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by dctoedt 4246 days ago
> "We can terminate your account for any reason" is a legal term which should be in every SaaS's (default) terms of service. Your lawyer will be happy to explain why.

For a free account this might well work.

For a paid account, a unilateral-termination right, if not worded properly, could kill all the legal protections of the terms of service by turning the TOS into an "illusory contract." [1] The SaaS provider could lose its limitations of liability, choice-of-law and choice-of-forum clause, arbitration provision, etc.

A better approach might be to provide that the SaaS provider can temporarily suspend the account for good reason, and perhaps enumerate some example reasons. That could be coupled with a termination for cause clause (with termination following notice and an opportunity to cure except in egregious cases).

Usual disclaimer: I'm not your lawyer, this isn't legal advice, YMMV, small differences in fact can make big differences in outcome, check with your own lawyer before making decisions, etc., etc.

[1] http://en.wikipedia.org/wiki/Illusory_promise. For more information and citations, see http://www.oncontracts.com/using-wordpress-coms-terms-of-ser... (self-cite).
2 comments
hawkice 4246 days ago
I guess I don't get it. When you terminate the account you can stop accepting payments and auto-trigger a pro-rated refund. Then the consideration is "the service, while you used it" or "the money, while we accepted it", depending on which party you are. Can you expand on that idea?
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dctoedt 4246 days ago
> When you terminate the account you can stop accepting payments and auto-trigger a pro-rated refund. Then the consideration is "the service, while you used it" or "the money, while we accepted it", depending on which party you are.

That sounds right --- the key difference is the refund, which wasn't mentioned in Patrick's original post.

If termination is for cause, you might not have to give a refund (although it'd look better to outsiders, and thus be more defensible in court, if you did give a refund).

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rmc 4244 days ago
> or a paid account, a unilateral-termination right, if not worded properly

How do you word this correctly to still be able to terminate whenever you want?

(I know one should speak to a lawyer, and I'm not running a SaaS business, I'm just curious of the generics)

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