REVIEWER’S GUIDE TO THE
BUILDINGLINK SUBSCRIPTION AGREEMENT
Dear Reviewing Legal Counsel:
We have prepared our contract with as few strings attached as possible, on either/both ends, on the assumption that we have a vested interest in working together in a successful collaboration, and that if your client is unhappy, then they will always have the ultimate recourse to cancel the subscription.
This guide is meant to highlight certain key aspects of our BuildingLink service and its related software subscription agreement. While weappreciatean attorney’swish to puthis/herclient in the strongest possible litigation position, please note that software subscription agreements are fundamentally different from other contracts for goods and services you may review for your real estate clients:
The basic structure of service agreements in the software area is fairly simple: The client accepts the responsibility of determining beforehand whether the product and the company’s reputation for supporting the product meet their needs and are likely to provide a satisfactory experience. Once the decision to subscribe to the software has been made, the primary remedy for the client is to discontinue use of the software and terminate the subscription, and in cases where the discrepancy between what was promised and what was delivered is great – i.e. a clearly defective product –software license/service agreements provide for a possibility of the refund of all fees paid, not just a pro-rata refund of advance fees paid. But if you wished to modify the terms of use or warranty for any shrink-wrapped software you or your clients use, such as Microsoft Word or Outlook (see page 5), you would not have any way to do that. If you wanted to modify the terms of use or warranty of any “SAAS” (software-as-a-service, delivered over the internet) services, such as Google Groups, Google docs, Salesforce, Dropbox, Netsuite, eBay, or any of the online storage and backup services (Amazon, Carbonite, Sugarsync) or collaboration tools (Basecamp, Asana) you would also not have any way to do that (see page 5).
Why is this so? The business model of software products, and the specifics of Errors and Omissions liability coverage available for software companies, simply does not support a broad acceptance of damage claims from any sort of ancillary negative consequences a specific client may encounter as a result of a real or alleged defect in a software product. Here’s an example of why: Imagine if a client claimed that Microsoft Word’s spell-checker was defective, and mistakenly replaced the word “millions” with “billions” in a contract – and would then claim that they were damaged to the tune of $999 million. The price paid for a copy of Word could never support obtaining coverage for that. As a result, ALLsoftware agreements that you and your clients agree to, if you read them carefully, limit recourse to returning or cancelling the agreement, and a refund of fees paid. (See page 5 for examples from eBay,Salesforce.com, Fandango, and SeamlessWeb.)
And that is what we at BuildingLink have done.
We expect that our clients have done adequate due diligence before getting to this stage, on the type of company we are, and on the extent to which our software, our commitment to customer service, support, training and innovation meet their needs. It is a very easy due diligence to perform: We have been providing the BuildingLink service now for over 12 years, and have as clients some management companies using us in 50, 65 and even 90+ properties they are involved with. Our reputation for delivering what we promise and more, in software quality, privacy protection, training and support is outstanding and we survive based on that reputation remaining unsullied. Our business incentive is to protect that reputation; our self-interest is to make sure your client is not disappointed. And assuming your client has done a bit of due diligence, they will have already eliminated 98% of the factors that they might wish to protect themselves from – by picking the right partner!
We have drafted a simple agreement that basically says:
(1) We will deliver what we promised.
(2) If at any point you feel we are not doing that, or you feel you want to make a change, you can cancel the agreement on 30 days’ notice and get an immediate refund of any advance fees paid.
(3) We will protect the privacy of all identifying information, according to industry best practices. (Our “limitation of liability” clause does NOT apply to privacy violation.)
(4) We will protect you from any copyright claims that say that you have infringed on someone else’s intellectual property by using our software.
(5) You will refrain from knowingly using the site or knowingly allowing others to use the site for illegal purposes, and if we notify you of such behavior, you will either stop that activity or authorize us to disable that user’s access.
That’s pretty much it.
We have a great, decade+- long track record. We even have with us still, a decade later, all of the people that started the company and who provide the consistent value, vision and leadership that your clients are counting on. That degree of consistency is what your clients have chosen by selecting us, and it is ultimately what guarantees their satisfaction, not the addition of many clauses of a contract focused on delineating all the ways in which things can go wrong and the consequences thereof. This is a software agreement. In software agreements, the recourse is to cancel.
Here are some facts that will show you that your client has selected a very good and generous vendor, who never goes back to a clause in a contract as an excuse to provide less service, or to charge more money or “nickel and dime,” and who puts the quality of the relationship above all else:
(1) We have NEVER charged a late fee or collection fee (although our contract allows us to)
(2) We have NEVER been sued by a client for non-performance, or for anything else
(3) We have NEVER charged extra fees for extra training sessions requested(although our contract allows us to)
(4) We respond to ALL service and support requests within one business day, and 90% of the time clients get a live and knowledgeable person on the phone on their first call
(5) We have NEVER had a privacy/security breach
Please understand that there is a very limited ability to make modifications to the attached contract. If you find places in the contract where you need to insert the word “reasonable,” or to change “5” days to “10” days, or to add words to make certain clauses “mutual,” go ahead and do that. Those are not substantive changes, and in any case we will probably never even get to those situations. But for any other types of changes, note that most modifications need to be approved by our Insurance Company, which introduces delays, and increases costs to us as well as to your client. We therefore ask you to please understand the nature and limitation of software agreements in performing your review. If your client feels the need for more protection than can normally be provided in a software agreement, please encourage them to speak to us further and we will assist them in their further due diligence.
We hope that you will review our standard agreement with the understanding that we have tried to craft an agreement that does not tie our clients hands, and that keeps the onus on us to continue to satisfy our clients and to earn their business every single day, and that your client’s ability to cancel the agreement at any time and receive a prorated refund provides the best guarantee that they will receive the services they are signing up for.
-Jerry Kestenbaum
President
BuildingLink.com
EXAMPLES OF “LIMITATION OF LIABILITY”
CLAUSES OF MICROSOFT, eBAY, etc.
Virtually every software EULA (end user license agreement), whether for locally installed software (like Microsoft Word) or for Internet-based software (like Google Gmail) has a “limitation of liability” clause limiting their liability to fees paid. We have done more than most, by waiving our liability limits for breach of privacy and for claims of copyright violation, because these put our client at significant risk. This is as much, and in many cases MORE than what other web-based software programs offer – including Microsoft and Google. Even smaller companies than Microsoft and Google include this limitation of liability. As an example, I show below a few excerpts from the Terms of Use policies of five other very widely used programs - 2 smaller, and 3 larger. So please see below the policies of Microsoft Office, eBay, Salesforce.com, Fandango, and SeamlessWeb:
Microsoft Office Word-License Terms
1. Limitation on and exclusion of damages. You can recover from Microsoft and its suppliers only direct damages up to the amount you paid for the software. You cannot recover any other damages, including consequential, lost profits, special, indirect or incidental damages. This limitation applies to: (a) anything related to the software, services, content (including code) on third party Internet sites, or third party programs; and (b)claims for breach of contract, breach of warranty, guarantee or condition, strict liability, negligence, or other tort to the extent permitted by applicable law. It also applies even if: (a) repair, replacement or a refund for the software does not fully compensate you for any losses; or (b) Microsoft knew or should have known about the possibility of the damages. Some states do not allow the exclusion or limitation of incidental or consequential damages, so the above limitation or exclusion may not apply to you. They also may not apply to you because your country may not allow the exclusion or limitation of incidental, consequential or other damages.
2. Remedy for breach of warranty. Microsoft will repair or replace the Software at no charge. If Microsoft cannot repair or replace it, Microsoft will refund the amount shown on your receipt for the software. It will also repair or replace supplements, updates and replacement Software at no charge. If Microsoft cannot repair or replace them, it will refund the amount you paid for them, if any. You must uninstall the Software and return any media and other associated materials to Microsoft with proof of purchase to obtain a refund. These are your only remedies for breach of the limited warranty.
3. Limitation on and exclusion of damages for breach of warranty. The limitation on and exclusion of damages clause above applies to breaches of this limited warranty. This warranty gives you specific legal rights, and you may also have other rights which vary from state to state. You may also have other rights which vary from country to country.
eBay Policy – Liability
1. To the extent legally permitted we expressly disclaim all warranties, representations and conditions, express or implied, including those of quality, merchantability, merchantable quality, durability, fitness for a particular purpose and those arising by statute. We are not liable for any loss, whether of money (including profit), goodwill, or reputation, or any special, indirect, or consequential damages arising out of your use of ebayinc.com even if you advise us or we could reasonably foresee the possibility of any such damage occurring. Some jurisdictions do not allow the disclaimer of warranties or exclusion of damages, so such disclaimers and exclusions may not apply to you.
2. Despite the previous paragraph, if we are found to be liable, our liability to you or any third party (whether in contract, tort, negligence, strict liability in tort, by statute or otherwise) is limited to fifty US dollars ($50).
Salesforce.com - Terms of Use:
1. Limitation of liability. Neither party's liability with respect to any single incident arising out of or related to this agreement (whether in contract or tort or under any other theory of liability) shall exceed the lesser of $500,000 or the amount paid by you hereunder in the 12 months preceding the incident, provided that in no event shall either party’s aggregate liability arising out of or related to this agreement (whether in contract or tort or under any other theory of liability) exceed the total amount paid by you hereunder. The foregoing shall not limit your payment obligations under section 6 (fees and payment for purchased services).
2. Exclusion of Consequential and Related Damages. In no event shall either party have any liability to the other party for any lost profits or revenues or for any indirect, special, incidental, consequential, cover or punitive damages however caused, whether in contract, tort or under any other theory of liability, and whether or not the party has been advised of the possibility of such damages. The foregoing disclaimer shall not apply to the extent prohibited by applicable law.
Fandango.com - Terms of Service:
1. Exclusion of damages. Fandango, and its subsidiaries and licensors will not be liable to you or any third party for any direct, indirect, punitive, incidental, special, consequential damages (including damages relating to lost profits, lost data or loss of goodwill) or any damages whatsoever that result from your use of or inability to use the service. This limitation applies whether the alleged liability is based on contract, tort, negligence, strict liability, or any other legal theory, and even if fandango has been advised of the possibility of such damage. Without limiting the foregoing, fandango will not be liable for any loss or damage arising out of (1) your failure to comply with section 3 (registration, accounts and passwords) or (2) content posted to the service by you or any third party.