November 23, 2021
Software & Technology

Software support and maintenance agreements can form an integral part of a software supply project. Customers look to support and maintenance agreements to provide insurance that if some purchased software fails to work as expected then the supplier (or some other party) will step in to fix the problem. The reality is that no software is without error and much commercial software is subject to continuous development. This development could be due to updates to the software or changes in the software’s environment. It can also simply be a matter of supporting customers who are unfamiliar with the operation of the software and so need technical and practical assistance. Support and maintenance agreements are included as standard when bespoke software is being supplied and we also sometimes include such arrangements in the context of SaaS agreements.

Scope of maintenance services

Software support and maintenance agreements can cover a wide range of different support and maintenance services. It is necessary for the customer to give careful consideration to the type of services that it requires and ensure that these are adequately documented. It may seem preferable to suppliers to present an agreement with few obligations around support and maintenance. However, this can be counterintuitive when problems actually arise. It can be as much a benefit to the supplier to know exactly what the terms will be in such situations and how much the supplier can then charge for supporting a customer.

Software support and maintenance agreements – definitions

Here are some of the key definitions to consider in software support and maintenance agreements:

  • It needs to be clear what is meant by ‘fault’ or ‘defect’ and what circumstances will therefore give rise to the supplier’s obligations to fix problems.
  • Faults and defects are usually categorised in software support and maintenance agreements based upon their severity. Therefore, if a specific fault is considered relatively insignificant in relation to the functionality of the software, the supplier will not be obliged to fix it instantly. However, if the defect causes the day to day running of the software to be severely impaired, the supplier is likely to be obliged to fix it as soon as possible.
  • With the rise of cloud computing the majority of software support and maintenance is provided by supplier staff from supplier locations (sometimes overseas). However, the customer may prefer for certain issues to be dealt with on site and will often want to ensure that supplier support staff are only given access to the customer IT systems and data required for the provision of the support.
  • Is the support service for technical queries only, or does it include an element of customer assistance? This could be provided by having a helpline available for customers in normal business hours (usually for a price).
  • Is the support service for technical queries only, or does it include an element of customer assistance? This could be provided by having a helpline available for customers in normal business hours (usually for a price).

Charging for support and maintenance

Given the often ad hoc nature of providing support and maintenance, suppliers will want to ensure that software support and maintenance agreements give sufficiently detailed information about charging customers for help. Some issues that are likely to arise include:

  • Will the charges be fixed or dependent upon the amount of time spent dealing with faults or defects? If they are fixed the supplier may wish to include caveats detailing where the charges will be more than the fixed price. This could arise where the supplier has to spend a significant amount of time dealing with specific support and maintenance problems or where the support provided deals with issues that fall outside of the scope of the definition of a fault or defect.
  • Are the charges under software support and maintenance agreements separate to the fees incurred by the customer for receiving the services under the main supply contract, or included?

Software support and maintenance agreements – updates

Software suppliers will usually update software, create new versions and adapt their software to the ever-changing environment in which cloud computing is made available. Suppliers will often want to use software support and maintenance agreements to reduce their obligations to customers who fail to update the supplier’s software when given the opportunity to do so. If the supplier is not obliged to continue supporting old versions, the customer will have to buy any new version that is issued if they want to continue receiving support. In some circumstances this could include customer expenditure on the training, installation and configuration required for new versions.

Levels of service

The software supplier may wish to offer the customer a choice of levels of service (for example, a ‘platinum’, ‘gold’ or ‘silver’ service), with appropriate pricing differentials between each. This could mean, for example, providing a normal business hours helpdesk or not, reducing or increasing response times or providing different levels of expertise within different time periods.

Software support and maintenance agreements – service levels

The customer will usually want to ensure that the supplier commits to service levels in software support and maintenance agreements. For example, a minimum response time and minimum timeframe in which to solve problems. If the supplier is unable to maintain such service levels, then they are usually expected to compensate the customer. This often comes in the form of ‘service credits’. These service credits will often be proportionate to the time difference between the minimum response time and actual response time or the minimum solution timeframe and the actual solution timeframe. Suppliers are going to want to ensure such service credits are neatly defined and, usually, that they are payable as a deduction of the Customer’s fees for receiving services.

Uptime guarantee

In software support and maintenance agreements, uptime guarantees refer to the amount of time in a given period that a supplier guarantees their server/software stays up and running. Some suppliers may guarantee a certain uptime – usually 99.9% of a contract year. This equates to 43 minutes and 50 seconds of mandated downtime per contract year. Similar to service levels, suppliers can include provisions in software support and maintenance agreements detailing how the customer will be compensated if the supplier fails to maintain this 99.9% uptime. This is useful for suppliers because instead of a customer potentially being able to sue for breach of contract when the supplier is unable to keep the software constantly up and running, the customer will instead receive credits detailed in the agreement. These credits will then usually be deducted from future fees owed by the customer to the supplier.

The supplier will want to carve out liability for any downtime caused by third parties or factors outside its control. The supplier should also be aware that whilst uptime guarantees and downtime credits will protect them to a certain extent, if the software continues to fail significantly, they are likely to be in breach of warranties requiring them to maintain the software to an acceptable standard and so the customer could potentially still sue for breach of contract in those more extreme circumstances.

Software support and maintenance agreements – warranty period

If the supplier is providing software under a systems integration agreement, as we explored in our blog Systems Integration Contracts: Co-op v IBM, and is therefore essentially building software for a customer, it will be important to understand the transition from a warranty period to the implementation of a software support and maintenance agreement. The overlap between the support and maintenance agreement and the warranty period (that is, the period during which the supplier agrees to fix any errors for free) in the main systems integration agreement should be considered carefully to ensure that the maintenance agreement is not used to pay for the fixing of errors which should in any event be fixed under the main systems integration agreement.

Solutions from the customer’s point of view are for the maintenance agreement to commence only after the end of the warranty period, or for the two to overlap but on the basis that the maintenance agreement is free of charge until the expiry of the warranty period. If the customer has a right to terminate the systems integration agreement during the warranty period, then the customer should also require a right to terminate any support and maintenance agreement in circumstances where the right to terminate the main agreement is exercised.

Here to help

As you can hopefully see from the above, software support and maintenance agreements are useful for both customers and suppliers. This is because it is useful for both parties to know the consequences of the supplier’s software failing to work as expected. The reality is that no software is without error and fixes are therefore often necessary. Software suppliers are also often subject to continuous development in the environments in which they provide their products and so have to update accordingly. Customers want to have a supplier who can offer the expertise and insight to help with any issues. The supplier wants to know that if the software isn’t working as it should be then they can be given time and potentially money to help sort it out, without worrying that the customer might have recourse to terminate the contract. A detailed definition of the support and maintenance services to be provided is therefore to the benefit of both parties.

EM Law specialised in technology law. Get in touch if you need advice on software support and maintenance agreements or other technology law matters.