understand the nature of these agreements and complexity that goes with them. We take the time to meet with you and get to know you and your business. 

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