What is a SaaS agreement?
 

A SaaS agreement (Software as a Service) defines the terms under which software is provided as a service over the internet. Unlike a traditional software license, the software operates in a cloud environment maintained or licensed by the service provider. The customer usually gains access to the service in exchange for a monthly or annual fee.

A SaaS service is technically lighter and commercially more flexible, but contractually more layered. A SaaS agreement governs not only the right to use the service, but also responsibilities, data management, and service continuity – all of which are critical terms defining the allocation of risk.

What does a SaaS agreement cover?
 

Key elements of a SaaS agreement typically include:
 

• Service availability and quality (SLA): how service uptime is ensured and to what extent the provider is responsible for performance.

• Data protection and security: how data is processed and safeguarded, especially if personal data is involved.

• User rights and scalability: what usage limitations apply and how overages are priced.

• Change management: under what conditions the SaaS service is developed and updated.

A well-drafted SaaS agreement takes into account the entire lifecycle of the service and creates a balanced risk allocation that supports both parties’ business objectives. It also recognises the nature of SaaS as a standardised solution provided to multiple customers.

How does regulation affect SaaS agreements?
 

Regulation plays an increasing role in SaaS contracts. Data protection requirements have long been important, but as cybersecurity threats evolve and the global situation changes, terms on data security and cross-border data transfers are becoming even more critical.
 

In addition, the EU Data Act, effective from Autumn 2025, requires SaaS agreements to include specific provisions on switching services and data portability. For example, customers must be entitled to terminate a SaaS contract with no more than two months’ notice, and service providers must enable smooth data transfers during the switching process.

How to create a good SaaS agreement?

SaaS contracts combine technology, business, and law. A successful agreement results from collaboration among experts in these areas. The role of a business-oriented lawyer is essential to ensure that the agreement not only meets regulatory standards but also identifies the practical risks and commercial interests of both parties.