Terms of Service vs. SaaS Agreement vs. End User License Agreement – Which One Do You Need?

If you’re running a software business, you need to have the right agreements in place to make sure you are protected.

But what exactly do you need to sell your product? Is it a Terms of Service, SaaS Agreement, or a End User License Agreement?

This post will give you a high level overview of the difference between these three specific documents.

Terms of Service/Use

Your website Terms of Service (or Terms of Use) governs any users use of your application or website. This includes visitors, registered users, paying customers, or a partner of your business.

Your Terms of Service/Use are built to protect your business by ensuring that visitors or users of your application aren’t doing something that may be detrimental to your business, and giving you the right to terminate their use of the product for a violation. This should sound familiar given recent events.

You should have a Terms of Service/Use no matter what, but it is THE go-to agreement for Business to Consumer (B2C) products.

SaaS Sales Agreement

If your product is a Software as a Service, you should be using a SaaS Sales Agreement. Your SaaS Sales Agreement lays out specific terms around how your SaaS product should be used, payment terms, intellectual property rights, data use rights, and data privacy rights.

There are a couple of different ways this could be presented to your customer. This could be a standalone agreement that needs both yours and your customers signatures, or, you can publish it on to your website as “Terms and Conditions of Sale” and have your customers use an order form referencing out to the published document. Enterprise customers will generally request the former over the latter.

End User License Agreement (Software License Agreement)

If your product is downloadable software that lives on your customers machines (a la Microsoft Word, Adobe Photoshop, etc.) – then an End User License Agreement (or Software License Agreement) is what you need. This includes your mobile applications – which your users will download and install onto their smartphones.

This agreement lays out specifics around how your customers may use your product, how many licenses you are selling (1 vs. 50), intellectual property rights, your customers responsibilities around installing and maintaining the product, and other specific terms around the product itself.

So, which one do you need? That all depends on what types of products you’re selling.

Let us Help

This post is just a high level overview of the difference between a Terms of Service, SaaS Agreement, and End User License Agreement.

There are many more nuances and specifics around each of these agreements, and you should have an experienced attorney help you through drafting the right one to make sure you and your customers are protected.

Kader Law can help you draft, edit, or negotiate any of these agreements. 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 reader.