Archive for January, 2012

SaaS Agreements – Reseller/Distribution – Terms to Include

When using a local partner to resell your SaaS software to customers outside of the countries in which you are based, you will need to have a distributor/reseller agreement in place between yourself and each distributor/reseller. This will in part mirror your standard SaaS terms and conditions but will also need to include additional clauses to cover the issues set out below.

Applicable Law and Language

Usually your reseller will be located in another country. The reseller will be selling your SaaS software to its customers using its own local terms and conditions. These will probably be subject to local law i.e. German law if the reseller is in Germany and in the local language, German. However, there is no reason why your reseller agreement should be in German and subject to German law, as you the supplier have no relationship with the customers. You should resist any attempt by the reseller to use its local law and language.

As a compromise, it is worth allowing the reseller to have the reseller agreement translated into their local language “for convenience”, in parallel to the English version. However if you have two language versions ensure that the English version of the agreement prevails if there are any discrepancies between the two different language versions.

Please note that in some countries it is mandatory under local law to have the agreement in the local language.

IPR

It is essential that you control the use of your name, trademarks and intellectual property rights by your resellers. You should set out clearly in the reseller agreement whether or not the reseller is permitted to register local domain names, company names and trademarks on your behalf for your SaaS application and products. You may require this, as in certain countries you need to be a resident national of that country or have a company located in the country to make such registrations.

If you do grant the reseller such rights, it is essential that you regulate what happens to ownership of the trademarks, domains and use of your name if the reseller agreement is terminated or expires.

Territories

You should identify the territories in which the reseller may resell your SaaS application and products. List country names and do not refer to unclear terms such as EMEA, the Middle East or North Africa – there is no agreed definition of which countries these include. You should also decide whether or not your reseller should have exclusive or non-exclusive rights in the territories. If you grant the reseller exclusive rights ensure that you retain the right to make passive sales to customers, or you will be in breach of EU competition law.

EU and Local Competition Law

Depending upon the country in which you are based and the country in which the SaaS distributor is based, you will need to comply with the various anti-competitive laws that will automatically apply to the reseller agreement. Failure to comply with relevant competition laws could make not just an individual clause in the reseller agreement, but the whole agreement invalid. Additionally you could be subject to very large fines based on a substantial percentage of your annual turnover for breaches of competition law.

Help

Irene Bodle is an IT lawyer specialising in SaaS agreements with over 10 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:

irene.bodle@bodlelaw.com
www.bodlelaw.com

To register for my newsletter click here

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Website Legal Requirements – Online Sales – New Consumer Rights

If you supply goods and services to consumers via the Internet you will need to change your terms and conditions of sale to incorporate the new EU Consumer Rights Directive before the end of 2013. The new directive harmonises consumer rights protection across the EU for all BTC (business to customer) online sales of goods and services. The directive must be implemented into UK law before the end of 2013 (probably in a Consumer Bill of Rights) which will result in the following compulsory rules applying to online sales.

Cooling-off Period

Customers will have 14 days (instead of the current 7 days) to cancel an online contract for no reason, free of charge. The 14 days will start on receipt of goods (where goods, or goods and services, are purchased) and on the date of the contract (where services are purchased). There is an exception for digital content – where the sale is deemed to be concluded from the moment that downloading begins, provided that:

  • you have obtained the customer’s prior express consent; and
  • the customer has acknowledged that there is no right to cancel.

Suppliers must inform customers of their right to withdraw from the contract within the cooling-off period, otherwise the customer’s right to withdraw will automatically extend to 12 months.

If a contract is cancelled during the cooling-off period, provided that the goods are returned within 14 days of the customer giving notice of cancellation, the supplier must refund:

  • the price within 14 days of the cancellation date; and
  • the postage costs for returning the goods, unless the supplier clearly informed the customer prior to the contract being concluded, that these costs would not be refunded.

Pre-Contract Information

The following minimum information must be provided to customers before online sales are concluded.

  • the name and full address of the supplier;
  • exactly what is being bought;
  • the price (including any additional charges or costs, such as taxes and delivery costs);

The above information must be provided in a way which allows the customer to store, access and reproduce the information for as long as may be necessary in connection with the online sale.

Also note that before the online sale is concluded the total price, including all charges should be made clear. The use of ‘pre-ticked boxes’ to conceal hidden charges will no longer be acceptable.

Delivery Date

Goods must be delivered without undue delay and in any case no later than 30 days from the conclusion of the contract.

Surcharges and ‘Hotlines’

Suppliers must not charge customers more for specific payment methods than they pay themselves i.e. fees for using a credit or charge card. In addition customer service telephone numbers must be charged at a basic NOT premium rate.

What to do Next

In preparation for the changes, you should review your current terms and conditions and customer policies now to adapt them to comply with the new rules.  Customers are more aware of their online rights and increasingly make complaints. Also, national regulators will also be keen to enforce the new rules and make public examples of non-compliant companies.

Help

Irene Bodle is an IT lawyer specialising in Internet Law and SaaS Agreements with over 10 years experience in the IT sector. If you require assistance with any Internet Law, SaaS, ASP, software on demand contracts or any other IT legal issues contact me:

irene.bodle@bodlelaw.com
www.bodlelaw.com

To register for my newsletter click here

______________________________________________________

Other related articles:

  
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