Find a Solicitor for your IT Agreement

An IT agreement is a contract between a business and a supplier of IT services. Agreements detail the services to be provided, the cost of the services, and the length of the agreement. Solicitors can ensure these contracts meet the aims of the business and supplier.

This is a guide for businesses and IT service providers involved in drafting and managing IT agreements. The content will cover the key types of IT agreements, their importance, and the legal considerations to ensure clear terms and conditions and compliance with applicable laws in IT contract management.

We’ve written this for:

• Businesses entering into IT service agreements
• IT service providers seeking to formalise service contracts
• Legal professionals advising on IT contract law
• Small businesses, entrepreneurs and start-ups needing clear IT agreements

Types of IT agreements

There are three main types of IT agreements, here we will explain the purposes of each, what to include in them, their benefits and the circumstances in which they are required by businesses.

1. Service Level Agreement (SLA)

SLAs are contracts between a service provider and client that defines the services to be provided, performance expectations, and penalties for failing to meet agreed-upon standards.

They also set the expectations and responsibilities of both parties. A variety of metrics are detailed in these agreements, including response time, resolution time and product conditions. 

Service level agreements are used by service providers like Google and Microsoft. Amazon Web Services also uses SLAs to detail the expected service level customers can expect, setting out expected levels of server downtime, guaranteed interface availability and the credits customers are redeemed with when they experience disruptions when the agreement terms are violated.

Key components of SLAs include:

• Agreement overview – the agreement opens with a description summarising the agreement. Include the parties involved, an introduction to the services included and when the agreement starts
• Services – a description of the vendor’s services listing specific deliverables, timeline for completion and other benefits the client has access to during the length of the contract
• Metrics – customer metrics based on their goals. These KPIs enable vendors to understand what their clients consider success and give them an opportunity to support these targets
• Points of contact – SLAs should list key personnel for specific elements of a service and how to contact them. This element of agreements limits miscommunication and ensures questions are answered quickly
• Exclusions – outline what is not included in the scope of the agreement to set clear expectations and limit liability and potential for disputes to arise
• Cancellation conditions – clarify how and when an agreement can be cancelled. Common cancellation conditions include at the end of the agreed term, changing business circumstances, or for breaching the terms and conditions of the agreement. The conditions should outline the consequences for ending the agreement 

2. Software Licensing Agreement

These agreements are between software companies and those that use software including other businesses using software as a service (SaaS) products. They protect the rights of software developers and users by outlining the terms for software use, distribution, and restrictions.

They allow customers to use business software and outline how to use it and the limits of how they can use it. Agreements state where customers can install the software, and how many times they can do so. They also include statements about the legalities of copying, sharing and distributing the software to others. 

The software’s price and fees are often included in agreements. They are important for software companies to protect against copyright infringement.

An example that many people would be aware of is the Apple iTunes software licensing agreement. Users have to click ‘I agree’ to the agreement which is many pages long. It became the butt of a famous joke on the adult cartoon South Park in the mid-2000s regarding its length and the fact users would not fully read the agreement before agreeing to it.

Key components of software licensing agreement include:

• Non-exclusivity – this clause allows software companies to license their software to multiple companies
• Non-transferability – prevents a license from being transferred to another party by the user
• Rights – it is important to set out that the rights to the software belong to your business after the agreement is signed. Include the software, its name, the copyright, distribution rights and intellectual property rights
• Modification – make it clear that you don’t allow the software to be modified in any way
• Breach of contract – include a clause that states that if the terms of the agreement are not followed then the service provider can revoke the license 
• Device usage – outline how many devices the license can be used on, for example on one computer or multiple devices in a business location
• Limitation of liability – outlines that the licensee accepts the software as it is and that there is no warranty for the software and its usage
• Terms of termination – express the circumstances and methods by which the agreement can be terminated, typically carried out by uninstalling the software from a device. Service providers can also include in this clause their right to terminate the software at any time without needing to give a reason
• Governing law – establishes the jurisdiction for settling disputes

3. Cloud Computing Agreement

Cloud computing agreements are agreements between cloud service providers and their clients. The agreements outline the terms and conditions and even terms of use of using cloud services. They cover how the following issues are handled: data protection, service uptime, and data security responsibilities.

Dropbox the file sharing service is a provider of cloud storage solutions. It allows businesses to store files securely in the cloud. 

Businesses can keep documents, photos and videos safe in a variety of formats and sizes. Cloud storage gives businesses the ability to access documents wherever they are: in the office, on the road, or abroad. Files can also be synced across multiple devices.

Key components of software licensing agreement include:

• Indemnity – specify the level of indemnification the provider will give in the event of a security incident, including damages for losses paid to the client
• Limit of liability – outline the liability of the service provider and their responsibilities in case of a data breach 
• Data – both data security and privacy are important for businesses using cloud services. Agreements should specify policies for data handling, data security and privacy measures that keep client’s data secure. Additionally, the agreement should outline how data protection and privacy rules will be followed, including GDPR
• Termination – specifying the conditions under which an agreement can be terminated, such as breach of contract, non-payment, or at the discretion of the service provider. What happens after termination should also be addressed, including the return of data, deletion of data and the transfer of data to another provider

Legal Considerations for IT Agreements

All IT agreements should define their terms and scope of services and deliverables to avoid disputes. Comprehensive agreements will outline the service provider’s role and responsibilities and also provide protections to limit liability in case disputes arise.

• Data protection and security obligations should also be addressed to ensure data is legally processed under laws including GDPR.
• IT agreements must also address security measures and data handling, as mentioned above. Learn more about GDPR compliance.
• Intellectual property (IP) rights are another essential consideration. IT agreements should cover the ownership of IP created during the project, including software, systems, and other technological assets.

Legal Process for Drafting and Reviewing IT Agreements

When drafting an agreement, the parties involved must be identified, a detailed specification of the services provided should be included too to ensure clarity between parties. Expectations are also set when performance standards and deliverables are agreed prior to arrangements getting underway.

Reviewing the agreement is another key step before signing on the line. It’s crucial to carefully review an IT agreement to ensure clarity, compliance with applicable laws, and alignment with business goals. An experienced solicitor can help with this process to ensure that the agreement aligns with your business needs and provides a suitable amount of protection from risk. 

Negotiating terms ensures both parties' interests are protected, including payment schedules, termination clauses, and dispute resolution, so that disputes can be resolved quickly and cost-effectively.

Risks and Considerations

With poorly drafted IT agreements several risks arise. These include disputes over service delivery including quality, delivery times and performance standards.

Additionally, data breaches are an ever-present risk with any IT arrangement where an outside business manages the data of another. IT agreements must therefore address liability for data security failures or breaches.

Both of these risks demonstrate the importance of well-drafted information technology agreements. Rather than grabbing templates online, a solicitor can help you draw up comprehensive agreements that are tailored to your needs and protect your interests.

Costs and Fees Involved

When planning an IT agreement, businesses should budget certain costs. These include legal fees for drafting and reviewing IT agreements. The legal costs associated with drafting and reviewing IT agreements include solicitor fees for drafting agreements from scratch, or reviewing existing agreements and suggesting improvements. 

When the parties negotiate the contract, this can create additional legal costs for a solicitor to advise and represent you in talks. The cost for a licensed solicitor to help with an IT agreement is dependent on many factors including the complexity and specific requirements of the case. On average it is expected to range from £100-£150 but in some cases, it could cost as much as £200.

Why Choose Lawhive for IT Agreement Legal Advice?

Our customers tell us these are the primary benefits of working with our IT lawyers:

• Legal expertise – our solicitors are highly experienced in drafting and reviewing IT agreements, ensuring that businesses and IT service providers have clear, legally sound contracts. All solicitors operating through Lawhive are fully licensed and regulated by the SRA, and have a minimum of 10+ years’ experience
• Combination of technology and legal expertise - we utilise technology to streamline the contract drafting process, making it easier and more cost-effective for clients. Our online platform lets you work with a licensed solicitor instantly online. By making an IT agreement through Lawhive, you'll get updates from your solicitor from anywhere and be able to check on the status 24/7. You can exchange messages and files with your solicitor directly through the Lawhive platform, and access our support team whenever you need
• Tailored approach – our team is committed to understanding your needs and providing tailored legal solutions for managing IT agreements

Information Technology Agreements & Legal Advice

A well-drafted IT service agreement provides numerous protections for businesses and IT service providers, helping both avoid potential disputes. Whether an IT service provider is looking to sign up a new client, or your business is providing a new service that requires the assistance of IT experts, our small business solicitors can help you draft an IT agreement.

Please get in touch with us today for expert legal assistance from Lawhive to ensure your IT agreements are comprehensive, clear, and legally enforceable.

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