Negotiating Cloud Contracts: Looking at Clouds from Both Sides Now

  • January 7, 2013
  • Stan. Tech. L. Rev. 81
W. Kuan Hon
Christopher Millard
Ian Walden

Contract terms for cloud computing services are evolving, driven by users’ attempts to negotiate providers’ standard terms to make them more suitable for their requirements, as well as market developments, particularly among cloud integrators. This Article, drawing on sources including interviews with cloud computing providers, users and other market actors, is the first in-depth research into how cloud contracts are negotiated. In particular, we have focused on instances where users have requested changes to providers’ standard terms, and the extent to which providers agreed to those changes. We have found that the terms that generated the most negotiation were provider liability, service level agreements, data protection and security, termination rights, unilateral amendments to service features, and intellectual property rights. Changes to providers’ standard terms are likely to filter down from large deals where users have negotiated amendments, and filter up from regulatory action affecting the consumer market. This Article suggests a multiplicity of approaches are emerging, rather than a de facto ‘cloud’ model, with market participants developing a range of cloud services with different contractual terms, priced at different levels, and embracing standards and certifications that aid legal certainty and compliance, particularly for small and medium-sized enterprise users.

Comments

Ecellent article, in my opinion it addresses all major issues regarding contractual disputes, discussions between cloud service provider, integrator and user.
Thanks!

I think this is an excellent and useful research paper. I would have liked this to add aspects on ‘jurisdiction as to place’ as cloud provider are typically judicially separated from users. It gets further complicated when an integrator is sitting in an alternate geographic location. Contracts typically have a clause detailing as to applicable laws and this can get very confusing. Having executed many contracts (cloud or otherwise) in my life time, I find lawyers passionately defend 'jurisdiction as to place' as they cannot fight their cases elsewhere!

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