Legal Implications of Clickwrapped B2B SaaS Agreements

Business to Business Software-as-a-Service (B2B SaaS) companies large and small often employ the use of clickwrapped legal agreements in their sales process. This can, however, become a critical issue – and it’s important to understand the legal implications. This blog post will give you an understanding of the legal implications of agreeing to clickwrapped B2B SaaS Agreements.

What to look out for:

  1. Contract Formation and Enforceability: Clickwrapped agreements raise questions about the formation and enforceability of contracts. In a B2B context, businesses may have more bargaining power than individual consumers, but issues related to the clarity of terms, mutual assent, and the adequacy of notice can still arise.
  2. Changing Terms: SaaS providers often reserve the right to change terms unilaterally. In a B2B setting, where contracts may be long-term and involve substantial financial commitments, businesses must carefully review clauses allowing unilateral changes because it may affect current and future rights. Ambiguous or unfair modification clauses may lead to disputes over contract enforceability.
  3. Data Protection and Privacy Compliance: Many B2B SaaS agreements involve the processing of sensitive business and personal data. Businesses must ensure that clickwrapped agreements comply with data protection and privacy laws and regulations, especially in jurisdictions with stringent regulations.
  4. Limitation of Liability and Indemnification: Clickwrapped agreements often contain clauses with unilateral indemnification and limitation of liability provisions in favor of the service provider. B2B customers should pay close attention to the scope and reasonableness of these terms.
  5. Service Level Agreements (SLAs): B2B SaaS agreements typically include SLAs outlining the expected level of service. Clickwrapped contracts may not always provide sufficient detail about SLAs, leaving room for misunderstandings and disputes regarding performance expectations.
  6. Dispute Resolution: B2B SaaS companies often add binding arbitration and class action waivers to to their clickwrapped agreements. This affects how you would resolve any dispute, and you have rights to opt out of any such binding arbitration based on recent case law. Contemplate what is more beneficial to your business.

How to mitigate risks:

  1. Legal Review: B2B customers should conduct a thorough legal review using their Counsel’s services before acceptance. Legal counsel will play a crucial role in identifying potential pitfalls and negotiating favorable terms.
  2. Negotiation of Key Terms: Despite the clickwrapped nature of many agreements, businesses should not shy away from negotiating critical terms, such as data protection provisions, limitation of liability clauses, and SLAs. Many companies, especially for larger deals, are open to such negotiations and entering into a customized agreement.
  3. Regular Contract Audits: B2B customers should regularly audit existing SaaS agreements to ensure ongoing compliance and to address any changes made by the service provider.
  4. Stay Informed About Legal Developments: Given the evolving nature of technology law, businesses should stay informed about legal developments, from enforceability, to dispute resolution, and data privacy.

Let Us Help

This post is providing a high level overview the legal implications of a clickwrapped B2B SaaS Agreement, and is not to be taken as comprehensive overview. There are many more nuances and specifics, and you should have an experienced attorney assist you. Kader Law can act as your Outside Counsel. If you’re interested, feel free to contact us.

This post is not legal advice, and does not establish any attorney client privilege between Law Office of K.S. Kader, PLLC and you, the readerThe content of this post was assisted by generative artificial intelligence solutions.