Edited for Contract Nerds from Foster’s Newsletter, “Mastering Commercial Contracts.”
KEY TAKEAWAYS:
- There are many parts or concepts of a SaaS Agreement that may be included in hyperlinks instead of as text.
- Whether you use Hyperlink Terms in your SaaS Agreement will be determined by multiple factors that may be business-driven, practical, or legal in nature.
- Some counterparties will refuse to agree to hyperlinks; be prepared to accommodate those requests and have the terms readily available in an editable format.
To link, or not to link? That is the question when you’re working with a SaaS Agreement, and deciding how to organize the various terms and conditions that will govern. As such, there are times when the SaaS Agreement will include a hyperlink to a web address that contains additional terms and conditions (“Hyperlink Terms”).
The SaaS Agreement itself, or parts of it, may be contained in a hyperlink. There are many parts or concepts of a SaaS Agreement that may be included in hyperlinks instead of as text. Hyperlink Terms may appear in the order of precedence, in in definitions of defined terms, or in various sections of the agreement.
Common Reasons and Examples
So, should you use, or agree to use Hyperlink Terms when drafting, reviewing, and negotiating your SaaS Agreement? Let’s start with the universal attorney response to any initial legal question, it depends. Whether you use Hyperlink Terms in your SaaS Agreement will be determined by multiple factors that may be business-driven, practical, or legal in nature. Let’s begin with common reasons and examples of using hyperlinks to guide the thought process around if and when to use them.
Hyperlinks make the most sense when your terms are non-negotiable. For example, the terms of a Privacy Statement or Privacy Policy are ones that must be kept uniform. If you will not negotiate, then you may even go so far as to place entirety of the SaaS Agreement in a hyperlink. However, it’s a best practice to have a version of the agreement in a format that can be negotiated when you’re a business-to-business SaaS provider.
Another reason is that the link is to third party terms that govern content in connection with the SaaS. These are pass-through terms. That means that even if you were to negotiate the terms, they wouldn’t be binding unless you made the third party a party to your SaaS Agreement. Another reason is that Hyperlink Terms carry no financial or legal implications.
Another reason to use Hyperlink Terms is because they address a subject that it makes sense to keep updated. An example of that is when the definition of “Documentation” includes Hyperlink Terms. It may make sense to allow the SaaS technical specifications, operations, and functionality to be updated with each new version released.
What to Consider in Adopting the Use of Hyperlinks
The approach you take to hyperlinking terms should be determined by multiple factors and the final decision must always be a business-driven one. Your client will not be happy if their customers are being asked to contract in a way that is not consistent with the industry, does not make sense for the transaction, or is a vast departure from how the parties conducted business together historically. Make sure you’re familiar with the foregoing before proposing any changes to how you’re currently contracting for business.
So, for example, if you think establishing a new paradigm of hyperlinking to the entirety of the governing terms on your order document is a great idea, get the support and approval of your business clients before making a change. If the business rarely negotiates its SaaS Agreements with its customers, then it may be supportive of making a change to click-to-agree. But if the business always negotiates with its customers, then you do not want to hyperlink to the entirety of the terms because that will set you up for the formatting nightmares that are occasioned by this practice. And if you have never redlined a Word document that was converted from a PDF document, then count yourself lucky and do not tempt the hand of fate.
Drafting Considerations
When you’re using a hyperlink for some but not all terms of the SaaS Agreement, many of the Hyperlink Terms can be called out in the “Introduction” section where the order of precedence is established. However, hyperlinks can be added to any section. If your hyperlinks appear in various sections, then in your click-to-agree or signature block language you should add express language referencing the Hyperlink Terms. Be sure to states the party is also agreeing and explicitly assenting to the provisions contained in the Hyperlink Terms.
Likely, the first issues to be raised by a counterparty reviewing Hyperlink Terms in a SaaS Agreement are going to be related to provenance and changes. You will need to be prepared to explain your IT practices around hosting the information. Often, a party will ask for language to be added obligating the SaaS provider to provide notice of any material changes to the Hyperlink Terms. Be certain there’s support from IT to maintain the Hyperlink Terms properly and inconformity with the terms of your SaaS Agreement.
To be sure, there will also be instances where a party refuses to agree to using Hyperlink Terms and requests the text be incorporated directly into the SaaS Agreement. Be prepared to accommodate those requests and have the terms in an editable format that can be incorporated into the overall text document for the SaaS Agreement.
Best Practice Tip
Think about order of precedence when making your plans for Hyperlink Terms. If you have hyperlinks to any terms and conditions that will prevail over a conflict with the SaaS Agreement, then consider whether hyperlinking to them will be an accelerator or a hinderance when negotiating with your counterparty and structure your agreement accordingly.
Hyperlink Terms are a great way to reduce the time spent reviewing and negotiating SaaS Agreements where and when appropriate. Take care with using hyperlinks. If you’re new to them and represent the SaaS provider, be sure you have a firm grasp of the business and existing contracting process before talking with your internal business partners to get their support and approval to adopt them in your SaaS Agreement. If you’re new to them and represent the SaaS customer, don’t be afraid to push back if the Hyperlink Terms address any subject matter you need to negotiate for your client.
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