Technology has completely changed the face of contract law. Today, many online users may find themselves agreeing to contracts and terms of service without even fully realizing it. These situations have led to many issues, and in some cases, they have even resulted in people being sent to prison. For these reasons, it is very important that you have a sound understanding of contract law in the digital age – especially if you are running a major software company or any other business that operates online. Seeing as eCommerce and online operations are almost essential in the modern business world, these lessons should apply to virtually every American entrepreneur.

 Why Would You Need a Technology Contract?

 Businesses may need to adopt, create, or sign contracts for several reasons in the digital world. Essentially, the same benefits of normal contracts apply to technology contracts. Contracts serve many important functions, including:

• Creating records of rights, responsibilities, and obligations (i.e., the division of responsibilities, what you get; what you pay; and what terms apply)
• Enforcing the legality of promises and commitments made between parties
• Formalizing relationships between parties
• Making sure that you are paid for the services you provide
• Providing opportunities to increase revenues(i.e.what’s included what’s extra, extra costs)
• Resolving disputes between parties who entered into agreements

Technology agreements and contracts mainly apply to online services, proprietary software, and other agreements over digital operations. There are many types of technology contracts that you might need depending on your business and your unique goals: 

• Master Service Agreements (MSA): A Master Service Agreement covers ongoing relationships between parties. These contracts are useful when two businesses agree to work together for the foreseeable future on various projects. MSAs are especially popular in the tech industry, but they can be used in virtually any industry. MSAs contain information on how all current and future activities will be governed. They allow companies to plan effectively for the future while resolving any future disputes without having to constantly create new contracts as your business expands. That being said, MSAs can be modified. MSAs can cover subjects like confidentiality, dispute resolution, intellectual property rights, limitations of liability, payment terms, warranty, and work standards. One of the more recent evolutions of MSA is the various Privacy and Information security provisions that now feature such as Personnel Background Screening criteria, international Standard Contractual Clauses (SCCS); InfoSec representations and security event notification processes, etc.
• Hosting Agreements: Since virtually all online operations require a website of some kind, hosting agreements are perhaps the most common form of technology contract. This is a legal document regulating a relationship between a customer and the supplier of a hosting service. Often, hosting agreements limit the liability of a hosting company if certain issues arise. For example, a host may not be held liable for illegal activities conducted by customers on their own websites. Hosting agreements are almost always combined with Service Level Agreements. The host’s goal is to protect themselves against the infringement of intellectual property, the publishing of abusive or indecent material, and defamatory information. The host needs these protections because it can be difficult to act quickly and remove this content once it has been published via their hosting service. In many instances, you may be working with a SaS provider who utilizes that services of one of the large multi-national host provides line, AWS, Google, or Azure.
• Reseller and Distribution Agreements: Reseller and distribution agreements are especially common among companies selling or creating software. In simple terms, this legal agreement details the rights and responsibilities of software owners or publishers and businesses that wish to sell or license that software to third parties. Each party relies on this contract to ensure the other party is delivering on its promises. The agreement clearly details precisely when and how the reseller is allowed to sell or distribute the software. Subjects that may be covered in this agreement include ownership terms, intellectual property rights, payment terms, and information about potential software updates in the future. Within this category, there are many types of software reseller agreements, including top-down agreements, bottom-up agreements, three-party contracts, and more. These may address common issues, such as who contracts for support, upgrades or renewals? May the distributor feature competitive products and if so is notice required?
• Service Level Agreements: Also known simply as an “SLA,” a Service Level Agreement is very common in the tech world. As previously mentioned, this contract is usually included in a hosting agreement. Basically, SLAs help manage customer expectations and limit liability for potential issues with the technology that the provider cannot control (such as outages, hacking, or performance issues). This agreement helps you lay out exactly what you can guarantee for your customers – and want you cannot. SLAs first gained popularity in the 80s when IT outsourcing became common. SLAs can include penalties for missed targets and bonuses for exceeding set goals.
• Source Code Escrow Agreements: A source code escrow agreement is a contract signed between the licensor and the licensee of the software. This involves the licensor depositing a copy of the software’s source code. Since this represents a major transfer of intellectual property, this agreement helps protect the rights and obligations of each party involved. Often, this source code can only be released under very specific circumstances, such as the licensor’s insolvency or the failure to uphold their obligations. Source Escrows are becoming less popular recently, but can still play an important role with a significant supply relationship; the challenge is once you have access to Source, how can you get familiarity with all of the very technical details required to use it ; i.e. knowledge transfer.
• Software as a Service Agreements: Otherwise known simply as “SaaS,” Software as a Service has grown in popularity over the last few years with the rise of cloud computing. SaaS agreements are required when companies choose to license software for a specific period of time instead of buying it. In other words, they agree to pay a subscription fee to use something like Google Drive or Adobe Illustrator. SaaS contracts are specifically geared toward this type of software, which manages customer expectations and provider obligations. They may include subjects like payment terms, warranties, limitations of liability, confidentiality, and much more.

 Are Email Signatures Considered “Real” Signatures?

 It is important to understand that your email signature could constitute a legal signature in the eyes of the law, becoming virtually identical to a “real” signature in the eyes of the law. Sometimes, merely typing your name can constitute a legally-binding signature. However, a party would need to prove that you actually typed your name for this to carry the same weight as a handwritten signature. Sometimes, this is difficult to prove. In addition, it is worth mentioning that e-signatures (such as those provided by companies like DocuSign) are legally binding across the United States. The COVID phenomena forced the world, even very traditional old-world countries, to accept electronic signature; often use of a commercial service like DocuSign if a vehicle that everyone can agree upon.

 Where Can I Find a Qualified Technology Contract Law Attorney?

 If you’ve been searching for an attorney who can help you with technology contract law, look no further than John P. O’Brien, Technology Attorney.