Website Hosting Agreements

Flat Fee Arrangement

Website Hosting Agreements can often be prepared for websites on a modest flat fee basis. The fee will vary based on the simplicity or complexity of the hosting services. Please contact us at , by phone at 410 367 5222 or complete our Contact Form to schedule a free initial consultation and to receive a quote for a flat fee to prepare a Website Hosting Agreement.

 

Overview

A website hosting agreement provides a system on which the website, once developed, will operate. Hosting and development agreements may be combined when performed by the same party, but are separate functions. The two primary considerations for website hosting agreements are performance and support. A platform that has slow performance or excessive downtime will ultimately discourage visitors to the website.

Key Provisions

  • Performance specifications. Performance and functional criteria need to be specified. There numerous features that webhosting companies can offer including ASP, cloud, e-commerce, security, etc. Since speed and capacity are the primary performance criteria, it is beneficial to get pricing upfront on the cost of expanding the system and the timing for implementing such changes. The size and complexity of the website will determine whether the customer will require dedicated servers.
  • Uptime commitment. It is not uncommon to see 99.9% uptime, because a webhosting company is expected to have redundant and back up systems in place. The agreement should also state how much planned maintenance will occur and specify that planned downtime should be scheduled for off hours. If there will be periodic downtime in addition to the planned maintenance, then the customer should be notified in advance before this occurs. In addition to downtime, there can be situations where the operation of the servers is so degraded that this should be deemed equivalent to downtime.
  • Service level credits. The purpose of service level credits is not to punish the vendor or to bring a windfall to the customer. The purpose is simply to motivate the vendor to perform. Therefore, service level credits should be set at an amount that causes some pain by diminishing the vendor’s profit margin. Therefore, onerous credit level amounts are inappropriate and will usually be rejected by the vendor. If service level payments are invoked with any frequency, then the customer should have the right to terminate the agreement and find a new webhosting company.
  • System security. System security is a critical issue to protect personal information that resides on the servers, and to otherwise protect the integrity of the website from attack. Security is more than such features, it also involves procedures that are in place once an attack occurs. In many cases, a webhosting company will have a security plan document that can be attached and incorporated into the agreement.
  • Disaster recovery plan. If a webhosting company’s location is subject to a disaster, that can be devastating to a website’s business. The amount of time that may be necessary to transfer to another hosting company may result in substantial losses. It is essential for webhosting companies to have disaster recovery plans in place so that if a disaster occurs the operations can continue seamlessly from a remote location. A disaster recovery plan can be attached to the agreement, and the hosting company can be required to have a third party test that plan annually and issue a report to the customer as to the performance of the disaster recovery plan.
  • Indemnifications. Cross indemnifications are important because either party could potentially be held liable for content provided by the other party which is infringing, defamatory, obscene or otherwise illegal or actionable.
  • Force majeure. While a force majeure may be considered a mere boilerplate clause in many agreements and only lightly reviewed, in a hosting agreement such a provision must be appropriately adapted. As mentioned, the hosting company is expected to have back up systems as well as a disaster recovery plan in place. Therefore, the types of occurrences that should actually qualify as force majeure events should be significantly narrowed.
  • Specific performance.  One of the most critical remedies that might be necessary in a hosting agreement may be the right to transfer to a different hosting company. This may require a right to specific performance when the hosting company also participated in the development and possesses code necessary to be transferred to the new hosting company.
  • Termination and transfer. Webhosting agreements typically operate on annual terms and renew automatically for additional terms, unless either party terminates. However, it is to the customer’s benefit to be able to terminate for its convenience at any time, because there are various reasons that a customer might not be satisfied with the performance or service, where such less than satisfactory performance does not amount to a breach of the agreement. Alternatively, specific performance failures (e.g., more than x unscheduled downtime or degraded service during any month) could be drafted to allow for early termination. If termination for breach occurs, the customer is going to incur costs when transferring to a new hosting company, and the customer can try to negotiate that such costs will be reimbursed by the hosting company. If there is a termination, the hosting company should have specific requirement to assist in any transfer to another hosting company. It may be useful for the website to be able to extend an agreement from month to month after termination or expiration in order to allow for transition to another hosting company.