As a business owner of a software-as-a-service business (SaaS) you have various clients with varying needs. To ensure you clarify your rights and obligations, it is valuable to draft a SaaS agreement. This agreement may vary depending on your client and the type of work you are required to do per the agreement. However, all agreements will share basic fundamental aspects. This article will highlight what your SaaS agreement should include.
Types of SaaS Agreements
There are different formatting options for SaaS agreements, which can dictate how your lawyer drafts the agreement. Hence, it is essential to select a format early in the process. Formats include:
- online tick-box;
- electronic signatures; or
- signing a document in-person.
Ensure that your customer entering a SaaS agreement has the capacity and authority to do so. To confirm this, you can require a warranty from your customer stating they have the authority to enter into an agreement. This will minimise future legal disputes.
Key Clauses in Your SaaS Agreement
Let us explore the key clauses to include in your SaaS agreement.
Continue reading this article below the formCommencement Date
You must clarify when your customer can begin using your SaaS. For example, if you create an online SaaS where customers can sign up at any time, you may need to state that they can only access your service once they create an account and pay a fee.
However, if you are developing a tailored SaaS for a customer, you may provide a “go live” date. This will be the date that the customer’s subscription starts. Before the launch date, you may execute specific steps to customise the SaaS, including:
- setting up your customer’s accounts;
- loading the customer’s information on the SaaS;
- configuring the SaaS to your customer’s systems; and
- procuring hardware to be used with the SaaS.
Free Trial
You can opt to give a free trial at the start of the service. A trial enables your client to assess your SaaS and whether it will be a good fit for their needs. You can structure this in two ways:
- the client does not pay any fees for the trial period; or
- the client pays a fee but can acquire a refund if they choose not to go ahead with your service.
Fee Structure
In your agreement, it is best to clarify how you expect to receive payment for your services. This will ensure you get paid on time and reduces future disputes. For example, you may require a bank transfer before or after the SaaS has been provided at a specific date.
Pay structures may include:
- deposit;
- monthly or annual subscription fee;
- fees for hardware;
- fees per user;
- fees for expenses in supplying the SaaS;
- fees for support or implementation you provide; or
- fees for additional work.
Term of Agreement
The term of your agreement will relate to how long the agreement lasts. There are various ways to structure this, including:
- fixed-term subscription;
- a monthly subscription that continues unless cancelled; or
- fixed-term subscription with renewal options.
Termination
Sometimes, a client may like to cancel an agreement for many reasons. To prepare for this, you should include a termination clause to detail how someone can cancel the agreement.
Additionally, you can outline the number of factors that will occur upon termination, such as:
- the SaaS service ceases;
- your client pays all owing fees;
- removing or disabling your client’s account;
- returning any materials the client provided to you for the SaaS; and
- your client returning any information you provided.
To protect your business, ensure supplier contracts meet your business’ needs. Our free Commercial Contracts Checklist will help.
Key Takeaways
When drafting a SaaS agreement, you must consider how your client will sign and formalise the deal. Further, they must have the capacity and authority to agree. Key clauses in your SaaS agreement include the commencement date, whether you offer a free trial, the fee structure, the term of the agreement and termination rights. Note that your agreement will have additional clauses that suit your situation.
If you need help drafting a SaaS agreement, our experienced business lawyers can assist as part of our LegalVision membership. You will have unlimited access to lawyers who can answer your questions and draft and review your documents for a low monthly fee. Call us today at 0800 005 570 or visit our membership page.
Frequently Asked Questions
Your SaaS agreement details the terms and conditions of providing the software to your client. It may include, among other factors, the term, start date, cancellation and software specifications.
It is prudent to outline whether or not you or your client can terminate the agreement and when. Further, you can clarify if the terminating party must provide a reason for termination.
We appreciate your feedback – your submission has been successfully received.
