June 25th, 2009
10 Things Every Lawyer Should Know About Legal SaaS (Part 8): Terms Of Service
Most of us can admit to having hurried through the terms of service (TOS) agreement when installing software or subscribing to a service, often without realizing the set of terms and provisions we’re agreeing to abide by. When in the context of the latest computer game or desktop widget, the consequences of a draconian agreement might not be so dire, however, when selecting a SaaS solution it’s important to understand the scope of rights and protections to extended to subscribers – especially when entrusting the provider with sensitive information which must be dependably and indefinitely accessible. Although its easy to trust that most providers have their clients best interests a heart (certainly most do), ultimately most TOS documents are legal agreements intended to protect the executive powers of the service provider, and subscribers should be reasonably comfortable with the implications of the terms therein before committing any valuable information to the service.
So, what should a TOS document contain? First and foremost, the SaaS provider should indeed have a TOS document which is readily accessible to subscribers, and available prior to committing to any service agreements. The content of the document should specify the following:
- Usage License: the terms by which the software or service can be used, the law governing the agreement, and the latitude retained by the licensee to modify, suspend or terminate access to the product.
- Service Access: the terms detailing the scope of permitted service accessors, and the means by which access can be obtained.
- Security: the security protections offered by the provider, along with the expected security practices inherited and upheld by the user.
- Subscription Terms: the terms detailing payment amounts, methods and frequency, in addition to any limitations regarding refunds or subscription modification.
- Cancellation: rights extended to both the subscriber and the licensee to terminate the subscription agreement, and the protocol for information management or retention following service cancellation.
- Warranty and Liability: those limitations afforded to the licensee regarding service quality, security or availability.
In addition to the above (and sometimes contrary to what’s specified in the TOS), Software-as-a-Service providers may additionally provide their subscribers with additional protections and remedies in the form of a Service Level Agreement (SLA), which is intended to alleviate some of the common subscriber concern over data availability and continuity. These agreements typically specify a guaranteed uptime (availability) percentage – often 99.9% or greater – and frequently back these guarantees with compensation in the form of pro-rated access fees, or refunds.
