What You Don’t Want in Your Cloud Services Agreement.

What You Don’t Want in Your Cloud Services Agreement.

Ok, I need to define a term first.

‘Strategic uncertainty’ =  when a party to say a cloud services agreement intentionally tries to create an ambiguity in a clause, so they can later use it for their benefit (in a dispute of course).

Look agreements are all about certainty and rules, so any type of uncertainty is generally not a good thing. However, it is near to impossible to be clear on everything (even if you try to), but if I were you I would make sure you are clear about at least these three issues.

 

1) It is All About the Money. You should be clear about how much, when and for how long your customer is committing to your     service.

2) Restrictions of the Service. You should be clear about any restrictions of your cloud service (for example, maybe your customer should not access your service other than through a documented interface…if that is the case).

3) Disclaim Unique Risks. You should be clear about any unique risks of your cloud service that your customers should be aware of  (for example,​ you do not guaranty compliance with say a certain law, even though your service helps them to comply with the law).

 

Oh yea, do you want an example of what a strategic uncertainty looks like. Well, here is one: “The customer must pay all undisputed invoices within 30 days.”   

Now this seems reasonable on its face, as if the invoice is incorrect the customer should not have to pay (who could disagree with this). But, what happens if the invoice is correct, and the customer does not pay and disputes it for no legally justifiable reason. So if this occurs, how do you go in front of a court and say I need to terminate the service as the customer has not paid. This sounds to me like the kind of uncertainty and ambiguity you don’t want to deal with in your cloud services agreement.

Now there are lots of important clauses in agreements (quite frankly I could make an argument why every clause is important), but I suggest these three areas are ones that you should be super clear and transparent on.

 

Disclaimer: This post is for informational and educational purposes only, and is not legal advice. You should hire an attorney if you need legal advice, which should be provided only after review of all relevant facts and applicable law.

 

 

 

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