Should the Limit of Liability Cover Indemnities?
This week’s musings on tech contracts… Contracting parties often debate whether the limit of liability should apply to indemnity obligations. IT contracts probably answer “no” more often than “yes.” But you can support either answer with good arguments. The Argument AGAINST Limiting Indemnity Liability The indemnity is unusual. It seems to address liability, but it […]
Don’t grant a license to SaaS, AIaaS, or other cloud services
Many software-as-a-service (SaaS) contracts grant a “license” to the vendor’s software. So do a lot of other cloud services agreements – on offerings like PaaS and AIaaS (artificial intelligence as-a-service). That’s a mistake, at least in the U.S. and jurisdictions with similar copyright laws. Licenses authorize reproduction of on-premise software (generally). Customers don’t reproduce SaaS […]
Why Not to Use “License” Agreements for Software-as-a-Service (SaaS) Deals
This article has been updated with a new one: “Don’t grant a license to SaaS, AIaaS, or Other Cloud Services.” Many software-as-a-service (SaaS) contracts grant a “license” to the vendor’s software. That’s a mistake. Licenses authorize making copies of on-premise software. Customers don’t copy SaaS, so they don’t need a license. And if you’re the […]
3rd Edition on Sale — The Tech Contracts Handbook!
I’m excited to announce the third edition of my book, THE TECH CONTRACTS HANDBOOK. You can buy a paperback or e-book from Amazon and other retailers or direct from ABA Publishing. It’s for both lawyers and businesspeople, including contract managers and procurement staff. (It’s selling fast, but don’t worry if Amazon says “out of stock.” […]
Don’t Cross the (Payment) Streams
“Don’t cross the streams,” says Egon in Ghostbusters (the 1984 original). “It would be bad.” Why? “Try to imagine all life as you know it stopping instantaneously and every molecule in your body exploding at the speed of light.” You could face less extreme consequences if you cross the payment streams in a contract, but […]
IP Indemnity Exception: “Registered after the Effective Date”
This article has been superseded by an updated version. Some intellectual property indemnities exclude claims about IP registered after the contract’s effective date. The tech provider argues that it shouldn’t be responsible for IP it didn’t know about when it created its product — or at least when it signed the contract. “If we couldn’t […]
Don’t grant or receive licenses to “use” software
Here’s a typical grant of rights from a software end-user license agreement (EULA): Provider hereby grants Customer a license to use 30 copies of the Software. Common though that clause may be, it’s dysfunctional. On-premise software licenses grant rights under copyright. And the copyright statute does not address a right to use anything. U.S. copyright […]
Limits of Liability Don’t Work for Indemnities
This post has been superseded by a more recent (and more nuanced) article. See, “Your limit of liability might not work on your indemnity.” Contracting parties often debate whether the limit of liability should apply to indemnities. But few notice the problem. Even if the contract specifically says the limit applies to an indemnity … […]
New SaaS Agreement Sample Form
Today, we updated one of Tech Contract Academy’s key sample contract forms: the Hybrid Cloud Agreement with Professional Services. It’s available to you, along with the rest of our forms, at the Contracts Page. This is the first update based on best practices and changes featured in the third edition of David Tollen’s book, The […]
Cloud Services Are Neither Products nor Services
Contract drafters regularly confuse cloud services with traditional products and services. They approach software-as-a-service (aka SaaS) and other cloud services as if they were either software products or old-style services, like professional services. That leads to perplexing negotiations and contracts full of errors. Much of the trouble stems from the IT industry’s vocabulary. In the […]