SaaS – Software as a Service – has become the go-to model for delivering software. Whether it’s your CRM, accounting platform, file storage or even legal tech (yes, I see the irony), businesses increasingly don’t buy software – they subscribe to it.

But while SaaS products may be slick and user-friendly, the contracts behind them are often anything but. Poorly drafted, vague or one-sided SaaS agreements are a recipe for disputes. So if you’re buying or selling SaaS in the UK, what should a proper SaaS agreement actually cover?

This article sets it out in plain English.

What is a SaaS agreement – and how is it different from a software licence?

SaaS means the software is hosted remotely – usually in the cloud – and accessed via the internet. You don’t install it locally, and you don’t own a copy. You’re essentially renting access to it.

That’s different from the old-school model of software licensing, where you’d buy a licence to install and use software on your own systems.

Because SaaS is a service, not a product, the legal agreement needs to reflect that. It’s not about licensing code – it’s about defining the service, responsibilities and risk allocation.

Who are the parties – and why it matters

This might seem basic, but it’s amazing how often contracts get this wrong. Who is actually providing the service? Is it a UK company, a US parent, or a reseller? Who owns the IP? Who is liable if it all goes wrong?

Clarity on the parties is crucial, especially if the SaaS product is part of a group or white-labelled. And on the customer side, make sure the legal entity matches the trading name – it avoids confusion and makes enforcement clearer.

Key clauses every SaaS agreement should include

Let’s look at the core terms you should expect to see – or include – in a proper SaaS agreement.

1. Service description and scope

Start with a clear description of the services being provided. What does the software do? Which modules or features are included? Are there usage limits (e.g. users, storage, API calls)?

This should be more than marketing fluff. It should set out exactly what the customer is getting and what counts as out-of-scope.

2. Service levels and uptime commitments

If you’re relying on the software to run your business, availability matters. Most decent SaaS agreements include a Service Level Agreement (SLA) – with targets for uptime (e.g. 99.9%), response times for support, and remedies if the provider falls short.

Make sure you understand whether “uptime” includes scheduled maintenance or only unplanned outages. And check what the remedies are – usually service credits, but occasionally termination rights.

3. Fees and payment terms

This covers how much you pay, when, and for what.

There are countless pricing models: per-user, per-month, per-transaction, tiered usage, and more. Make sure the fee structure is crystal clear – and watch for automatic renewal clauses or price increases.

Also check what happens if you pay late. Is there interest? Suspension of service? Termination?

4. Data protection and security

If the SaaS platform handles personal data (and most do), the agreement must deal with data protection – especially under UK GDPR.

Who is the data controller and who is the processor? What technical and organisational measures are in place? Can the provider use sub-processors? Where is the data stored?

The agreement should include a data processing clause (or annex) with all the required details. And it should require the provider to notify you promptly of any data breach.

5. Intellectual property rights

The provider should retain ownership of the software and related IP. But the agreement should grant the customer a right to access and use it – usually a non-exclusive, non-transferable licence for the term of the agreement.

Watch out for any restrictions on use (e.g. can you use it across group companies?) and make sure it’s clear that your own data remains your property.

6. Support and maintenance

What support is included? Is there a helpdesk, live chat or ticketing system? What are the response and resolution times? Are updates and patches included in the fee?

Make sure it’s clear whether support is included or charged separately – and what hours it’s available (especially if you operate outside UK office hours).

7. Changes to the service

Most SaaS platforms evolve – new features are added, old ones are removed, and the UI gets updated.

The agreement should set out the provider’s right to make changes, and whether they need to notify customers. If changes materially reduce functionality, can the customer terminate?

8. Warranties and disclaimers

Most providers will warrant that they have the right to provide the service, and that it will conform in all material respects with the documentation.

But they’ll also try to disclaim liability for anything else – including fitness for a particular purpose. Make sure you understand what’s covered and what isn’t.

9. Limitation of liability

Almost every SaaS agreement will include a clause limiting the provider’s liability. This is a key clause and often heavily negotiated.

Look at the caps: are they per claim or in total? Are there different caps for different types of loss (e.g. data breach vs general breach)? Are there uncapped areas (e.g. death, fraud, IP infringement)?

Under English law, liability caps need to be reasonable. Boilerplate clauses copied from US contracts often aren’t.

10. Term and termination

How long is the agreement for? Is it rolling or fixed term? Can either side terminate for convenience? What happens on breach or insolvency?

Also check what happens at the end: does access stop immediately? Can the customer download their data? Is there a wind-down or transition period?

Optional clauses and commercial additions

Depending on the product and the deal size, you might also see:

• Escrow – where the software code is held by a third party in case the provider goes bust.

• Trial periods – free or discounted trial access with conversion to full subscription.

• White-labelling – using the software under your own brand.

• API terms – where integration with other platforms is a key part of the offering.

• Custom development – if the provider is building bespoke functionality for you.

Common mistakes and negotiation tips

Here are some issues I regularly see when reviewing SaaS agreements:

• No definition of the service – vague or inconsistent descriptions.

• Overly broad liability exclusions – trying to exclude everything, which won’t hold up in court.

• No termination rights for the customer – or only for breach, not for convenience.

• Data protection clauses missing or inadequate – which puts everyone at risk.

• Jurisdiction clauses pointing to a foreign court – often a sign the contract is a US template.

Most SaaS providers have standard terms, but many are willing to negotiate – particularly for enterprise customers. It’s worth asking for changes, especially on liability, IP and data security.

SaaS agreements and regulation

Depending on the sector, you may need to think about:

• Consumer protection law – if your SaaS product is used by individuals or sole traders.

• Financial regulation – if your platform touches on payments, credit or investments.

• Accessibility and equalities law – especially if you sell to the public sector.

• Cross-border data transfers – particularly if you use US-based servers or sub-processors.

None of these are showstoppers – but they need to be addressed properly.

Final thoughts – don’t copy and paste your way into trouble

SaaS contracts can feel dry – but they’re vital. They set the legal foundation for how your software is delivered, used and paid for. If something goes wrong, this is the document you’ll be relying on.

Don’t just copy a US template or accept T&Cs without reading them. And don’t leave it to chance if the agreement is vague, unbalanced or silent on key points.

If you’re a SaaS provider, I can help you draft terms that protect your business without scaring off customers. If you’re a buyer, I can help you spot the risks and negotiate fairer terms. Either way, I’ll keep it in plain English.