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.
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.
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.
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:
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