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A SaaS agreement sets out the terms under which you use cloud services (Software as a Service): availability, security, data protection, costs, and what happens in the event of outages or the provider's bankruptcy. Without proper agreements, you run the risk of downtime, data loss, and high costs. Below, you can read what SaaS is, what should be included in the agreement, and which additional documents you need.
What is SaaS and what are the benefits?
SaaS stands for Software as a Service: the software does not run on your own computer or server, but in the cloud, on the servers of an external provider. The provider ensures that the software is up-to-date and available anywhere with an internet connection. The major advantage: you do not have to make substantial investments in hardware and software yourself, but always use the latest technology.
What is a SaaS agreement and why do you need one?
A SaaS agreement is the contract between you and the SaaS provider containing the terms of use. This agreement clarifies the rights and obligations of both parties and establishes agreements regarding important matters such as availability, security, and data protection.
What is included in a SaaS agreement?
Important elements include:
- a clear description of the software;
- the time of entry into force and the duration;
- the termination options and the consequences thereof;
- the usage restrictions;
- how to report malfunctions and who is responsible for them;
- agreements regarding updates and maintenance of the software;
- the costs, invoicing and payment.
Which additional documents do you need for SaaS?
In addition to the SaaS agreement, more documents are often required:
- a data processing agreement if personal data is processed;
- general terms and conditions including limitations of liability, consequences of non-payment and intellectual property rights;
- a privacy policy;
- a Service Level Agreement (SLA) including uptime guarantees, response times for malfunctions, and helpdesk availability.
Note: bankruptcy of the SaaS provider
An important point of attention is what happens if the SaaS provider goes bankrupt. This can have major consequences, as your software and data are stored with that provider. Therefore, ensure you have an escrow agreement or a continuity plan in place so that you retain access to the software and stored data in the event of bankruptcy.
Frequently Asked Questions
Do I need a Data Processing Agreement for SaaS?
Yes, if the provider processes personal data on your behalf. The GDPR then requires a data processing agreement.
What does an SLA regulate for SaaS?
The SLA defines the service and performance levels, such as uptime guarantees, response times for outages, and helpdesk availability.
What happens to my data if the provider goes bankrupt?
Without an arrangement, you risk losing access. An escrow agreement or continuity arrangement ensures that you retain access to the software and your data in the event of bankruptcy.
Who is responsible for updates and security?
Usually the provider, but explicitly stipulate this in the SaaS agreement and the SLA, along with the agreements regarding outages and maintenance.
Need help with your SaaS agreement?
Drafting and reviewing a SaaS agreement and accompanying documents is complex; a single gap can have major consequences. As IT law specialists , we advise you and draft, review, or negotiate your SaaS terms of use.
Schedule a no-obligation intake meeting and ensure your SaaS is legally sound.
