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SaaS Agreements

What is the difference between a License and SaaS?

In a traditional license, the user buys a copy of the software and hosts it. In SaaS, the user pays a subscription fee for access to software hosted by the provider. The legal terms differ significantly regarding ownership and maintenance.

Can I limit my liability for data loss?

Yes, you can and should limit liability in your Terms of Service, typically to the amount paid by the user over a specific period (e.g., 12 months). However, you cannot exclude liability for intentional misconduct or gross negligence under Georgian law.

Do I need a Privacy Policy if I don't sell data?

Yes. If you collect any personal data (emails, names, logs), you are legally required to have a Privacy Policy explaining what you collect and how you use it, regardless of whether you sell it.

How binding are "Terms and Conditions" on a website?

They are binding if the user has a reasonable opportunity to review them and explicitly manifests assent (e.g., checking a box "I agree"). Simply having a link at the bottom of the page is often insufficient in court.

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SaaS Agreements: Legal Regulation of Cloud Services

The Software as a Service (SaaS) business model is becoming increasingly popular globally and in Georgia. Unlike traditional licensing, where a user purchases software, in the SaaS model, they receive access to a cloud service on a subscription basis. This specificity requires a special type of contract — a SaaS Agreement, which regulates the relationship between the provider and the user (B2B or B2C). A properly drafted SaaS agreement is the foundation for business scaling, revenue protection, and legal risk minimization.

A SaaS agreement combines Terms of Service (ToS) and a Service Level Agreement (SLA). It defines not only the rules for using the software but also data security, server availability, and the liability of the parties. Considering Georgian legislation and international standards (such as GDPR, if entering the European market) is essential for your SaaS product to be competitive and trustworthy. Legal.ge allows you to connect with experienced lawyers who will help you prepare international-level SaaS documentation.

What Does a SaaS Agreement Cover?

A SaaS agreement is a multi-component document. Specialists on Legal.ge ensure detailed processing of the following key elements:

  • Grant of License and Restrictions: Defining access rights (e.g., number of users, functionality), prohibitions (Reverse engineering, copying code), and usage rules.
  • Service Level Agreement (SLA): Guarantees regarding system availability (Uptime, e.g., 99.9%), technical support deadlines, and compensation mechanisms (Service Credits) in case of violations.
  • Data Protection and Security: Who owns the data uploaded to the platform (usually the client), where it is stored, how backups are performed, and what cybersecurity measures are in place.
  • Payment Terms and Subscription: Structure of subscription fees, automatic renewal conditions, the right to change prices, and consequences of non-payment (suspension of service).
  • Termination and Data Return: What happens when the contract ends? How can the client export their data, and within what timeframe is it deleted from the system?
  • Limitation of Liability: Setting a cap on the provider's liability (e.g., the amount of 12 months' subscription fees) and excluding indirect damages.

Common Scenarios and Use Cases

SaaS agreements are needed for various types of digital products. Here are a few examples:

  • B2B CRM or ERP Systems: A Georgian company creates accounting or management software for businesses. The agreement must be robust because clients entrust it with critical financial data.
  • Subscription-based Mobile Apps: A fitness or educational app using the SaaS model. Protecting consumer rights and transparency of automatic payments are important here.
  • International Expansion: A Georgian startup sells a service in Europe and the USA. Documentation must comply with GDPR and CCPA (California law) to avoid heavy fines.
  • White Label Solutions: When a SaaS provider allows another company to sell its product under its own brand. This requires specific distribution and SaaS terms.

Georgian Legal Framework

Several laws apply when regulating SaaS agreements in Georgia:

The Civil Code of Georgia defines "standard contract terms." Since a SaaS agreement is often a "contract of adhesion" (Click-wrap agreement), it is important that its terms are not unfairly burdensome for the user; otherwise, the court may declare them void.

The Law of Georgia on Personal Data Protection is the central act for SaaS. The provider often acts as a data Processor, and the client as the Controller. The law strictly defines the processor's obligations, technical security, and cross-border data transfer.

The Law of Georgia on Protection of Consumer Rights (if SaaS is B2C). This law obliges the provider to provide full information on the service, price, and cancellation conditions before concluding the contract.

Step-by-Step Service Process

Working with a specialist selected on Legal.ge to create a SaaS agreement consists of the following steps:

  1. Business Model Study: The lawyer analyzes who your clients are (B2B or B2C), what data you process, and where the servers are located.
  2. Risk Identification: Potential threats (data loss, service downtime) and ways of legal prevention are determined.
  3. Preparation of Documentation Package: Terms of Service, Privacy Policy, and SLA are written.
  4. Integration Consultation: The lawyer advises on how to place these documents on the website/app so that user consent is legally valid (Click-wrap vs Browse-wrap).
  5. Update and Monitoring: Periodic updating of documents in case of changes in legislation or the product.

Why Choose Legal.ge?

The SaaS business is global, and competition is high. Weak legal documentation can become a hindrance to attracting investment or a cause for client mistrust. Legal.ge gives you access to lawyers experienced in Tech Law who know international best practices. Our specialists will help you create a SaaS agreement that protects your intellectual property, minimizes liability, and facilitates successful sales of your digital product. Find your partner on Legal.ge.

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