Software Warranties in SaaS

How do you handle remedies for breach of warranties in your #SaaS #contracts.

SaaS contracts generally provide a very narrow warranty – that the application will do what the documentation says it will do. The contract will also typically set out the supplier’s obligations if this warranty is breached. Typically, this would be correcting the application or providing a replacement, and if that’s not possible, terminating the contract and providing the customer a refund.

These are pretty standard, or so you would think.

The warranty may be valid for a finite period of time (the warranty period). If the software fails after the warranty period, the customer is SOL.

The remedies provided may be “sole and exclusive”, meaning that the customer has no recourse beyond the “repair or terminate” remedies set out.

The termination remedy may or may not include a refund. The refund may be structured in different ways.

You need to look at all of these factors holistically when negotiating the warranty and remedies. As a customer, are you being protected adequately if the software doesn’t work? As the supplier, have you left the door open for undetermined liability?

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