A Supplier’s Software Warranty in SaaS

So how do you negotiate software warranties in a SaaS Contract?

From a supplier’s perspective:
– the supplier provides support for the term of the SaaS that includes fixing issues and therefore a warranty is not required.
– if the customer insists on a warranty, the warranty should be limited to what the supplier can control – i.e. it should be limited to documented specifications of the software.
– the warranty would ideally be time-limited after the subscription starts to provide certainty of a committed subscription term
– the supplier should include remedies that it can control – repairing or replacing the malfunctioning software and if that is not possible, at the supplier’s discretion, a termination right.
– the remedies provided should be “sole and exclusive” to avoid the possibility of further liability or lawsuit from the customer.

As always, negotiate the remedy with a holistic view of the contract. If the contract provides a robust limitation of liability clause or other remedies acceptable to the customer, point to those as possible solutions.

The bottom line – be creative in offering solutions that work for both parties. Rigidity is not an attractive quality in negotiating remedies.

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