SaaS solution: what type of contract is needed to sell to large accounts?

When you develop a SaaS solution, the time comes to market it (finally!). And with this marketing, many questions arise:

• Do we need to draw up a contract to sell to customers?
• What type of contract should be drawn up?
• Can we rely on the model of the neighboring startup that also does SaaS?
• And if we receive the client's contract template, how do we read it?

Here are some tips on the subject.

A contract is (absolutely necessary)

Not using a contract might (i) save you money on drafting one and (ii) save you time during the sale, but at what cost? Concluding with a simple purchase order or quote leaves many important issues unresolved:

• Can you suspend the solution if you are not paid on time?
• What happens if your solution is temporarily unavailable?
• Does the client become the owner of the solutions, modules or databases that you make available to them?

Entering into a contract means protecting yourself and your services. It is therefore highly recommended. And you will note that the internal processes of large companies, as part of their risk management, (almost) always require a contract with their suppliers.

No, the neighbor's SaaS contract is not recommended

Does your neighboring startup have exactly the same business as you? The same solution? The same modules? The same clients? The same objectives? If not, the contract will be different and could be subject to different regulations. Therefore, and you'll often hear this repeated by lawyers, copying a template could mislead you on legal matters and thus jeopardize your business and your solution.

The specifics of the SaaS contract

The SaaS solution involves three main stakeholders:

• the service provider who developed the solution and makes it available to its clients;
• the customer who buys access to the solution and the ability to use it;
• the individual user who uses the solution within the client's company.

Therefore, whatever the form of your contract (general terms and conditions or framework agreement), it must include the terms of sale of the solution to customers and the terms of use of the solution by users.

Furthermore, a SaaS solution contract is unique in that you are not selling a product as such (like traditional software), but rather access to an online service. Therefore, your contract should not stipulate a transfer of ownership of the solution, but rather a right of access and use (an important point because your solution is your most valuable asset and you do not want to transfer it).

This contract should also clearly stipulate:

• the services included in your offer and those that are excluded;
• the number of users benefiting from your solution;
• the financial conditions and the consequences in case of default of payment by your client (late payment interest, suspension of the solution, termination of the contract);
• clauses relating to your ownership: the solution, source codes, your database, the data and symbols already present on the SaaS solution are your property and this must be expressly stated.

Large companies will also want to see the following included in the document:

• the service levels of the solution, referring to the guarantees of availability of your solution and the expectations in case of anomalies;
• the security conditions of your solution;
• a GDPR annex outlining your commitments if you process personal data on behalf of your client.

The legal clauses need to be negotiated

Even if the legal language seems unusual to you (we understand), we can only recommend that you carefully read (or have someone help you read) the contract sent by your client or the modifications he or she has made to your contract.

And if some clauses seem too strict, unbalanced or do not correspond to your solution, do not hesitate to negotiate these clauses and indicate in writing that they do not suit you or do not correspond to your collaboration.

If you cannot negotiate, keep the evidence that negotiation was impossible; this could be useful later if the client wishes to abuse their position of power in an unbalanced way.