How to Build and Use a SaaS Agreement Playbook: The Great 8

Key Quotes: 

• “Playbooks are the new template.” ~ Nada Alnajafi, Founder of Contract Nerds
• “Another piece I’m very wary of anything that says this will be your exclusive remedy. No, it won’t.” ~ Lynden Renwick, Managing Partner of Out-House Attorneys
• “You want to have damages capped. Cap. Cap. Cap. I’m going to say yes all day, please.” ~ Bari Williams, Head of Legal & Legal Content at LegalOn Technologies

SaaS agreements are the most frequently negotiated and nuanced type of commercial agreement. Yet many legal teams struggle with inconsistent review processes and lengthy negotiations that slow down the speed of doing business. Contract playbooks. As I recently said in a LinkedIn post, Playbooks are the new template, and we’ve got you covered here on all things SaaS agreement playbooks! 

In a recent webinar hosted by Contract Nerds 📄🤓 on “How to Build and Use a SaaS Agreement Playbook”, legal experts Lynden Renwick, Bari Williams, and Nada Alnajafi shared customer vs. vendor perspectives on the most commonly negotiated SaaS issues. Our webinar explored how experienced legal and contracts professionals approach contract negotiations by combining strategic thinking, practical SaaS agreement playbooks, and the support of AI-driven review methods. We showed exactly what the future of redlining and contract review looks like in a way that no one has ever done before—through a practical, educational, and fun webinar.  

With an audience of 889 live attendees and 2,012 registrants, this event was described by Kevin Kirsner, Director of Contracts for InnovAge as “even better and more valuable than normal [webinars].” The Contract Nerds webinar program always aims to please and this webinar was no miss! But in case you did, continue reading this article for a summary of key highlights and click below to access the full recording.

Watch and Learn: Watch the full 75-minute webinar recording and access the presentation and bonus materials to dive deeper into this topic.

The “Great 8”: Most Negotiated SaaS Clauses

Bari Williams, Head of Legal & Legal Content at LegalOn Technologies, identified eight provisions that consistently drive the most contentious negotiations in SaaS contracts. Williams says, “These are what I typically call the great eight, and they are the provisions that tend to be the most negotiated or most contentious when you find them in a SaaS contract.” 

Term and Termination

The fundamental tension in term and termination clauses centers on the vendor’s desire for predictable revenue versus the customer’s need for flexibility. 

Vendors prefer evergreen clauses with automatic renewals unless customers provide written notice within specified timeframes. In addition, vendors typically resist termination for convenience clauses, preferring termination only for cause such as material breach, bankruptcy, or consistent service level failures. As Williams explained, “We [vendors] love to see evergreen clauses…we want to make sure that it’s sticky enough, and that our product is useful enough, that you’re going to be locked in for a long-term deal.”

From the customer perspective, Lynden Renwick, Managing Partner of Out-House Attorneys, advocates strongly against automatic renewals because of the risk that the customer might miss non-renewal deadlines. When forced to accept automatic renewal terms, he insists on balanced notice periods that give customers adequate time to evaluate fee increases before being locked into new terms. “My preferred position is no automatic renewal…I would not be surprised to find that there is more than a billion dollars globally of what I will call unintentional business,” Renwick noted.

Payment

Payment structures in SaaS agreements typically involve customers paying annual fees upfront, with vendors passing through sales tax and other duties to customers. Williams explained that vendors establish interest fees and liquidated damages for missed payments to protect their business planning and annual recurring revenue. The challenge becomes balancing vendor cash flow needs with customer payment flexibility, particularly when service level failures might justify credits or pro rata refunds.

Customers often push for prorated refunds upon early termination and resist excessive late payment penalties, especially for disputed amounts. Renwick emphasized the importance of distinguishing between undisputed and disputed fees when negotiating penalty clauses. “I’m only going to pay a modest amount of penalties for undisputed fees that I’ve missed…because it creates an incentive for you to not meaningfully engage in the dispute conversation,” he explained.

Service Level Agreements

Service level agreements represent one of the most technically complex negotiation areas, requiring vendors to balance realistic commitments with competitive positioning. Williams stressed the critical importance of vendors not over-promising capabilities they cannot deliver, particularly regarding uptime percentages, maintenance windows, and error rates. Vendors must also account for third-party dependencies like AWS infrastructure and align their commitments with upstream provider schedules. “Do not over promise and under deliver…if you know that you cannot have a 99.5% uptime, don’t say in your contract that you will,” Williams emphasized.

Customers approach SLAs from a business continuity perspective, often requiring vendor uptime commitments that match their own downstream obligations to end users. Renwick advocates for SLA terms that align with actual business needs rather than industry standards, seeking transparency through vendor-provided monitoring dashboards and automatic credit application rather than claim-based systems. “Another piece I’m very wary of anything that says this will be your exclusive remedy. No, it won’t,” Renwick stated firmly.

Customer Data

Data ownership and usage rights create significant negotiation complexity as vendors seek to leverage aggregated data for product improvement while customers maintain strict control over their information. Vendors typically want rights to de-identify and aggregate customer data for pattern matching and product enhancement, requiring clear contractual definitions distinguishing customer data from anonymized analytics data. They also seek protection for any unsolicited feedback or suggestions customers provide during the relationship.

On the other hand, customers prioritize maintaining ownership of all customer data and derivatives while strictly limiting vendor usage rights to what is required for service delivery. But Renwick warns against broad “providing services” language that could allow vendors to use customer data beyond the specific customer relationship. 

Privacy and Security

Privacy and security provisions must navigate varying jurisdictional requirements, particularly regarding what constitutes personally identifiable information across different regions. Vendors need comprehensive data processing agreements (DPAs) that accurately reflect the types of PII they handle, along with robust breach response procedures and business continuity plans that are regularly tested and updated.

From the customer side, Renwick advocates for expansive breach definitions that include any unauthorized access to vendor systems, not just confirmed customer data exposure. This approach enables faster response times and earlier activation of disaster recovery resources. “I would define a security breach to include not only just unauthorized access, use, or disclosure of my data…but any unauthorized access use or disclosure of any data or systems owned or controlled by the vendor,” he explained.

Read and Learn: Check out our expert-written articles on data privacy agreements to ensure your SaaS agreement has appropriate privacy references and considerations.

Intellectual Property Protections

Intellectual property protection clauses focus on preventing reverse engineering and unauthorized derivative works while defining appropriate licensing terms for customer access to vendor tools. 

Vendors typically grant non-exclusive, revocable, non-assignable licenses to their SaaS platforms with specific use restrictions. They often resist providing both IP warranties and indemnification, requiring customers to choose their preferred method of risk mitigation.

Customers must balance their operational needs with IP compliance requirements, often seeking knowledge qualifiers for unauthorized use representations to avoid strict liability for inadvertent violations. However, as Renwick acknowledged, “Any SaaS provider worth their salt is going to laugh and say no to knowledge qualifiers, recognizing they effectively nullify the protection.”

Indemnification

Indemnification negotiations center on which party bears responsibility for different types of risks and claims, with vendors seeking to limit their exposure while customers demanding protection for vendor-controlled risks. 

Vendors typically want to limit indemnification to issues solely within their control while carving out customer-directed modifications, third-party integrations, and unauthorized use scenarios. They seek mutual indemnification requiring customers to protect them for how the customer uses the tool beyond the vendor’s control or agreement parameters, particularly for any infringement claims arising from customer modifications to the SaaS or combinations with other software.

Customers approach indemnification strategically, arguing that vendors should bear unlimited responsibility for risks they exclusively control, especially when customers face their own unlimited downstream liability to end users. Lynden advocates for uncapped indemnification covering third-party IP infringement claims, confidentiality violations, regulatory compliance failures, DPA breaches, and gross negligence or willful misconduct. The financial stakes are substantial, as he noted: “The average cost to notify affected data subjects for a security breach is now to the tune of a million dollars US, that’s before you get to loss or liability.” 

Limitation of Liability

Limitation of liability clauses represent perhaps the most contentious negotiation point in SaaS agreements. And according to a poll taken amongst webinar attendees, 46% said is the most commonly negotiated clause they encounter. This data point is consistent with several years of data on the same point conducted by the World Commerce & Contracting. In conclusion, you can expect to negotiate your next limitation of liability clause (or LoL as we nerds refer to it).

What we are seeing is that vendors attempt to seek comprehensive damage caps while customers resist limitations on what they see as vendor-controlled or vendor-managed risks. Vendors prefer establishing firm, hard caps typically starting with fees paid, then escalating to multiples of fees paid, and potentially super caps for specific violations. They also seek to disclaim indirect, incidental, consequential, and punitive damages while carving out exceptions for their own IP infringement and confidentiality breaches. Williams emphasized vendor priorities succinctly by saying, “You want to have damages capped. Cap. Cap. Cap. I’m going to say yes all day, please.”

Customers fundamentally challenge the fairness of liability caps when vendors exclusively control or manage the risk. This creates what customers view as an untenable risk allocation where they end up being responsible downstream for vendor failures. Renwick frames this as a basic fairness issue, arguing that if vendors control security, IP compliance, and system operations, they should accept unlimited liability for failures in those areas. “So you’re exclusively in control of this risk. But if it happens, your liability to me is going to be capped, and I have to hold the proverbial bag. How am I supposed to accept that?” he challenged.

The Modern Role of SaaS Playbooks

Now that we have briefly discussed the most commonly negotiated clauses in a SaaS agreement, the question becomes how we can streamline negotiations to close contracts faster while maintaining a level of quality that both parties can live with. The answer is, with a practical and usable SaaS contract playbook that legal and business teams can leverage on a daily basis. And that you can use to train your next AI contract review tool. If you’re not using AI yet, you’ll be using it soon. According to a poll we ran during the webinar, 76% of attendees are either already using or preparing to use AI during contract reviews. 

The backbone of many of these AI review tools are attorney-vetted contract playbooks that train the AI on the risks and terms the user is expecting to see. However, despite their critical importance, playbook adoption remains surprisingly low. In another webinar poll, we asked attendees if they have contract playbooks and only 5% said they had a fully comprehensive playbook for every contract type. Yikes! Seems like we have some work to do, fellow nerds. 

Building a Comprehensive Contract Playbook

So what can you do improve your odds of staying ahead of the legal curve? Start building a SaaS playbook today. In fact, when you access the webinar recording, we’ll give you a free SaaS agreement playbook that you can use immediately.

Renwick advises that a comprehensive playbook should include three essential components: “Your preferred position, your fallback position and some guidance for the business.” In addition, Williams suggests that you “start with your template, map out the different things that you find, look at what are the things that you tend to negotiate the most and start with those.”

Are you inspired? Are you ready? Access this webinar recording to download our free SaaS agreement playbook that you can start using today.

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