The Anatomy of an Enterprise SaaS Sales Agreement (MSA)

If you’re selling a Software as a Service (SaaS) product to enterprise companies, your customers will demand a strong master service agreement. Sometimes they’ll sign yours, but more often than not – you’ll have to sign theirs. This leads to some back and forth, and lots of redlines. Yay, legal!

This is not just a formality. This agreement should outline what services you’re providing, what services you’re NOT providing, outlining warranties, specifying data privacy and information security provisions, limiting liabilities, and overall – protecting you AND your customers.

There are hundreds of templates available online, but you should know what the terms mean – and have these agreements edited to meet your specific needs.

A good Enterprise SaaS Sales Agreement should have the following:

  1. Definitions – each contract has a “Definitions” section to outline what specific meanings are being given to terms throughout the contract. For example, terms such as “uptime”, “customer data”, “service level failure”, and “downtime” could have meanings specific to your SaaS business that may not be a common definition.
  2. Services and Service Orders – here is where you identify specifically what your SaaS business is doing for your customer. This section can include subsections such as description of services, access and use, documentation license, compliance with laws, sub-contracting, and information around personnel that would be assigned to your customers’ account (if applicable).
  3. Use Restrictions – This section outlines how the customer is restricted from using the application – including sub-licensing, hacking, reverse engineering, or otherwise using your SaaS for illegal operations.
  4. Service Levels – Here, the agreement outlines what kind of uptime is being promised, and references any other third party agreement that you may have in place. Further, this section should have sub-sections outlining service availability reports, and any remedies in case service levels promised are not met. Consider adding a service level agreement as an Exhibit.
  5. Support and Maintenance – Your agreement should also outline what kind of customer support and maintenance you offer your customers.
  6. Data Privacy and Information Security – An increasingly important part – this section outlines how you are approaching data privacy and information security for your SaaS application – including data breach policies, redundancy and backup, high availability, disaster recovery, etc.
  7. Fees and Payment – this section should outline how you are charging your customers, how you are collecting payment, payment terms, taxes, invoices, and any other specifics around billing.
  8. Confidentiality – Your agreement should define what is considered confidential information, and what is expected from both you and the customer relating to said information.
  9. Intellectual Property Rights – Your customer is using your intellectual property, which is the SaaS itself, and you may be taking inventory of some of theres. This section should outline who owns what intellectual property, and what rights are being licensed over.
  10. Representations and Warranties – This essential section outlines the promises being made by each party that they are indeed able to enter into this agreement. Further, this section outlines the warranties you as the SaaS provider are making to the customer in terms of protections, data security, etc.
  11. Indemnification – This section is sometimes negotiated, and outlines how you and the customer are indemnifying each other from contract breaches and third party claims.
  12. Limitations of Liability – This essential section limits liability for you and your customer from claims, and can set a monetary limit as to how much can be recovered (such as the total price of the contract) in case there is a breach.
  13. Term and Termination – Your agreement should outline how long the contract runs, and under what circumstances and procedures can your agreement be terminated or renewed.
  14. Insurance – Your agreement can outline insurance requirements both from you, or for your customer – and what kind of minimum coverage either of you should have.
  15. Boilerplate Terms – these are the contract clauses that are included in most agreements – including entire agreement, notices, assignment, third-party beneficiaries, governing laws, equitable relief, and any exhibits.

Let us Help

This post is just a high level overview of what should be in your Enterprise SaaS Sales Agreement. There are many more nuances and specifics around this, and you should have an experienced attorney help you through it to make sure you and your customers are protected.

Kader Law can help you draft a solid Enterprise SaaS sales agreement, review incoming MSA’s, and negotiate for you. 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.