DRAFT Notes on the Main Issues of Cloud Computing Contracts (prepared by the UNCITRAL secretariat, 2019): Introduction OUTDATED

The present Notes address the main issues of cloud computing contracts between business entities where one party (the provider) provides to the other party (the customer) one or more cloud computing services for end use. Contracts for resale or other forms of further distribution of cloud computing services are excluded from the scope of the Notes. Also excluded from the scope of the Notes are contracts with cloud computing service partners and other third parties that may be involved in the provision of cloud computing services to the customer (e.g., contracts with subcontractors and Internet service providers).

Cloud computing contracts may be qualified under the applicable law as a service, rental, outsourcing, licensing, mixed or other type of contract. Statutory requirements as regards its form and content may vary accordingly. In some jurisdictions, parties themselves may qualify their contract as a contract of a particular type if legislation is silent or vague on that issue; the court would take such qualification into account in interpreting the terms of the contract unless this would contradict the law, court practice, the actual intention of the parties, the factual situation or business customs or practices.

These Notes address issues that may arise from cloud computing contracts regardless of the type of cloud computing services (e.g., infrastructure as a service (IaaS), platform as a service (PaaS) or software as a service (SaaS)), their deployment model (e.g., public, community, private or hybrid) and payment terms (with or without remuneration). The primary focus of the Notes is on contracts for the provision of public SaaS-type cloud computing services for remuneration.

The ability to negotiate cloud computing contract clauses would depend on many factors, in particular on whether the contract involves standardized commoditized multi-subscriber cloud solutions or an individual tailor-made solution, whether a choice of competing offers exists, and on the bargaining positions of the potential parties. The ability to negotiate the terms of a contract, in particular clauses on unilateral suspension, termination or modification of the contract by the provider, as well as liability clauses, may be an important factor in choosing the provider where the choice exists. Although prepared primarily for parties negotiating a cloud computing contract, the Notes may also be useful for customers reviewing standard terms offered by providers to determine whether those terms sufficiently address the customer's needs.

The Notes should not be regarded as an exhaustive source of information on drafting cloud computing contracts or as a substitute for obtaining any legal and technical advice and services of professional advisers. The Notes suggest issues for consideration by potential parties before and during contract drafting, including shared responsibility for security measures, without intending to convey that all of those issues must always be considered. The various solutions discussed in the Notes will not govern the relationship between the parties unless they expressly agree upon such solutions, or unless the solutions result from provisions of the applicable law. Headings and subheadings used in the Notes and their sequence are not to be regarded as mandatory or as suggesting any preferred structure or style for a cloud computing contract. The form, content, style and structure of cloud computing contracts may vary significantly, reflecting various legal traditions, drafting styles, legal requirements and parties' needs and preferences.

Lastly, the Notes are not intended to express the position of the United Nations Commission on International Trade Law (UNCITRAL) or its secretariat on the desirability of concluding cloud computing contracts.

The Notes consist of two parts and a glossary: part one addresses the main pre-contractual aspects that potential parties may wish to consider before entering into a cloud computing contract; part two addresses the main contractual issues that negotiating parties may face while drafting a cloud computing contract; and the glossary describes some technical terms used in the Notes, to facilitate understanding.

Relevant Glossary terms

Cloud computing services: online services characterized by:

Broad network access, meaning that services can be accessed over the network from any place where the network is available (e.g., through the Internet), using a wide variety of devices, such as mobile phones, tablets and laptops;
Metered delivery, allowing usage of the resources to be monitored and charged by reference to level of usage (on a pay-as-you-go basis);
Multi-tenancy, meaning that physical and virtual resources are allocated to multiple users whose data are isolated and inaccessible to one another;
On-demand self-service, meaning that services are used by the customer as needed, automatically or with minimal interaction with the provider;
Elasticity and scalability,meaning the capability for rapidly scaling up or down the consumption of servicesaccording to the customer's needs, including large-scale trends in resource usage (e.g., seasonal effects);
Resource pooling,meaning that physical or virtual resources can be aggregated by the provider in order to serve one or more customers without their control or knowledge over the processes involved;
A wide range of services from the provision and use of simple connectivity and basic computing services (such as storage, emails and office applications) to the provision and use of the whole range of physical information technology infrastructure (such as servers and data centres) and virtual resources needed for the customer to build its own information technology platforms, or deploy, manage and run customer-created or customer-acquired applications or software. Infrastructure as a service(IaaS), platform as a service (PaaS) or software as a service (SaaS) are types of cloud computing services.

Cloud computing service partners (e.g., cloud auditors, cloud service brokers and system integrators): Persons engaged in support of, or auxiliary to, activities of either the provider or the customer or both. Cloud auditors conduct an audit of the provision and use of cloud computing services. Cloud service brokers or system integrators assist parties with a wide range of issues, e.g., with finding the right cloud solution, negotiating acceptable terms and migrating the customer to the cloud.

Deployment models: The various ways in which cloud computing services are organized, based on the control and sharing of physical or virtual resources:

Public cloud, where cloud computing services are potentially available to any interested customer and resources are controlled by the provider;
Community cloud, where cloud computing services exclusively support a specific group of related customers with shared requirements and resources are controlled by at least one member of that group;
Private cloud, where cloud computing services are used exclusively by a single customer and resources are controlled by that customer;
Hybrid cloud, where at least two different cloud deployment models are used.

Infrastructure as a service (IaaS): Types of cloud computing services with which the customer can obtain and use processing, storage or networking resources. The customer does not manage or control the underlying physical or virtual resources, but does have control over operating systems, storage and deployed applications that use the physical or virtual resources. The customer may also have limited ability to control certain networking components (e.g., host firewalls).

Platform as a service (PaaS): Types of cloud computing services with which the customer can deploy, manage and run in the cloud customer-created or customer-acquired applications using one or more existing programming languages and execution environments supported by the provider.

Software as a service (SaaS): Types of cloud computing services with which the customer can use the provider's applications in the cloud.

Standardized commoditized multi-subscriber cloud solutions: Cloud computing services provided to an unlimited number of customers as a mass product or commodity on non-negotiable standard terms of the provider. Broad disclaimers and waivers of the provider's liability are common in this type of solution. The customer may be in a position to compare different providers and their contracts and select among those available on the market the most suitable for its needs, but not to negotiate a contract.

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Relevant Glossary terms