Legal Agreements for SaaS Apps
Software as a Service (SaaS) is a simple arrangement in some respects. You sell your service like a subscription, and in return, you collect payments on a regular basis from your customers.
But that doesn’t mean you can throw your legal obligations out the window.
Protecting your company and ensuring that you understand issues like liability are both integral components to keeping your SaaS up and functioning. And that means using legal agreements to establish clarity between you and the consumer when it comes to expectations.
Here is what you need to know when it comes to legal agreements for your SaaS:
What is SaaS, Anyway?
When you sell a product, you can throw warning information on the label. You can include a warranty in the box. It’s a straightforward process.
But you’re selling Software as a Service, which changes the format a bit. Rather than a tangible product, you’re selling software on a subscription basis.
In most cases, your customers will be able to simply download your software and unlock it with a purchase code or activation key. That means if you’re going to establish a basic user agreement, you’re going to have to actively insert it somewhere into that process.
Why You Need Legal Agreements in Place
In short, because you’re entering into a contract with your customers here. This isn’t just a one-time purchase. They’re not paying with cash. You’re likely taking hold of each customer’s:
- Credit card information
- Email address
As Uncle Ben once said in the Spider-Man series–with great power comes great responsibility. That means that you, the provider of the SaaS, have to take steps to ensure that this contract is legal and in good standing by the rules and regulations that govern your industry.
It also helps to protect you on the legal end of things. But we’ll get more into that as we explore the specific legal agreements you’ll want and oftentimes even need.
Which Legal Agreements Should SaaS Apps Have?
Now let’s get specific. Which legal agreements do you want to include with a SaaS app that is presumably collecting vital customer information? In this article, we’ll focus on two main agreements:
- Terms and Conditions – Optional but recommended – You’re entering into a contract with someone you don’t know. Don’t you think it’s a good idea to set some basic ground rules first? By having someone agree to your terms and conditions before they use your software, you can fight against potential liabilities — after all, you’ve established the conditions of using your software ahead of time.
Here’s what you’ll need to know about each.
What to Include in Your Terms and Conditions
You know Terms and Conditions. They’re those long, boring screeds you skip through as you play the latest computer game or even as you download an important piece of software for your business. And while it’s not important that you understand every last detail of these Terms and Conditions as a consumer, you’d better bet that you’ll want to know them when it comes to running a SaaS business.
Here are a few things you’ll want to include:
- Defining your software and what will be provided. This sets the expectations of what you need to hold up to on your end of the bargain.
- Guarantees and warranties, if any.
- Which laws will govern the contract. For example, if you’re in the state of California, you’re going to want to explain that.
- The terms of this agreement and what might cancel it, or give you grounds to cancel it. (You should also explain that you have the right to terminate the agreement at any time).
Tips for Creating Terms and Conditions
How do you actually sit down and create Terms and Conditions? There are a number of ways. You can buy template Terms and Conditions online, for example. But you’ll want to customize it for your specific product and ensure that your business concerns are taken care of.
Here are a few tips for making that happen:
- Get some help. Legal advice in creating Terms and Conditions can be much less expensive than you might think. A lawyer can even work off of a pre-existing template to customize a list of terms and conditions that meet your priorities. It’s far easier to say, “here’s what I want my terms to be; make it happen in legalese” than it is to attempt it yourself.
- Look at some examples online first. This will give you a sense of what a quality Terms and Conditions page will look like. Don’t copy and paste–see the above tip. But you do want to get a sense of what Terms and Conditions are all about.
Setting the Terms and Conditions sounds boring, but thinking about it can be fun. You get to set the rules for associating with you. Think of yourself as a boss determining the quality of your customers.
Your Terms and Conditions are important because they establish the ground rules of your services, but this agreement isn’t a legal requirement to have.
Here’s what you’ll need to know about this vital document:
- Disclose what information you collect and how you collect it. Let users know about direct and indirect ways you collect their information, and which types (such as IP addresses, geolocational data and others) that you are collecting.
- Talk about the categories of third parties with whom you share information.
- Include how you use the information. What you plan on doing with the information after you’ve collected it can be some of the most important information in the entire policy. In fact, it’s likely what your users will be looking for.
You’ve done a lot of work to get your SaaS app perfect. Including these two legal agreements will pull everything together. And a lot of people care about them.
Governments will care. Customers will care. And you’ll care when you face the consequences for not having these documents in place. Don’t let yourself or your business get caught off-guard in the future because you didn’t establish the ground rules and make information available to your customers.
Instead, make sure that you include these two legal agreements with your SaaS app. Once you do, you can rest easier knowing that not only have you established the right limitations and restrictions for your SaaS, but that your company is better protected from violating privacy laws.