SAAS Agreement Template
What does this agreement do?
A SaaS Agreement, sometimes referred to as “on-demand software” is a services agreement in which software is provided on a subscription basis and is centrally hosted. It usually does not require the user to install anything and is accessed by using a thin client via a web browser. Essentially, it’s software being made available via the Internet to users.
Why do I need this?
A SaaS Agreement provides the terms of subscription in relation to privacy, data security, performance and up-time guarantees, disaster recovery, and data back-ups.
What’s the main benefit?
A SaaS Agreement clearly outlines the rights and obligations of the service provider.
Additional key points
- The customer should get a subscription, not a software license. The customer gets a right “to receive the Service” or “to use the System” so long as the subscription lasts. Of course, you can describe the vendor’s offering as “a license to the Service,” but that suggests some kind of copyright license, and it’s hard to predict what a court will do with it if the parties get into litigation.
- Are service levels applicable? You should consider a service level agreement (SLA) for a SaaS contract. Most SLA’s address time-frames for fixing errors or minimum performance standards—speed, latency, etc.—or both
- What are the obligations in relation to customer data? Data management and security play a more important role in SaaS deals than in most software licenses. The customer’s sensitive data generally sits on the vendor’s computers, along with the software, rather than on the customer’s computers. That’s why many SaaS contracts include a data clause, addressing the vendor’s obligations for managing data and for keeping it secure.
- SaaS customers generally don’t risk suits about copyright infringement, including open source suits, because they’re not copying any software. So they usually don’t need indemnities against copyright suits. Of course, the flip-side is that vendors don’t face much risk if they grant copyright indemnities. Patent indemnities, however, can play a key role in SaaS contracts because the customer could get dragged into a patent suit, even without copying the software. Some vendors grant patent indemnities only, others grant broad IP indemnities, and still others grant no indemnity at all.