Appendix 2: Sample Services Agreement
This is an example of a contract that a technology provider might offer you. You’ll find important language affecting your ability to share information relating to this relationship in a few different locations throughout the contract, all of which can inform your risk analysis. If you’re in the negotiation stage, knowing how to identify this language can also inform your negotiations.
Annotations, including explanatory notes and Q&A, appear in italics throughout the document.
SERVICES AGREEMENT
This Services Agreement (“Agreement”) by and between Super Software Co. (“SSC”) and the subscriber named in Section 1 (“Subscriber”) (together the “parties”), effective as of the date of the last signature below (“Effective Date”), outlines the terms and conditions under which SSC will provide services to Subscriber. For good and valuable consideration the sufficiency of which is acknowledged, the parties agree as follows.
SECTION 1. DEFINITIONS
1.1 “Confidential Information” means all non-public information disclosed by SSC to Subscriber, whether orally or in writing, that is designated as confidential or that reasonably should be understood to be confidential given the nature of the information and the circumstances of disclosure. Confidential Information includes, without limitation, software code, dashboard designs, business roadmaps, and the methodology of the SSC “BestRank” ranking algorithm.
Q: Is “Confidential Information” an exhaustive list?
A: Not necessarily! Be on the lookout for other expectations around confidentiality.
1.2 “Subscriber” means [the subscriber’s name and contact information].
1.3 “Subscriber Data” means any data owned by Subscriber at the time the parties enter into this Agreement or that comes into being during the Term of the Agreement and is not a product of Subscriber’s use of SSC services.
Q: Does “Subscriber Data” qualify as “Confidential Information”?
A: No, even if the Subscriber would consider that data to be protectable. It probably is, but it’s not covered by the above definition, so SSC doesn’t have any expectations around it for the purposes of this contract.
SECTION 3. FEES AND PAYMENT
3.1 Fees. SSC shall calculate fees at the rate indicated on the related invoice. All invoices and Fee information are considered “Confidential Information” under this Agreement.
Note: The “Fees” clause expands “Confidential Information” in this contract, so any terms that apply to “Confidential Information” also apply to invoices and Fee information.
3.2 Payment Terms. Subscriber shall pay the Fees indicated on the related invoice net thirty (30) days of receipt of that invoice.
SECTION 4. NON-DISCLOSURE
4.1 Duty of Confidentiality. Subscriber shall use the same degree of care to protect Confidential Information as it uses for its own similar information. Subscriber shall not disclose or use any Confidential Information of SSC for any purpose outside the scope of this Agreement.
Q: What is Subscriber prevented from doing with Confidential Information?
A: Per these terms, Subscriber would need to protect Confidential Information (as defined above, plus the Fee addition in Section 3.1) in the same way it would protect its own information, and must not disclose that information for any reason – so this is a very restrictive duty.
4.2 Exceptions. The obligations in Section 4.1 do not apply to information that:
(a) is or becomes generally available to the public through no fault of the Subscriber;
(b) was already in the Subscriber’s possession without an obligation of secrecy;
(c) is independently developed by the Subscriber; or
(d) is “Subscriber Data” as defined in this Agreement.
Q: How do these Exceptions change the duty above?
A: This clause carves out the types of exceptions that usually apply to confidentiality restrictions: it doesn’t give Subscriber a lot of leeway in terms of sharing SSC’s information.
SECTION 7. INDEMNIFICATION
7.1 Subscriber Indemnity. Subscriber shall indemnify, defend, and hold harmless SSC from and against any and all claims, damages, or losses arising out of Subscriber’s unauthorized use of the SSC services or any breach of this Agreement.
Note: Indemnification, or indemnity, clauses are usually “standard” terms in a template. It basically means you’re not going to sue the company if something goes wrong. They’re not a big part of a confidentiality assessment, but they’re worth reviewing and pushing back on because they tend to be one-sided by default.
Pro Tip: Ask the other party to make indemnification mutual. If they refuse, that’s a good indicator that the terms aren’t well written. You can negotiate by suggesting edits that make sense for your situation.
SECTION 9. TERM AND TERMINATION
9.1 Term. …
9.2 Termination for Cause. Either party may immediately terminate this Agreement if the other party materially breaches any term. For clarity, Subscriber’s failure to protect Confidential Information is considered a material breach and grounds for termination by SSC.
9.3 Termination for Convenience. SSC may terminate this Agreement at any time, for any reason or no reason, upon sixty (60) days’ prior written notice…
9.4 Effect of Termination. Upon termination or expiration of this Agreement, Subscriber’s access to the SSC Dashboard and all SSC services immediately ceases and Subscriber shall return all materials, including but not limited to any Confidential Information, received from SSC which are not demonstrably required for Subscriber’s ongoing business purposes following termination. In the event that SSC terminates this Agreement under Section 9.2, SSC may in its sole discretion seek monetary damages not to exceed the total value of this Agreement.
SECTION 10. GENERAL PROVISIONS
10.1 Survival. Sections 1 , 3.1, 4, 7, 9.4, 10, and any provisions that by their nature survive, survive expiration or termination of this Agreement. The obligations in Section 4 remain in effect for a period of three (3) years following termination.
