What Are Common Client Concerns in SaaS Agreements?
A SaaS (Software as a Service) agreement outlines how software is used and accessed. When drafting this contract, we’ve found that many business owners express similar concerns that make them seek legal review.
Based on research by ContractsCounsel, an online legal marketplace that connects clients with vetted lawyers who can draft or review their contracts, the top concerns clients have about SaaS agreements include termination clauses, renewal provisions, liability limitations, intellectual property ownership, and legal compliance.
Read the rest of this article to explore these, and other concerns, and how a legal review can help.
Note: This research comes from ContractsCounsel’s real, anonymized SaaS agreement review postings on the platform.
Termination Clauses and Flexibility
Concern 1: A leading concern clients have when reviewing SaaS agreements involves contract termination. They want these clauses to be clear so that they’re not stuck in long contracts.
How lawyers help: Technology lawyers review termination clauses so that all notice periods, breach conditions, and early exits are properly provided.
Renewal and Auto-Renewal Provisions
Concern 2: Automatic renewal and vague or unclear cancellation clauses can cause surprise expenses clients wish to avoid.
How lawyers help: Lawyers look at the renewal terms so that they’re fair and have advance notice provisions. They need to be in line with state renewal laws.
Service Level Agreements (SLAs)
Concern 3: Companies want service reliability. They want to know how often it’s available and how quickly support will respond when required.
How lawyers help: Lawyers check for provider guarantee transparency. They outline what happens should these promises not be fulfilled.
Liability Limitations and Indemnification
Concern 4: We’ve found many clients worry that there are unfair liability caps in the agreement. These might protect providers but not cover data loss and other issues.
How lawyers help: Lawyers will negotiate liability caps and provide coverage for issues such as data breaches. They also ensure the contract includes provisions for mutual indemnification.
Intellectual Property Ownership and Joint Work Product
Concern 5: Clients seek clarity over intellectual property ownership, such as for software customizations and tools they’ve developed with the other party.
How lawyers help: To avoid disputes, lawyers will check and clarify IP rules and licensing rights so that clients maintain theirs.
Jurisdiction-Specific Legal Compliance
Concern 6: A common concern for clients is ensuring the contract is compliant with local laws. They worry if the contact defaults to the provider’s jurisdiction.
How lawyers help: Lawyers check that the contract follows the laws where the client operates. They ensure the contract complies with all applicable data privacy and consumer protection rules.
Key Takeaways
- Top client concerns include contract termination, auto-renewals, and quality of service.
- Clients want clear and fair IP terms.
- Legal review ensures the agreement is reasonable, fair, and enforceable.
Do You need help with your SaaS agreement?
You can visit ContractsCounsel to post your project for free. You’ll connect to vetted technology lawyers who have lots of experience in drafting and reviewing clients’ SaaS agreements.