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Your SaaS will have a variety of users who may have different roles or access. For example, suppose you operate a SaaS that specialises in debt management. You may offer this SaaS to businesses or individuals. If you then expand outward with authorised users from within the business, end users, paying users and invited users, the process of management can become confusing. This article will explore the different types of users and who is responsible for the way they interact with your SaaS.
Paying User
A paying user is someone who pays to use your SaaS. Your SaaS may be B2B or B2C. Either way, it may involve a paying user somewhere along the chain.
Business-to-Business (B2B)
In B2B relationships, the paying user may be the business itself.
Your contract in this arrangement should outline:
- how many authorised users a business can have on their paying account;
- the level of access for each user; and
- the person responsible for their use of the systems.
Business-to-Consumer (B2C)
In B2C relationships, the paying user will be the individual who wishes to use your SaaS. This user contracts directly with you. This is usually through a simpler set of terms and conditions, as opposed to the longer contract you may use when engaging businesses. Further, you should address the issues of responsibility in the terms and conditions you use. Ideally, you will outline your responsibilities for the platform and their responsibilities for the appropriate use of it.
Invited User
These users are invited to use the platform by a paying user, making use of the paying user’s licence. They may be contractors or clients of the business you engage with. For example, imagine a debt management SaaS. In this case, the debt management business may invite a valuer to input valuation data.
Your contract should outline how many invited users a customer can have and what their access may be.
However, this approach may not always be appropriate. For example, suppose an invited user acts unlawfully and introduces corrupt data to the platform. Though you may wish to pursue the customer who invited that user, you may also wish to pursue the invited user themselves. One mechanism for engaging more directly with invited users is through the EULA.
Continue reading this article below the formEULA
EULAs outline the key terms you and your customers need to know to use your SaaS. This will involve:
- ownership of the intellectual property;
- warranties and representations, particularly on uptime and availability;
- restrictions on use; and
- limiting your liability.
A well-drafted EULA will ensure the terms of the agreement are clear and will protect you from certain claims by users that the software does not suit their purpose or is defective. This is important because software can have bugs that only become apparent once released to the mass market.
It will also add layers of protection for your business as new users join. Distinguishing between paying users and invited users can be confusing. Therefore, having a EULA in place that all parties using the software must sign will ensure that responsibilities are clear and the conditions of their use are consistent.
Furthermore, the EULA will ensure you have recourse to address any issues directly with the individuals who use the software, rather than only having a legal relationship with the business. This gives you greater control over the use of your software and ensures that you can take action against an individual user.
However, these documents have their own legal challenges and hurdles. These terms are commonly accepted in the following forms:
- shrink-wrap; and
- click-wrap.
Shrink-Wrap and Click-Wrap
Shrink-wrap agreements can be accepted simply by making the terms available on the platform. The user’s continued use of the platform construes acceptance of the contract. Click-wrap agreements are similar, but usually require active participation from the user, usually through simply clicking a box that says “I accept”.
Due to this informal method of contract acceptance, users may potentially claim the contract was not validly formed. Additionally, users may wish to avoid their responsibilities in the EULA by claiming that their continued use of the platform or their click-through was insufficient to substantiate consideration and acceptance, which are key components of any contract.
Key Takeaways
With the increasing use of SaaS, your business should consider who is using your product and who is responsible for users’ actions. It is essential to the safety of your business that you outline clearly who can use your SaaS, under what conditions and what permissions they have. From your core SaaS contract, to a EULA, the legal framework you put in place for your SaaS will be essential to its eventual success and protection as you grow.
If you need help with SaaS responsibility, our experienced IT lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
A paying user is someone who pays to use your SaaS. This may be either an individual consumer or a business. The term differentiates from invited users who do not pay for your service but gain access through a paying user.
A EULA is a document that allows you to create a contractual relationship between you and all end users of your SaaS, including invited users.
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