SaaS Agreements – Terms and Conditions – Need for an Arbitration Clause

SaaS customers and suppliers entering into business to business (BTB) contracts are increasingly using arbitration clauses in their SaaS agreements to avoid going to court to resolve disputes. If you do not already have an arbitration clause in your SaaS agreement it is worth considering adding one for the following reasons.

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SaaS Agreements – Terms and Conditions – Limitation of Liability

The terms of a SaaS agreement should always include a clause limiting the SaaS supplier’s liability to the customer. The specific details of the liability clause will depend upon the type of SaaS software being supplied, the value of the SaaS agreement and what is usual in the business sector in which the parties operate.
The following issues should be covered by the limitation of liability clause in most SaaS agreements.

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SaaS Agreements – Terms and Conditions – Subcontractors and Outsourcing

The terms of your SaaS agreement must include the right to use sub-contractors as 99% of SaaS suppliers use at least one sub-contractor – a third party data centre – to host their SaaS software. SaaS customers often try to prohibit the use of sub-contractors or place severe restrictions on their use by insisting that they must give prior consent to each sub-contractor. This is not acceptable for practical reasons as often numerous sub-contractors are used in providing the SaaS services and these sub-contractors will change over time.

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SaaS Agreements – Terms and Conditions – Exit Provisions

Increasingly SaaS customers are asking for detailed exit provisions to be included in the terms of SaaS agreements. Such requests usually cover the return of data, the provision of transition assistance and non-solicitation clauses. If such terms are not already included in your SaaS agreement it is advisable to add these in order to protect your interests upon termination of the customer relationship.

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SaaS Agreements – Terms and Conditions – Indemnities

The terms of your SaaS agreement will usually include indemnities to protect you or your SaaS customer, as applicable. The type and nature of such indemnities and which party should be giving them will depend upon the type of SaaS software being used and the business sector in which your

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SaaS Agreements – Terms and Conditions – Online Sales

SaaS Agreements – Online Sales – Terms and Conditions

Many SaaS suppliers now conclude sales of SaaS products with customers online, usually by having customers “click” acceptance of the supplier’s terms and conditions on their website. When concluding online sales, SaaS suppliers need to ensure that their online terms and conditions include the following information, in order to create a legally enforceable SaaS agreement with the customer.

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SaaS Agreements – Agency Agreements – Commercial Agents Regulations

SaaS suppliers often use partners to find prospects, refer leads, assist with the sales process or to conclude sales with SaaS customers on behalf of the SaaS supplier. Many SaaS suppliers are not aware that the terms of the Commercial Agents Regulations 1993 apply to the terms of the agreement between the SaaS supplier and its commercial agent.

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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

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SaaS Agreements – Entire Agreement Clauses

In the recent Court of Appeal decision Axa Sun Life Services Plc v Campbell Martin Ltd an entire agreement clause did not exclude liability for pre-contractual misrepresentations although the clause was reasonable under the Unfair Contract Terms Act (UCTA).

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SaaS, ASP Agreements – Transfer of Personal Data outside of the EEA

There are no restrictions on transferring personal data within the EEA. However, due to the global nature of SaaS or ASP agreements personal data often needs to be transferred outside of the EEA, for example to an IT outsourcing provider in India, a subsidiary of your company in China or a data centre or software development centre in Vietnam.

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