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    What is a Software as a Service agreement?

    21/07/21 10:34 AM

    It is increasingly common for businesses to utilise a Software as a Service (SaaS) model for their products and rely on cloud-based software in their operations. While the benefits of SaaS are widely acknowledged (reduced cost, scalability, integration and maintenance to name a few) there can also be complications in detailing the rights and responsibilities of customers and service providers. It is therefore very important that SaaS providers have a SaaS agreement in place.

    A SaaS agreement is different to a traditional software licensing agreement as the user is subscribing to access software that is stored on the cloud, whereas a traditional software license is a one-off purchase to gain usage of a software product. As the relationship between provider and customer is ongoing, it requires more detailed legal regulation.

    If your business requires a SaaS agreement, one of the first considerations should be whether your product is business-to-business or business-to-consumer. This and other factors specific to your software will determine the specific clauses relevant to your agreement. However, broadly speaking SaaS agreements will cover the following:

    • The service or functionality the software provides
    • Details of how users can access the software (do they need to create an account, download an app or visit a website?)
    • User obligations and responsibilities
      1. This includes (but is not limited to) terms relating to any prohibited use or alteration of the software, where responsibility falls for updating products, obligations to keep personal information and login details safe
    • Payment clauses
    • Intellectual property rights
    • How the SaaS agreement can be terminated
      1. For example, this section will include details on what happens if a user tampers with the software or wishes to cancel their subscription
    • Software updates
    • Dispute resolution
    • Support and feedback processes offered to users
    • Limitation of liability

    SaaS agreements are comprehensive and complicated documents. Each one is unique and a poorly drafted or generic SaaS agreement may expose you to unwanted legal complications. If you would like more information about SaaS agreements, please feel free to get in contact with one of our experienced commercial lawyers at Frank Law on (02) 9688 6023.

    This is not legal advice. 

    Megan McGrath

    Written by Megan McGrath