SaaS Agreements 101: Subscribers and Providers Rights & Responsibilities
By Joanne Hue, published: 2023-03-14
A SaaS agreement is a legally binding contract between a company that provides software as a service and its client. These services mostly concern cloud-based applications that a client may subscribe to. After the subscription, the client can access these internet-based services in exchange for a recurring fee. The content of the SaaS agreement varies vastly based on the parties entering the contract. However, these agreements intend to provide both parties with a clear understanding of their expectations and liabilities.
The rights and responsibilities of the provider and the subscriber are drafted within the SaaS agreement. Depending on the client-producer relationship or the scale of service, each SaaS agreement lays unique provisions. A well-drafted SaaS agreement clarifies the terms and conditions for the service alongside the rights and responsibilities of the parties.
Like every legally binding document, the terms and conditions of a SaaS agreement outline the condition within which the agreement may terminate. This may either occur naturally- after reaching the established date of the agreement- or in case of infraction via a party.
Since the software is the subject of exchange in a SaaS agreement, producers and subscribers need to accept the intricacies concerning the trade. The SaaS agreement may open space for negotiation, and demand data protection. A well-drafted SaaS agreement is crucial to prevent and protect against any potential legal suits.
If you’re looking for templates to draft an efficient SaaS agreement, you may create SaaS agreements through Zegal’s templates.
Terms and Conditions of Saas Agreements
SaaS agreements encompass terms and conditions concerning the software’s control. Outlining the required terms and conditions within the agreement allows providers to secure certain authority over the application they provide. Additionally, including terms in the SaaS agreement can provide legal protection to the parties in case of conflict. Therefore, SaaS agreements are crucial documents for SaaS provider companies and their subscribers.
The terms and conditions agreements define the rules and regulations that a customer needs to follow to access the product of a SaaS company. It establishes the conditions that ought to be followed by the consumer to continue their access to the product. Often SaaS providers set copyright restrictions, and procedures for dispute resolution, and rules for interaction with other consumers. Once agreed upon, these conditions are legally binding and form contractual obligations for the customers.
A well-written SaaS agreement defines the terms and conditions clearly and allows SaaS companies to define their expectations from the trade. Since SaaS providers can retain control over their services, it lowers the possibility of misuse and sets a legal basis to identify violations of terms from the customers.
Rights of Subscribers and Producers
Subscribers and Producers set their rights in the SaaS agreement. Producers often reserve the right to suspend or terminate their services under specified conditions. Usually, these suspensions or terminations of services occur in cases of infraction or unjustified repudiation from the client. As the suspension is against the interests of the party that subscribes to the services of SaaS providers, they can negotiate within the SaaS agreement to limit the suspension rights of the producers to the circumstances of the serious infraction.
Through the SaaS agreement, subscribers may secure the right to prevent immediate termination. They may outline negotiation terms or demand a notice to remedy unintentional infractions. Drafting the provision concerning these rights in the SaaS agreement prevents the collapse of the agreement when infractions occur due to unforeseen circumstances.
Cloud service providers may also agree to send warning notices.
Some customers take the stance that providers do not have the right to terminate or suspend services even in circumstances of grave infractions like nonpayment. They maintain that providers may file a suit but are obliged to continue their services until a breach is proven.
For services that are given in a metered model, the subscribers often hold the right to terminate the agreement as these models often do not require commitment. In some agreements, the cloud provider may reserve the right to may unilateral changes to the service it provides. They do not need to obtain the customer’s permission before doing so. Within such agreements, customers have the right to terminate the agreement for convenience through the reason of material impact.
Transition rights are crucial to be addressed in the SaaS agreement. When the agreement terminates naturally, or before-term, the customer may wish to transfer their business to a new provider. Transition clauses secure the customer’s right to do so without obstruction.
Responsibilities of Subscribers and Producers
The SaaS producer has an obligation to provide their service to the subscriber as detailed under the SaaS agreement. As a certification of access rights, the customer holds a licence to use the software. They may only use the software for the purposes outlined in the agreement. The customer has the obligation to comply with the restrictions and prohibitions that were agreed upon.
Other than providing uninterrupted services, the SaaS provider may also have the obligation to ensure that the customer receives support services. They have the responsibility to maintain or update the software as required.
Along with the obligations concerning the service, the provider has the legal responsibility to maintain the confidentiality of the client’s information. This also includes the responsibility to protect data collected or supplied by the customer.
As the data supplied via the subscriber is the property of the subscriber, SaaS producers need to comply with GDPR-friendly data processing clauses. The customer may also choose to specify the data that they demand confidentiality for.
The data supplied by the customer are the property of the customer and, insofar as such data are personal data, are subject to a standard GDPR-friendly data processing clause. The customer data may be specified to be confidential.
Terms and Conditions of the SaaS agreement regulate the rights and levy obligations on the subscribers and producers of SaaS. A SaaS agreement may entitle the producer with the right to suspend their services in case of an infraction via the producer. Likewise, the subscriber may arrange terms to prevent immediate suspension of service in the cases of breach. They may do so by including clauses for negotiation or obligating the producer to provide a warning notice to remedy the breach prior to suspending or terminating the services. A SaaS agreement can have numerous provisions depending on the requirements of the parties involved. A client may include a transition clause to address the event of termination of the contract. Both parties are required to comply with the terms and conditions laid out in the agreement. An effective SaaS agreement lays a foundation for an efficient transaction of software services.