SaaS vendors generally seek to offer their services on standard terms (that are usually published on their websites). These terms tend to be strongly supplier-centric, excluding all but the most limited of warranties and any liability for data loss or corruption or service failure. In particular, several organisations reserve the right to delete customer data for breach of contract, such as non-payment. In the UK, standard terms (and in particular any exclusions or limits of liability) are subject to the Unfair Contract Terms Act 1977 and therefore must be reasonable but it is far safer to seek to negotiate key provisions in advance rather than rely on statutory protection after an issue arises. It is also likely that customers will need to ask for service levels and service credits to be proposed.

Appropriate software licences still need to be granted to the customer. This is because users have online use of software at a PC and, without a licence, this would amount to copyright infringement. These licences are usually very narrowly defined and limited to use of the online application for their own business purposes − customers have no rights to make copies of or modifications or enhancements to the software and they cannot sub-license to third parties. 

The SaaS vendor will not always own the intellectual property in the software that is the subject of the SaaS arrangements. Where this is the case the SaaS vendor will need to arrange for the right to sub-license the software to its customers, or for a direct licence to be entered into between the customers and the relevant third party licensor.

For the purposes of contractual simplicity, it is preferable (and most common) for the SaaS vendor to sub-license the customer's use of the third party software. All of the contractual arrangements will then be between the SaaS vendor and the customer. However, software licensors often require a direct licence agreement to be entered into between the customer and the third party licensor. In these circumstances, the SaaS contract should make it clear that the SaaS vendor is responsible for the management of the third party licences, together with the payment of any licence fees. The third party licensor should also be informed that the licence arrangements relate to licensing only. All other issues relating to the provision of the software, such as delivery, installation and configuration requirements, should be dealt with in separate agreements between the customer and the SaaS vendor.