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.

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

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

In this case, a building material company was certifying contractors as Master Craftsman regarding their products. If a customer wanted to search for a Master Craftsman on the building company’s site, they had to agree to a Terms of Service that stated:

“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 building company for fraud. The court got it right and threw the case out. There was no misrepresentation, so no fraud.

The disclaimers most SaaS vendors should carry.

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

• No professional advice: your software is a tool, not legal/medical/financial/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 don’t 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.

The takeaway for every SaaS company: think about decisions your customer should own and be responsible for (i.e. things they should not expect from your service). Add those to a disclaimer on your website or in your SaaS agreement to make it clear those are their responsibility.

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.