Software and SaaS agreements look standardized, but they almost never are. Most templates are drafted to protect the vendor, not your business. If you operate in Canada and rely on a cloud platform, CRM, development tool, or enterprise system, the contract you accept can lock you into costs, obligations, and liabilities that you never planned for. These documents often exceed twenty pages and contain clauses that shift risk quietly and effectively.
For many Canadian founders, the danger is not that a vendor is acting in bad faith. The danger is that the agreement is written for a completely different size of company, or for US legal assumptions, or for a business model that does not match your own. This is where unexpected exposure begins.
Below is a practical breakdown of the most common risks I see when reviewing real software agreements for Canadian businesses, along with guidance on how to stay protected.
1. Uncapped liability that can cripple a business
A surprising number of SaaS agreements contain no liability cap at all. That means if something goes wrong with the service, your company might be responsible for damages with no upper limit. Vendors often limit their own exposure to a small amount, usually equal to fees paid in the last six to twelve months. This creates an uneven risk profile where the Canadian customer absorbs most of the downside.
A balanced contract usually caps liability on both sides. If you see unlimited caps, or no cap at all, it is worth having a lawyer revise the language before signing.
2. Vague or unenforceable service levels
Canadian businesses often assume an SLA will give them strong uptime and response guarantees. In reality, many SLAs are drafted so vaguely that enforcing them is almost impossible. The most common issues include undefined measurement periods, remedies that require you to request credits manually, or performance targets with vague exceptions.
You want clear metrics, defined remedies, and automatic credits when the vendor fails to meet standards. Without this, you may have no practical recourse during outages.
3. Hidden data protection obligations
If your business handles customer information, you need to understand exactly how the vendor will store and protect that data. This is especially important if your users are located in multiple jurisdictions. The contract should specify data location, vendor security obligations, subcontractor access, encryption standards, and incident notification timelines.
For Canadian companies that operate internationally, it is essential that the agreement aligns with PIPEDA and any privacy rules that apply to your customer base. You do not want to discover after an audit that your vendor contract created compliance gaps.
4. Intellectual property ownership that is not as clear as you think
Canadian founders often assume that if they upload content, designs, or code into a system, they retain all ownership. Some agreements quietly grant the vendor a broad licence to use, modify, or distribute your material. This becomes a major issue if your business relies on proprietary workflows, internal processes, or custom software.
A technology lawyer will check that the agreement restricts how your IP can be used and that any custom work built for you is assigned back to your company.
5. Termination clauses that make it impossible to leave
Many SaaS agreements are designed with difficult termination paths. These may include long notice periods, automatic renewals, penalties for early termination, or unilateral rights allowing the vendor to change pricing while you remain locked in.
You want clear and flexible exit rights, including termination for convenience with reasonable notice. This protects you if your business model changes or the vendor becomes unreliable.
6. Overreaching audit and compliance obligations
Some large vendors include broad audit rights that allow them to access your systems or inspect your records with little restriction. These clauses can be intrusive and may conflict with your own privacy obligations. Audit rights should be limited to clearly defined situations with strict notice requirements and should not interfere with your operations.
7. Ambiguous subcontractor use
Vendors rely heavily on subcontractors for hosting, support, integrations, and development. If the contract does not clearly state that the vendor is fully responsible for its subcontractors, you carry the risk. You also need to be aware of where those subcontractors are located, since offshore providers may create privacy or cybersecurity vulnerabilities.
How a technology lawyer helps
A lawyer familiar with Canadian technology and SaaS contracts can review these clauses quickly and practically. The goal is not to slow down your deal. The goal is to balance risk, negotiate fair terms, and give you clarity before you are locked in. You get a contract that fits your business model, reduces disputes, and allows you to scale without hidden liabilities appearing later.