When offering services, particularly in the software industry, establishing clear legal frameworks such as Terms of Service (ToS), a Master Service Agreement (MSA), Statements of Work (SOW), or End User License Agreements (EULA) are essential. These documents set out the key terms, responsibilities and expectations between you and your customers, including critical security-related requirements. However, in the spirit of the ‘just enough’ principle, it’s important to approach these documents with flexibility and scalability, ensuring they meet current needs without being overly complex or burdensome. Here’s how to create and manage these agreements effectively.
Understanding the basics of key legal documents
- Terms of Service (ToS):
- Purpose: a public-facing document that outlines the rules, guidelines and responsibilities for users accessing your service. This often includes acceptable use policies, limitations of liability and general terms applicable to all users.
- Security considerations: should include general security requirements, such as users’ responsibilities to protect their account credentials and comply with security best practices.
- Master Service Agreement (MSA):
- Purpose: a comprehensive contract between you and your customers that outlines the overall terms of the relationship, including services provided, payment terms and legal protections.
- Security considerations: the MSA should include detailed security obligations, such as data protection requirements, breach notification protocols and the security standards your service adheres to.
- Statements of work (SOW):
- Purpose: a detailed agreement outlining specific deliverables, timelines and responsibilities for individual projects or services under the MSA.
- Security considerations: SOWs can include project-specific security measures, particularly if the work involves handling sensitive data or developing security-related features.
- End User License Agreement (EULA):
- Purpose: a contract that governs the use of software by end users, typically outlining licensing terms, usage restrictions and intellectual property rights.
- Security considerations: should cover the security obligations of both parties, including software updates, data protection and limitations on use to prevent security vulnerabilities.
Implementing ‘just enough’
This control area is often satisfied solely with public-facing terms of service for modern cloud software companies. This can be used as the baseline for your key commitments and security considerations, which then may go through a red-line markup or subject to additional supplementary terms when dealing with large enterprises with unique requirements.
➡️ Doing less tip #1: start simple
- Shorter, focused agreements: when first establishing your service, start with shorter, more focused agreements that cover the essentials.
- Live contract with one customer: if you’re just starting, consider developing your legal framework through a live contract with an initial customer. This allows you to create a practical agreement based on real-world needs, which can then be adapted into a reusable template for future clients.
➡️ Doing less tip #2: generic online Terms of Service
Begin with a generic, easily accessible ToS hosted online. This version can be broad enough to apply to all users, with the flexibility to enhance or customize it for specific clients as needed.
➡️ Doing less tip #3: incorporate security requirements early
- Baseline security obligations: even in simpler, initial agreements, make sure to include baseline security obligations for both parties. This could involve general data protection requirements, breach notification processes and expectations for handling sensitive information.
- Evolving security clauses: as your understanding of security needs grows, or as you receive feedback from customers, you can expand the security-related clauses to address specific risks or compliance requirements.
➡️ Doing less tip #4: live document approach
Treat your legal agreements as live documents that can be updated and refined over time. This approach ensures your contracts remain relevant and effective as your business evolves and as legal or regulatory requirements change.
Better practices
From an information security standpoint, the better practices of your customer agreements and legal framework are to incorporate the key aspects of information security into your agreements. These include:
- Data protection and privacy:
- Clearly outline how data will be protected, including encryption standards, data storage locations, and access controls.
- Include terms related to compliance with relevant data protection regulations, such as GDPR or CCPA.
- Clearly outline how data will be protected, including encryption standards, data storage locations, and access controls.
- Breach notification:
- Define the procedures and timelines for notifying customers in the event of a data breach.
- Specify the responsibilities of each party in responding to a breach, including any requirements for mitigation and reporting.
- Security audits and compliance:
- For more advanced agreements, consider including clauses that allow for periodic security audits or assessments to ensure ongoing compliance with agreed security standards.
- Outline any certifications or compliance frameworks your service adheres to, such as SOC 2, ISO 27001, or PCI-DSS.
In a nutshell
Creating effective legal frameworks such as Terms of Service, MSAs, SOWs, and EULAs is essential for protecting your business and clarifying responsibilities with your customers. By starting with ‘just enough’ agreements that focus on key terms and security considerations, you can establish a strong foundation that is flexible and scalable as your business grows. Whether you begin with a live contract with one customer or a simple online ToS, the goal is to create documents that are practical, manageable, and adaptable over time, ensuring your legal protections and customer relationships remain robust and relevant.