SaaS Agreement Checklist: What to Review Before Signing

What is a SaaS agreement?

A SaaS agreement (Software as a Service agreement) is a contract between a software vendor and a customer that defines the terms of access to a cloud-based software product. Unlike a traditional software license where you buy the software outright, a SaaS agreement is a subscription — meaning the vendor can change the terms, raise prices, or shut down the service.

That makes the contract terms more important, not less. You're not just buying access to software — you're trusting a vendor with your data, your workflow, and in many cases, your customers' information.

SaaS agreement checklist

Data ownership and usage

• Who owns the data you put into the platform? (It should be you.)
• What license does the vendor have over your data — is it limited to providing the service, or broader?
• Can the vendor use your data to train AI models, improve their product, or for any purpose beyond delivering the service?
• Are there any provisions that let them share your data with third parties?
• What happens to your data after termination — how long does the vendor retain it, and how is it deleted?

Auto-renewal and pricing

• Does the agreement auto-renew? What is the notice window to cancel before renewal?
• Can the vendor increase the price at renewal? Is there a cap on price increases?
• Are there any minimum commitment periods beyond the initial term?
• What are the fees for exceeding usage limits (seats, storage, API calls)?
• Is there a refund policy for annual prepayments if you cancel early?

Uptime and SLA

• Is there an SLA? What is the uptime commitment (99%, 99.9%, 99.99%)?
• What counts as downtime — does scheduled maintenance count?
• Are there actual remedies if the SLA is breached? (Service credits are common; refunds are rare but worth asking for.)
• Is there an incident response or support SLA for critical outages?

Termination rights

• Can you terminate the agreement for convenience before the term ends?
• Are termination rights mutual — can the vendor terminate your account for convenience?
• What notice period is required for termination?
• What happens to in-flight work or data at the moment of termination?
• Can the vendor suspend your account without terminating it, and under what conditions?

Data portability and exit

• Can you export all of your data before canceling, in a usable format (CSV, JSON, etc.)?
• Is there a transition period after cancellation during which you can still access your data?
• Does the vendor offer migration assistance or data export on request?
• How long after termination before data is permanently deleted?

Liability and indemnification

• Is there a liability cap? (Typically limited to fees paid in the prior 12 months.)
• Are consequential and indirect damages excluded for both parties?
• Is the indemnification clause mutual or one-sided?
• Does the vendor indemnify you for IP infringement claims arising from their software?
• Are you required to indemnify the vendor for your use of the platform in ways that exceed its intended purpose?

Security and compliance

• What security standards does the vendor comply with (SOC 2, ISO 27001, etc.)?
• Are you required to sign a Data Processing Agreement (DPA) for GDPR or CCPA compliance?
• What is the vendor's breach notification obligation — how quickly must they notify you of a data breach?
• Are subprocessors listed and auditable?

Changes to the agreement

• Can the vendor modify the terms unilaterally? With what notice?
• If the vendor changes the terms materially, do you have the right to exit without penalty?
• Are changes to pricing governed by the same change provision, or is pricing handled separately?

Common red flags in SaaS agreements

• Broad data license — vendor claims rights to use your data beyond delivering the service
• Auto-renewal with a short cancellation window — e.g., must cancel 60+ days before renewal or you're locked in for another year
• SLA with no remedies — a 99.9% uptime promise is worthless if there's no credit or refund for failing it
• One-sided termination rights — vendor can terminate your account for any reason, but you can't exit early
• No data export on cancellation — data is effectively held hostage until you're paid up
• Uncapped liability for the customer — you bear unlimited liability for your use of the platform
• Unilateral right to modify pricing mid-term — vendor can raise rates without notice or exit rights
• No breach notification timeline — vendor has no defined obligation to tell you when your data has been compromised

SaaS agreements vs. traditional software licenses

With a traditional software license, you pay once and own a perpetual right to use that version of the software. With a SaaS agreement, you're renting access — and that means the vendor can:

• Raise prices at renewal
• Change the features you rely on
• Shut down the product entirely
• Change the data terms without much notice

This is why data portability, termination rights, and change-of-terms provisions matter more in a SaaS agreement than in a traditional license. Your leverage is highest at signing, not after you're dependent on the product.