How to Make Sure Your SaaS Software Works Like You Think It Will: Why Your Contract Is Just as Important as the Software Itself

By Attorney H. Robert Fischer III

Introduction: Don’t Get Blindsided by a Bad SaaS Agreement

SaaS (Software as a Service) has revolutionized business operations, replacing traditional on-premises software with cloud-based solutions that offer flexibility and scalability. For many companies, adopting SaaS means subscribing to a service rather than purchasing and installing software outright.

You’ve spent weeks testing different SaaS platforms, found the perfect one for your business, and you’re ready to sign the contract. You assume that because the software worked well during the trial, it’ll work the same way when you roll it out to your team.

But what if it doesn’t?

What if the software goes down for hours during peak business hours, but your vendor says it doesn’t qualify as “downtime”?
What if key features become glitchy or slow, but the contract only counts a total outage?
What if you’re stuck paying for a failing service because you can’t terminate the contract for bad performance?

Most business owners think the quality of the software is what determines their success—but the contract is just as important. If your SaaS agreement is full of vendor-friendly loopholes, you could be left with no real recourse when things go wrong.

Before you sign your next SaaS contract, here’s how to make sure your software actually works like you think it will—and that you’re protected if it doesn’t.

1. The Uptime Guarantee Trap: Why 99.9% Might Not Mean What You Think

Most SaaS contracts promise 99.9% uptime, which sounds great—until you realize how it’s defined.

Common Vendor Trick:

• “Vendor will use reasonable efforts to maintain 99.9% uptime.”
• What this really means: They only have to “try”—if they fail, there’s no penalty or compensation.

Real-World Risk:

• 99.9% uptime still allows 8 hours and 45 minutes of downtime per year.
• Many vendors exclude maintenance periods, so real downtime could be even longer.

How to Protect Yourself:

• Insist on a firm commitment, not just “reasonable efforts.”
• Ask how uptime is calculated—does it exclude maintenance or emergency fixes?
• Ensure maintenance is scheduled at predictable times—not at the vendor’s whim.

2. The “Downtime” Definition Loophole: What If It’s Working… But Barely?

You assume that if the software isn’t working properly, it counts as downtime. But most contracts define downtime so narrowly that you may never actually qualify for compensation.

Common Vendor Trick:

• “Downtime is defined as a total inability to access the service.”
• What this really means: If some functions still work, even if critical ones don’t, it’s NOT downtime.

Real-World Risk:

• Intermittent failures don’t count—so if the software is glitchy but not completely dead, you get no remedy.
• Core features breaking (like billing, reporting, or integrations) don’t qualify if the platform still loads.

How to Protect Yourself:

• A broad definition of downtime, such as:

• • “Downtime includes any period when the service is unavailable or does not perform core functionalities as intended.”

• • “Repeated intermittent failures over a 24-hour period shall be treated as cumulative downtime.”

• Compensation for degraded service, not just total failure.

3. The Hidden Maintenance Loophole: Why Your SaaS Can Go Down—Without Penalty

You assume all downtime counts toward your uptime guarantee. That’s almost never true. Most SaaS vendors exclude scheduled maintenance—which they define however they want.

Common Vendor Trick:

• “Scheduled maintenance does not count toward downtime calculations.”
• What this really means: They can schedule maintenance whenever they want, for as long as they want, and it won’t count against their uptime guarantee.

Real-World Risk:

• Some vendors do weekly or even daily maintenance during business hours.
• Maintenance could happen without notice, leaving you scrambling.

How to Protect Yourself:

• Limits on scheduled maintenance, such as:

• • “Scheduled maintenance will not exceed 2 hours per month.”

• • “Scheduled maintenance will occur only between 2 AM – 5 AM.”

• Advance notice requirements—so you’re never caught off guard.
• Require maintenance to be pre-scheduled, not at the vendor’s whim.

4. The No-Termination Trap: What If the Software Fails Repeatedly?

Imagine your SaaS platform keeps failing, your team is constantly struggling, and you’re losing money—but your contract doesn’t let you cancel.

Common Vendor Trick:

• “Customer may not terminate the agreement for failure to meet SLA commitments.”
• What this really means: No matter how unreliable the service is, you’re stuck in the contract.

Real-World Risk:

• You’re locked into paying for failing software with no way out.
• Even if you prove they’re failing, you only get useless service credits (more on that below).

How to Protect Yourself:

• Termination for repeated SLA breaches, such as:

• • “Customer may terminate if uptime falls below 99.5% for 3 consecutive months.”

• Pro-rated refunds for repeated failures.

5. The Worthless Remedy: Why Service Credits Don’t Actually Help You

Even if you qualify for compensation, many contracts limit you to service credits—which are often useless.

Common Vendor Trick:

• “Customer’s sole and exclusive remedy for SLA violations is a service credit.”
• What this really means: You cannot get a refund, sue for damages, or terminate the contract—you’re stuck with useless credits.

Real-World Risk:

• Credits may expire before you can use them.
• You may only apply them to future invoices, so if you planned to cancel, you get nothing.

How to Protect Yourself:

• Refund options—so you’re not stuck with credits.
• No expiration on credits—so they don’t disappear before you use them.
• Termination rights if service failures persist.

Final Warning: Your Software Is Only As Good As Your Contract

You can buy the best SaaS software in the world, but if your contract is full of vendor-friendly loopholes, you might find yourself:

• Stuck with weeks of downtime and no compensation
• Paying for a service that fails when you need it most
• Losing money while the vendor walks away consequence-free

Bottom Line: A strong SaaS contract protects your business. A weak one protects the vendor.

Before you sign another SaaS agreement, have a legal expert review the SLA. A few small changes can mean the difference between a smooth, reliable service and a costly product.