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Application service provider (ASP) agreements

Certain types of software can be hosted on the software supplier’s server, rather than the computers belonging to a business owner. The main advantage of this is that the supplier, rather than the customer, takes responsibility for ensuring that the software is up-to-date and functions correctly.

The software supplier is referred to as the Application Service Provider (ASP) in this instance.

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There are specific issues to consider if you are considering entering into an agreement with an ASP for software.

These include:

Operational issues – specify how users will access the software and service from the ASP provider

Consideration – details of compensation for the ASP provider

Payment terms and procedures

Software – customisation, integration and configuration

Hardware – location and site requirements, responsibility for loss and damage and access

Installation, training and support – explain the process and the ASP provider’s obligations

Maintenance – describe the ASP provider’s obligations, response times and maintenance charges

Documentation – detail the documentation to be provided and whether copies will be given to each user

Upgrades – definition of an upgrade and the upgrade path

Promotion and branding – describe both parties’ obligations to promote the software to staff

Non-exclusive relationship – the client must understand the software is being provided on a non-exclusive basis

Security – discuss any special security requirements the client may have

Limitation of liability – address the issue of liability to repair or replace the software

Term of agreement

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