Software-as-a-Service (SaaS) agreements are often clicked through without reading. But for businesses signing enterprise deals, these contracts can hide dangerous clauses. Here are the top red flags our AI consistently detects.
1. Data Ownership Ambiguity
Red Flag: "Vendor shall own all data processed by the System."
The Fix: Ensure the contract explicitly states that "Customer retains all right, title, and interest in Customer Data."
2. Uncapped Price Increases
Red Flag: "Vendor reserves the right to increase fees at renewal."
The Fix: Negotiate a cap, such as "Fees for renewal terms shall not increase by more than 5% or CPI, whichever is lower."
3. Termination for Convenience (Vendor Only)
Red Flag: The vendor can cancel anytime, but you are locked in for 3 years. This asymmetry puts your business operations at risk if they decide to drop you as a client.
4. Automatic Renewal with Long Notice Periods
Red Flag: "Renews for 1 year unless notice is given 90 days prior."
Why it's bad: You'll likely forget 3 months out. Use tools like ClauseoAI to set alerts, or negotiate this down to 30 days.
💡 Did You Know?
ClauseoAI's AI automatically flags clauses with "90 days" notice requirements as High Risk, prompting you to review them immediately.
5. No SLA or Uptime Guarantee
If the software is critical to your business, you need an SLA (Service Level Agreement). Look for "99.9% uptime" and, crucially, remedies (credits/refunds) if they fail to meet it.
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