What is a SaaS Subscription Agreement Review?
An SaaS (Software as a Service) subscription agreement is a legal contract signed by a software provider and customer. It outlines all the important terms for how the internet-based software can be used, its fees, and the license for the customer to make use of the service.
Once a SaaS subscription has been drafted, it should be carefully reviewed to avoid being locked into a contract that doesn’t benefit you or your business goals.
Here’s a rundown of what a SaaS subscription agreement contains and how to review it for legal accuracy. We’ll also feature tips on how a lawyer can help you navigate the review process.
What are Key Terms in a SaaS Subscription Agreement?
A SaaS subscription agreement usually contains essential terms such as the following:
- Scope. The SaaS provides specific services, such as software support, updates, and/or hosting.
- Subscription. The pricing model that will be used must be clarified to prevent misunderstandings. This section should include information about billing cycles.
- Usage. A license agreement will explain how the customer is allowed to use the software and prohibited uses to prevent breach.
- Service Levels (SLAs). The software provider must fulfill the services they agree to provide, such as uptime commitments and fast response times.
- Data protection. Since data will be used and shared, the agreement must specify ownership and how the data can be kept confidential.
- Termination. This term outlines how either party can terminate the agreement, but it should also include information about post-termination obligations. These include returning or destroying data.
How Can You Review a SaaS Subscription Agreement?
Reviewing a SaaS subscription agreement isn’t just about reading all the terms, but understanding every point, flagging the contract for potential issues, and considering the effect of various real-world scenarios on the contract’s term. Here are some tips to consider when reviewing your contract.
Check What Happens if There’s a Data Breach
The contract’s security and data protection provisions must be clear and specific, so that your sensitive information is protected. You also want to consider what happens in the case of a breach, such as how you will be notified and remedies for the breach to prevent further losses.
Consider the Software Features
When checking what you’ll get from the software, ensure that all its features and functions are clearly defined. These should be aligned with your business goals.
Scrutinize the Termination Clause
Some SaaS agreements will have automatic renewal clauses, which means you could be stuck in the agreement for a longer term.
Check Additional Fees
While payment terms are important to check for accuracy and clarity, you also want to know of any additional fees that could be your responsibility. For example, there could be fees for early contract terminations.
Understand Confidentiality Terms
You should check the agreement to know what information is considered confidential and how you can protect it. There might be exceptions, such as if you have to disclose information by law. If these terms aren’t clearly drafted, you’ll want to ask the other party about them.
Protect Yourself with Indemnity and Limitation of Liability
It’s important to know what will happen should you experience losses, such as those caused by software failure. The provider should indemnify you for such occurrences, but there could be restrictions or caps on their liability.
Check for Legal Compliance
You want confirmation that the contract is aligned with all relevant laws and industry regulations, to prevent legal issues or disputes. There might also be clauses that allow for auditing and monitoring of the provider’s compliance.
Flag Vague Language
If you notice anything unclear or ambiguous in the contract, even if it doesn’t seem too important, you should note it and discuss it with the other party. Even small details could pose risks or cost you in the future. Seek clarification so that you can understand everything. This also enables you to negotiate for revisions.
Should You Hire a Lawyer for a SaaS Subscription Agreement Review?
Since SaaS subscription agreements can be technical and detailed, you should consider hiring a qualified lawyer for help with reviewing them. They will give you peace of mind that you’re entering into a contract that’s legal, balanced, and clear.
A lawyer will help you during the agreement review by:
- Spotting any legal or financial risks that might not be immediately obvious.
- Examining and assessing financial and payment terms to prevent unexpected fees.
- Reviewing the important SLA to ensure that provider guarantees are specified and remedies are in place for things that could go wrong.
- Checking data protection and privacy terms so that they’re aligned with all regulations.
- Evaluating intellectual property (IP) clauses to confirm ownership rights, preventing disputes.
- Reviewing limitations of liability and indemnity so that you’re not exposed to unnecessary risks.
- Negotiating any terms that should be revised by communicating with the other party on your behalf.
- Considering if your long-term business goals are aligned with the SaaS agreement.
Where to Find a Lawyer for a SaaS Agreement Review
If you need to hire a lawyer for a SaaS agreement review, you don’t have to waste time researching traditional law firms. You can find a reputable lawyer on ContractsCounsel, one of the largest online legal marketplaces where clients connect with lawyers who have been vetted on the platform. They will review or draft your SaaS agreement.
Here’s how to request it:
1. Go to the ContractsCounsel marketplace.
2. Post your project for free.
3. You’ll receive multiple bids from lawyers directly on the platform who can assist you.
4. Once you receive the lawyer bids, you should review the lawyers' profiles. There’s lots of info on the platform to help you choose the best lawyer, such as their location, client ratings, years of experience, and field of expertise.
5. Connect with a lawyer you think is best suited to your requirements and hire them to review your SaaS agreement.
