SaaS Agreement: How do I draft the user obligations and prohibited use clauses?

Summarise with: ChatGPT Claude Perplexity Microsoft Copilot

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Table of Contents

• Obligations
• Prohibited uses
• Conclusion

Your Software as a Service (SaaS) agreement should address your user’s obligations in using the service, as well as any prohibited activities. This will assist you if you would like to terminate the subscription, as well as inform and educate your users about how you expect them to use the software.

Obligations

Users should warrant that all the information they provide is true, accurate and complete. The user should agree that they are authorised to use the software, and you may include a clause that they must be over the age of 18 years to use your software or have a guardian’s approval if this is applicable. The user should ensure that all usernames and passwords are kept secure and confidential. The user should notify you if there are any breaches of security. This will ensure that if security is breached, the user will notify you, and if you are not notified, you may terminate the agreement and subscription for breach of the terms.

This clause should also set out the user responsibilities to ensure that other related or dependent software is kept up to date and that this is not your responsibility. You should also outline that use of the software is at the user’s own risk and that they are responsible for ensuring that they comply with all laws that relate to them.

It is also important to include a clause which sets out that each user is responsible for the safety and security of their own data and must have their own back up processes in place to ensure that they are able to recover any data that may be lost or damaged in the process of using the software.

Prohibited uses

To protect your software, your SaaS agreement should list all behaviour and activities you wish to prohibit your users from undertaking, such as:

• Interfering with, changing or altering software;
• Reengineering the software;
• Distributing or on-selling the software;
• Licencing the software;
• Hacking or altering the integrity of the software; or
• In any way misusing the software or damaging the software.

This will ensure that you are able to immediately terminate the subscription if you discover that a user is altering your software, accessing or hacking your site.

Conclusion

It is important to include well-drafted user obligations and prohibited use clauses in your SaaS agreement to ensure that users are aware of their responsibilities and that you are protected from inappropriate use of your software by giving yourself rights to terminate a user’s subscription if there is prohibited activity. If you would like LegalVision to draft a SaaS agreement or would like to learn more about user obligations and prohibited use clauses, our team of IT lawyers have extensive experience in this area. We have assisted many software companies to expand and grow their business and protect their software at the same time.

If you’re in need of legal advice, contact us on 1300 544 755 and speak with one of our experienced IT lawyers.