Cloud service contracts

A cloud service contract sets out the legal basis upon which a customer for cloud-based services accesses and uses those services. 

As well as regularly drafting cloud contracts for our clients, we supply a number of professional software-as-a-service templates. Download now from:

SaaS agreements

One of the core principles of cloud services is the standardisation of the service. Legal terms should also, in most cases, be standardised. Accordingly, most cloud service contracts are prepared on the instructions of the service provider. They tend, therefore, to emphasise the rights of the service provider and the obligations / liabilities of the customer. 

Although cloud service agreements have superficial similarities to software licence agreements, there is a fundamental difference in the legal rights being granted to the customer. 

Key terms in a cloud service agreement may include: 

  • rights to use the service;
  • payment obligations;
  • acceptable use policies;
  • service levels: maintenance, availability, support and service credits;
  • service upgrades;
  • rights of termination;
  • customer access to data, including upon termination;
  • customisations; and
  • application licensing. 

One area of law that has a significant effect upon cloud service agreements is data protection. In the typical case, the cloud service provider will be a “data processor” in respect of customer data stored in and processed by the service, while the customer will be “data controller”.

Cloud services are often resold in a similar way to software licences. In these circumstances, the vendor and reseller should enter into a special cloud service reseller contract.

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