Key Message: The various options for customer terms in the area of software offerings mean that a company must actively decide how it wants to legally structure the customer relationship. A clear analysis of its own offering and pricing is the most important basis for structuring the customer terms.
In detail:
1. The flood of possible terms and contract documents
Software companies require contractual documents to regulate the legal relationship with their customers.
There are many different contractual documents that are used under various names. These include Terms of Service (ToS), General Terms and Conditions (GTC), data protection declarations, SaaS contracts, application usage contracts, Service Level Agreements (SLA), maintenance contracts, support contracts and order data processing contracts.
In the flood of possible documents and regulatory areas, it is important to find a solution that makes sense for the company.
2. Approach as a company
To ensure that the legal aspects relevant to your company are covered, companies should take the following steps:
1. Analysis of the business model: To begin with, a clear analysis of your own business model is necessary, i.e. a precise definition of the service to be offered to the customer.
2. Definition of customer categories: For various provisions and the validity of various regulations, it is crucial to determine which categories of customers are addressed. In particular, it must be decided whether the software is offered B2B, B2C or for both and whether there are differences in the offer.
3. Main service obligations: It is then advisable to define the main service obligations (in particular which functions are offered for which price) for each customer category.
4. Standard topics: Only then should you turn your attention to the other legal issues, which are typically the following:
a. Software maintenance and update
b. Availability and support
c. Rights to data (input, output)
d. Handling personal data (topic of data protection)
Whether everything is dealt with in one document or in several, with or without attachments, and how the documents are labeled, does not play the central role. However, a clear and comprehensible structure is crucial - both for the customer and for the software provider.
5. Other aspects: Data protection and any industry-specific regulatory issues (e.g. financial market regulations for FinTech software solutions) must be examined in parallel or in advance.
6. Regular review and adaptation: The range of services offered by software companies changes over time and the legal framework can also change. It is therefore important to review the contractual documents regularly and adapt them if necessary.
3. Notes on some of the legal topics
The legal topics of customer contracts of software companies can be divided into different categories that are relevant for both B2B (business-to-business) and B2C (business-to-consumer) relationships:
IP, data, data protection: This is about protecting intellectual property, handling data and complying with data protection regulations. It must be clearly regulated who owns the rights to the software and the data generated with it and how these are protected and processed. In the context of AI solutions, particular attention must be paid to the distinction between input and output data and rules must be established for the further development of AI software based on the data.
Service levels, maintenance, support: Service level agreements define the expected service level, often including availability and maintenance windows, as well as the conditions for support services. The structure of service level agreements and the corresponding rules vary greatly depending on the company offering the service. Providers generally have a great deal of leeway, which is why customer expectations must be given particular consideration here. From a business perspective, it is important not to forget whether/how much services cost or whether they are included in the price for use or have to be paid for separately.
Liability: Another important area is the regulation of liability. Here it must be clarified to what extent the provider is responsible for any damage or failures. In this context, it is particularly important to know and describe the functionalities of the software in detail (and, if necessary, to point out what the software cannot do).
Specific provisions depending on on-premise or SaaS: Even though most software solutions have recently been offered as software-as-a-service, there are still on-premise solutions (especially in certain industries). The legal regulations, in particular with regard to licenses and maintenance/support, must be structured differently depending on how the software is offered to the customer.
