For Application Service Providers – anyone who provides clients access to licensed software and application services – implementing a system of checks and balances, risk management procedures and quality control is invaluable. Typically a solid Application Service Provider (ASP) Agreement will fulfill these needs.

An Application Service Provider Agreement manages the relationship between an ASP and the licensed user. In other words, it sets limits and expectations on the use of your software and applications server. It also controls who has access to the software or servers as well as where and when they can be accessed.

An ASP Agreement will also prevent modification or reverse engineering of the software and determine server storage space available for each client, which limits exposure to infringement on intellectual property rights and confidentiality. Most importantly, these agreements reduce the ASP’s liability for deficiencies and defects in the software or on the server.

ASP Agreements are not only necessary for large-volume ASPs; they also cover service providers who offer single applications to their clients. ASP businesses that would benefit from the agreements include:

  • Specialist or functional ASP – provides a single application, such as credit card payment processing or timesheet services
  • Vertical market ASP – provides a solution package for a specific customer, such as a doctor’s office
  • Enterprise ASP – offers a wide variety of solutions
  • Local ASP – offers small-business services in a particular area
  • Volume ASP – delivers cost effective package solutions through its own Web site

An important component of an ASP is the Service Level Agreement (SLA). This formally negotiated agreement between two parties is part of the service contract in which the level of service is formally defined. This agreement might include delivery time of the service or performance. It clearly defines and documents the common understanding of services, responsibilities and guarantees, while typically covering issues such as serviceability, performance and operation, just to name a few.

Service providers can purchase packages that include a variety of templates, including a software license template. Software license Agreements set the terms and conditions for the end users of your software and includes disclaimers, limitations of liability, and confidentiality agreements, among other safeguards.

When searching for packages, most companies will provide ASP Agreement samples for viewing. Be sure the software license template and the ASP Agreement sample includes the following sections:

  • Grant of License
  • Use and Access
  • Price and Payment
  • Technical Support
  • Terms and Termination
  • Ownership of Intellectual Property
  • Confidentiality
  • Warranty and Disclaimer
  • Limitation of Liability, Indemnification
  • Relations of Parties
  • Non-assignment
  • Arbitration
  • Attorney’s Fees
  • Severability
  • Force Majeure
  • Waiver and Modification
  • Entire Agreement
ASP agreements will safeguard your company from any future claims of damages, and reduce your exposure and liabilities. Many companies have made it easy to implement the agreements by providing packages specifically designed for the service providers needs. Be sure to preview the ASP Agreement samples to ensure it covers the needs of your business.