What Is an ASP Agreement?
Many businesses utilize specially created software for their business needs. The price of such software is high. So it will be difficult for small scale companies to make use of it. This is where the application service providers come into play. They provide software solutions for companies over the network. Sometimes the software they provide is at risk. So that is why the use of this software will be carefully regulated by written or digital agreements that contain important terms and conditions expected by the application service providers such as data security and use of license terms, all of which are governed by an asp license agreement.
Therefore Application service provider agreements are used creating software that suits business needs but keeps data secure. The asp software license agreement manages the essential aspects of the specialised software that includes training and support. The customers who want to make use of the software have to read and fill in the application service provider agreement and accept the terms to have dealings with the application providers.
When to Use ASP Agreement?
The application service provider agreement is written with the software services offered to the customers in mind. The terms of the agreement are written to mostly favor the application service providers. For instance, the ASP does not compensate for the losses sustained by the clients for events that were outside the scope of the agreement or because the clients did not adhere to the guidelines issued by the ASPs. This means they may increase the fees without offering the customer the right to terminate the agreement.
How to Draft the ASP Agreement?
When drafting an Application service provider agreement, some points to keep in mind are
- The nature of services that are provided
- The term for which the agreement is valid
- The fees that would be paid along with any other payments that need to be made
- Responsibilities of both parties including representations and warranties
- Data ownership
- Notices that need to be provided
- Interpretation of the agreement subject to governing laws
- Employment of counsel
Benefits of ASP Agreement
Some benefits of Application service provider agreements are
- Helps in improving data security for businesses
- Provides expert advice to businesses, particularly small business
- Transactions can become easier because of the reduced cost of business
- Improved infrastructure improves the quality of of service provided to the businesses
- By outlining the strict governing rules, both parties ensure that the nature of professional business is limited to the scope of the agreement in providing service to the clients
- It protects the ownership of data while allowing for licensure
Content of ASP Agreement
A standard ASP agreement template would contain the following terms:
- Responsibility of development of software
- The downtime permissible and the times after which it would be penalized
- Number of users permitted on the system
- Sandbox and scripts including libraries
- The nature of services provided
- The licenses offered on the services
- The intellectual property generated and the ownership of such property
- Payment obligations
- Terms for renewal of data
- Limitation of liability
- Warranties, representations, and indemnity
- Right of audit and the frequency of such audits
- Force majeure
- Termination clauses
- Survival and counsel clauses
- The infrastructure provided
- Governing laws and jurisdiction
What Happens in Case of Violation?
A breach of contract would result in immediate termination and the ownership of the assets would cease. For this to happen, both parties must mention what constitutes a breach of contract for which the contract would be terminated. In every other case, the contract would stipulate payment of penalties or interest for the breach. In some cases, the services might be stopped for a period of time that the breach does not get remedied. The last resort is to approach courts of law for specific performance or injunctive relief if there is sensitive proprietary information involved.
An ASP agreement is useful for small businesses so that they don’t have to develop internal infrastructure and incur huge costs especially when they don’t have the relevant expertise in the field.
Sample for Application Service Provider Partner Agreement
A sample of the agreement can be downloaded from below.
Download this USA Attorney made original Agreement for only $9.99