How to Protect Your Business When Signing SaaS Agreements

When your business signs up to software‑as‑a‑service (SaaS) solution, the contract you agree to sets out how the service will perform, who is responsible for what, and what happens if things go wrong. For UK businesses, having a clear understanding of those terms and taking the time to shape the agreement before you commit to it, will help you get more from your investment.

Common contract clauses in SaaS agreements

SaaS contracts can vary widely, though certain clauses need to be addressed consistently. Businesses should pay attention to:

• Liability and indemnity: Are the provider’s liability limits reasonable given your dependency on the service?
• Service levels and uptime guarantees: Does the agreement specify performance expectations, what happens if they are missed, and how you can claim a remedy?
• Intellectual Property (IP) rights: Verify who owns any work created using the software and ensure you retain rights to your own data and outputs
• Termination and exit clauses: Know under what circumstances the agreement can be ended and what happens to your data on termination

By focusing on these areas, you can spot terms that might restrict your flexibility or increase your risk.

Data protection requirements in SaaS agreements

When you use SaaS tools, it is often used to process personal data, which means UK GDPR and the Data Protection Act 2018 apply. If you rely on a provider to handle that data, your contract must reflect that. You should ensure it covers the following:

• Data processing agreements (DPAs): These should clearly define the provider’s obligations, including security measures, breach notification procedures and data return or deletion on termination
• International data transfers: If your provider holds or processes data abroad, check for safeguards that match UK standards
• Upcoming regulatory changes: Although the Data Protection and Digital Information Bill did not become law, this area is under review and you should allow for change

Ensuring data protection is addressed in your SaaS agreement and safeguards the business from regulatory risk and supports confident use of technology.

Negotiating SaaS Agreements

Negotiation is the part where you can shape the outcome rather than simply accept the provider’s standard terms. These steps will help you gain more control:

1. Review key terms upfront: Before signing, examine liability caps, termination rights, SLAs and IP clauses
2. Align contracts with business needs: Ensure the SaaS solution delivers what you require, with remedies if commitments are not met
3. Allocate risk appropriately: Negotiate responsibility for downtime, data breaches, or service interruptions in line with your business impact
4. Clarify data rights and obligations: Confirm who owns data, who can access it and how it can be used or deleted
5. Seek expert advice: An experienced legal team can spot risks and draft supporting agreements like DPAs

Protecting your business investment

A SaaS agreement is a contract like any other, it deserves proper attention. By carefully reviewing clauses and negotiating appropriately, you reduce the risk of surprises and give your business a more secure foundation for growth.

For tailored advice on reviewing or negotiating SaaS agreements, contact mlplaw’s Commercial Team. Our lawyers are experienced in technology contracts, commercial terms and data protection obligations and they can work with you to get the contract right.