This is a very important question and I’m glad you asked. I agree that legalese can be overly excessive.
At the same time, T&Cs are vital to shielding your company from exposure to liability. While privacy policies are legally required and tend to be more consistent, most of the other components are about company policy. Risk assessment is a huge part of the analysis since the T&C statement is mostly about risk management, not what’s legally required. And that’s unfortunately why legal fees can be high: if it’s done right, it’s going to be more time intensive.
There are also business risks in addition to legal ones. Not only do you need to shield your company from liability, but you’ll also need to minimize the possibilities of taking other kinds of financial hits. So determining how the T&C statement can potentially inhibit your operations is one aspect that you need to drill down on pretty deeply since a poorly drafted T&C can cause some serious damage to a business.
So it’s a bit tricky since you’ll want to avoid some fairly common pitfalls that can result from using someone else’s SaaS T&C statements. First, each company is unique, so what works for them isn’t necessarily going to work for you. Second, they could be doing some things wrong, which you’ll want to avoid with your T&C.
The Perils of Templates
The truth is that there’s little uniformity across the spectrum of T&C statements. These are highly technical legal contracts involving privacy and intellectual property (IP) issues, among many others. So while Salesforce might seem overly legalistic, it’s vital to your company’s legal and financial interests to understand that there are times – particularly where IP and privacy issues are involved – where you need that legal coverage.
Using a template is risky, so I’m going to suggest you consider a few key factors. For example, there are different types of SaaS products with some significant differences. Some are consumer products, while others are for business. Which ones are you dealing with?
Also, you’ll want extremely tight language to protect privacy, clarify pricing, maintain data ownership, set boundaries for limitations and warranties, and specify technical integration and training responsibilities. Additionally, there are indemnification and tax concerns that require the help of a knowledgeable attorney. For example, will you be liable for sales tax or is that clearly the responsibility of your end-user?
Here’s the Chase
With all that said, T&Cs need to be written with the assistance of those involved in the day-to-day business and operations of a SaaS provider. Plain English is important to the transparency and basic comprehension of a T&C; if it’s cluttered with heavy legalese, then it’s probably not going to serve anyone very well.
On the other hand, lawyers have the expertise to understand the legal consequences of using – or not using – certain language. That’s why you really need both business people and attorneys involved in crafting this unique contract animal. It’s frustrating when a startup needs legal services that can cost a bundle of money. Instead of getting the help they need from competent attorneys, they often choose to go bare, putting their entire company at risk.
I love to help startups with these types of questions and attorneys need to be more affordable so a new business can access important legal services such as SaaS T&Cs and other types of contracts. That’s exactly why we started LawTrades.