Why You Need a Disclaimer In Your SaaS Agreement?

Short answer: a disclaimer states what you are not responsible for, and a well-placed one can get a fraud or misrepresentation claim dismissed, as the real case below shows. Every SaaS vendor should carry a short set of responsibility disclaimers, in the agreement and where the risky decision actually happens.

I have always thought disclaimers were good things to add to SaaS agreements, but this case shows they can make a real difference in a dispute. A disclaimer is a statement about the things you are not liable for.

Example: if you provide medical software, it is wise to state that you are not providing medical advice and that the doctors are solely responsible. You get the picture.

The Case That Proves the Point.

A building-material company certified contractors as “Master Craftsman” for its products. To search for one on the company’s site, a customer first had to accept a Terms of Service that said:

“Although we take certain steps to examine the credentials of our listed service professionals, CertainTeed makes no guarantees or representations regarding the skills or representations of such service professional or the quality of the job that he or she may perform for you if you elect to retain their services. CertainTeed does not endorse or recommend the services of any particular service professional.”

Despite that warning, a customer sued the company for fraud. The court got it right and threw the case out. Because the company had clearly disclaimed the very thing the customer claimed it promised, there was no misrepresentation, and without a misrepresentation there is no fraud. That is a disclaimer doing real legal work, not just sitting in the boilerplate.

The Disclaimers Most SaaS Vendors Should Carry.

A few show up again and again, and they map to the ways customers misuse a service or over-rely on it:

• No professional advice. Your software is a tool, not legal, medical, financial, or tax advice; the licensed professional remains responsible.
• No guarantee of legal compliance. Your service helps the customer comply with a law or framework, but you do not guarantee their compliance.
• Third-party content and integrations. You are not responsible for data, services, or results that come from systems you do not control.
• Results not guaranteed. The service provides functionality, not a particular business outcome.

How It Differs From Your Warranty Disclaimer.

Keep two ideas separate. A warranty disclaimer (“AS IS,” no implied warranties of merchantability or fitness) addresses the quality of the service itself. The disclaimers above address scope of responsibility: decisions and outcomes the customer owns. You want both, and you want the responsibility disclaimers somewhere the customer actually sees them, in the agreement and often mirrored on the website or in-product where the risky decision happens. This is the same anti-reliance instinct that keeps a fraud claim from leaping your liability cap, which I cover in is your software agreement airtight.

Frequently Asked Questions.

Can a disclaimer really defeat a fraud claim? It can. In the case above, a clear disclaimer of the exact thing the customer claimed was promised meant there was no misrepresentation, so the fraud claim was dismissed.

Is a warranty disclaimer enough on its own? No. An “AS IS” warranty disclaimer covers service quality. You also need responsibility disclaimers that make clear which decisions and outcomes the customer owns.

Where should the disclaimer live? In the SaaS agreement, and mirrored on the website or in-product at the point where the customer makes the risky decision, so they actually have notice of it.

The takeaway for every SaaS company: think about the decisions your customer should own, and put those in a disclaimer in your SaaS agreement and where the customer sees them.

For the foundational distinction that drives most SaaS liability disputes, and why a disclaimer matters within it, see SaaS Indemnity vs. Breach of Contract: What’s the Difference?

Resources:

Solum v. CertainTeed Corporation

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.