Top 6 frequently asked questions about SaaS contracts

Whether you are a customer seeking clarity or a SaaS provider looking to address common concerns, our legal team will delve into the 6 most frequently asked questions (FAQs) surrounding SaaS contracts for you. Let's explore some of the key queries that often arise and shed light on important aspects of SaaS contracts.

1. What is a SaaS contract?

A SaaS contract (also known as a SaaS agreement) governs the use of cloud-based software services (known as “software as a service” – hence the name “SaaS”!) between a service provider and their customer. It contains a licence from the service provider granting the customer the right to access and use the software. However, the user can only use the software if it abides by the terms and conditions of the SaaS contract.

If you're looking for a template for a SaaS contract that can be tailored to your unique business needs, click here.

2. What is software as a service (SaaS)?

Software as a service is a method of delivering software over the internet, where the SaaS provider hosts and manages the software application. It allows users to connect to and use software via the cloud without the need for installation or maintenance on their own servers or devices. SaaS allows users to conveniently use and access the software from any location, removing the need for physical software installation. With SaaS, the provider handles software updates, maintenance, security and infrastructure.

3. What is the difference between a SaaS contract and a software licensing agreement?

A SaaS contract and a software licensing agreement share similar components. However, unlike a SaaS contract, software licensing agreements specifically regulate the use of software that requires installation onto the user's device, either through a CD or download. In the traditional software model, users typically have the right to use the software indefinitely. In contrast, SaaS contracts govern the use of software as a service, allowing access and usage of the software via the internet for as long as the user maintains a subscription to the service.

For a more in-depth guide, check out this blog which explains the key differences between SaaS contracts and software licensing agreements.

4. What are the core components of a SaaS contract?

SaaS contract covers the essential terms and conditions relating to the access of, and use of, the software. Typically, a SaaS contract will include terms relating to the scope of the licence, usage rights, responsibilities of each party, data protection, confidentiality, intellectual property, payment terms, support and maintenance, termination, liability limitations, governing law and jurisdiction. Understanding each component is essential to ensure a comprehensive and mutually beneficial agreement. 

Check out our comprehensive guide to SaaS contracts here.

5. Can a SaaS contract be negotiated?

The negotiability of a SaaS contract depends on the SaaS provider and their willingness to modify their standard contract terms. Larger SaaS providers, who are prominent players in the software industry, often offer non-negotiable standard contracts. These agreements are typically presented as "clickwrap agreements," where customers agree to the terms by ticking a box or selecting an option. On the other hand, some service providers may be open to tailoring specific clauses to accommodate the customer's unique requirements. It is advisable to discuss specific needs or requirements with the provider before entering into a SaaS contract.

6. What does it mean for software to be provided "as is"?

If the software is provided "as is" in a B2B SaaS contract, this means that the software is to be provided by the service provider in its current state without any warranties or guarantees unless otherwise stated in the SaaS contract or implied by law. The SaaS provider does not make any promises regarding the software's performance or suitability for specific purposes. By accepting the software on an "as is" basis, the customer takes responsibility for the risks associated with any defects or shortcomings in its functionality.

To gain a deeper insight into terms that can protect you when it comes to your SaaS contracts, read this blog.

Conclusion

SaaS contracts play a vital role in defining the rules of access and use of software services. Now that you've grasped the basics of SaaS contracts with these handy FAQS, if you would like to gain a deeper knowledge of important clauses that you should include in SaaS contracts, check out this checklist curated by lawyers.

Where can you find a template for a SaaS contract?

If you’re looking for a SaaS contract for your own business, you can find Docue’s SaaS contract here.

With Docue, you can create contracts in minutes at the click of a button; sign up today and see just how easy it is to use the platform.