Dangerous Words in Your SaaS or Software Agreement

Short answer: certain phrases in a SaaS or software agreement template — particularly conditions precedent tied to signing deadlines — can void an entire contract even after both parties sign it. A 2014 case makes the point. Know which words create those traps and strike them before any customer sees them.

I have been reviewing SaaS agreement templates for years, and certain phrases keep showing up that create serious legal risk. Most of them start as sales language designed to create urgency. But courts read contracts precisely, and imprecise wording produces results no one intended.

The 2014 Case: A Signing Deadline That Voided the Contract.

Here is the specific language that triggered the problem:

“To be valid, this agreement must be signed within 30 days of. . .”

Companies use language like this when they want to tell a customer that a price or term offer will expire. That is a legitimate business goal. The problem is how courts interpret it. When a court reads “to be valid,” it reads a condition precedent — a requirement that must be satisfied before a contract can legally exist. The court in the 2014 case did exactly that. It found that if the condition is not met, there is no contract, even if both parties later sign the agreement after the 30-day window.

The parties signed the software agreement after the deadline. The vendor assumed the contract was formed. The customer later argued — and the court agreed — that no contract ever came into existence. In that particular case, the vendor also lost its work-for-hire protection over deliverables it had already created. The Bloomberg Law case report is in the Resources section below.

Why This Happens: Conditions Precedent in Contract Language.

A condition precedent is a contractual term that must be satisfied before an obligation becomes enforceable. If the condition is not met, the contract does not take effect — even if both parties have signed. Courts find conditions precedent in phrases like “to be valid,” “provided that,” “subject to,” and similar qualifiers that tie contract effectiveness to an external event or deadline.

Sales teams often draft these phrases without thinking about how a court will read them. Their intent is “if you sign after 30 days we might change the price” — a negotiation lever, not a legal condition. But once that language goes into a written agreement, the legal reading controls, not the sales intent. The legal doctrine of conditions precedent is well-established and courts apply it literally.

Other Dangerous Phrases in SaaS Agreement Templates.

The condition-precedent trap is not the only dangerous phrasing that shows up in SaaS templates. A few others I flag regularly when reviewing a vendor-side SaaS contract:

“As described herein.” Vague incorporation language that creates a dispute about what “herein” actually covers — the order form only, the main agreement, the exhibits, or all of them together. Specify exactly what governs and in what order of priority.

“Best efforts” when you mean “reasonable efforts.” These are not interchangeable. Most courts treat “best efforts” as a higher, more demanding standard. Unless you mean to commit to the highest possible standard of performance, do not use “best efforts” when “reasonable efforts” is what you intend.

“Including but not limited to” inside a definition. Not inherently dangerous, but when it appears in a definition of “Confidential Information” or “Intellectual Property,” it can expand that definition unpredictably. Courts sometimes read it to include things the parties never discussed.

“Satisfactory to” or “acceptable to” the customer. This is the acceptance-criteria problem — an entirely subjective standard that the customer controls. Replace it with objective completion criteria whenever possible. See the full analysis at Acceptance vs. Completion Criteria in a Software SOW.

How to Fix These Before They Cause Problems.

Review your standard SaaS or software agreement template before deals go out, not after a dispute arises. Look specifically for any phrase that ties contract validity or performance to a condition, deadline, or satisfaction standard. If the intent is a commercial deadline or a negotiating lever, express it as a separate side communication or a pricing provision — not as a condition to the contract’s validity.

For the signing-deadline issue specifically: if the contract is signed after the deadline, delete the deadline language before execution and have both parties initial the deletion. If the language has already appeared in an executed agreement and the deadline was missed, get counsel involved before anyone takes a position on whether a contract was formed.

Catching these traps before they reach a customer is exactly the kind of work we do when drafting and reviewing vendor-side SaaS contracts. For the separate issue of how imprecision in contract language interacts with the mechanics of signing, see Signing Contracts Online and our work on indemnity and breach of contract in SaaS agreements.

Resources:

• Bloomberg Law: Failure to Execute Contract by Specified Date (2014 Case)
• Condition Precedent (Cornell Law School LII)
• Vendor-Side SaaS Contracts
• Acceptance vs. Completion Criteria in a Software SOW

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.