Unlike traditional software, which is generally downloaded and saved to a user’s own device, software-as-a-service, or “SaaS,” refers to software applications hosted by a software provider and made available to customers over the internet through a remote server. In other words, SaaS products refer to cloud-based or web-based software products that are not saved to a user’s own device but are instead accessed remotely.
Regardless of the form a SaaS Agreement takes, and although Software as a Service Agreements will need to be tailored to meet the specific software and business models of the contracting parties, a few key considerations when drafting, negotiating, or reviewing a SaaS Agreement include the following:
- Defined Service Levels. SaaS Agreements often offer users customer support or other services in connection with a SaaS product. Additionally, in many instances, a provider may offer different “packages” or “levels” of support to a user based on either the product ordered or price paid by the user. Where a SaaS provider offers customers such levels or categories of service, the SaaS Agreement should include provisions clearly describing what services are provided within each service level, the times during which specific services are available to the user, the mechanisms for submitting service requests, and the effect of exceeding the scope of one’s assigned usage under a service level. Although information regarding service levels may be included in a master agreement, a separate Service Level Agreement may be appropriate in certain situations.
- Service Interruptions. Because SaaS products are generally web-based and accessed remotely by users, users may be restricted from accessing the software services during outages resulting from events such as routine maintenance, actions taken by a provider in response to malicious attacks, or outages that are the result of circumstances beyond a provider’s control, such as a third party provider’s outage. Accordingly, a SaaS Agreement should include detailed terms describing the parties’ rights with respect to service outages, including when such outages can be expected and whether a customer is entitled to any refund or termination rights upon the occurrence of an outage. Such terms may be included through the use of standard provisions such as Force Majeure, Outages, and Maintenance provisions.
- Authorized Users and Account Assignability. One benefit of SaaS products is that they can be easily scaled to add, or remove, user accounts to meet individual customers’ needs. Accordingly, many customers, especially larger enterprises, will enter into Master Service Agreements with a SaaS provider that allows the customer to add or remove users to their account during the term of a SaaS Agreement. However, from a provider perspective, because SaaS products can be accessed remotely, it is important that SaaS providers ensure unauthorized users are not accessing and using services they did not pay for. Accordingly, a SaaS Agreement should include a clear definition of who an “Authorized User” is, explain who is permitted to assign accounts to new authorized users, describe whether authorized user accounts may be reassigned between former and new employees of a customer, and include mechanisms for addressing issues concerning misuse of user accounts.
- Priority of Agreements. As mentioned, SaaS Agreements often include more than one document, such as where a customer agrees to both a Master Service Agreement and individual Order Forms. Where a provider requires customers to enter into, or agree to, multiple stand-alone agreements, such as a MSA and Order Form, or Subscription Agreement and Terms of Service, such agreements should contain clear language stating which agreement will control over the other in the event of conflict between the terms of the agreements. Such terms may be included through the use of a “Priority” or “Order of Preference” provision.
The above-listed provisions are just a few of the many provisions which should be carefully considered when drafting, negotiating, or reviewing a Software as a Service (SaaS) Agreement. For more information regarding how the Law Office of Nicholas J. Vail, PLLC assists software and technology providers, developers, licensors, and licensees, click here.