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Vendor Protection in a SAAS Agreement

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28.Jan, 2020 0 SaaS Law

Today, the delivery of everyday tools used by individuals and corporates alike has moved significantly away from being offline-based to online-focused. From cloud-based sales tools that help track contracts and contacts, to marketing software tools that measure website traffic, to finance solutions that track revenue, and HR tools that manage employees, the list is endless. This trend is further fuelled by millennials who continue to seek ease in everyday activities. Importantly, this growing trend opens up the need for there to be rules and agreements that regulate SaaS vendor-customer relationships.

This short piece seeks to address the varying protection if any, that vendors usually have included in SaaS agreements. A subsequent piece would examine the protection offered to customers of SaaS vendors.

Intellectual Property Rights Protection

Usually, the IP rights of SaaS vendors in respect of their developed products are protected in SaaS arrangements. It includes clarifications that customers are only licensed to use such products and that no proprietary IP ownership rights have been vested in such users. This is especially important to prevent paid users from assuming that they have the right to indefinite access to the tools or uncapped redistribution of the software.

Liability Protection

Typically, purchasers or users of SaaS products reasonably expect a level of quality from purchased virtual tools. Where however the product fails to meet the user’s expectations and anticipations, he’s by law empowered to sue for a breach of contract. Vendors, therefore, protect themselves from this potential situation by disclaiming all liability beforehand, in case the product doesn’t meet the user’s expectations.

Amicable Resolution Protection

Incessant court disputes and business growth aren’t peas in a pod. SaaS vendors –like other businessmen – try as much as possible to avoid litigation. This involves the inclusion of the exploration of alternative dispute resolution as mandatory steps before conflicting parties in SaaS agreements can initiate court proceedings.

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