Quick Tip #15: Suspension rights can have far reaching consequences
We’ve noticed that suspension rights are creeping into contracts more and more, primarily as a result of the increase in SaaS services. A supplier’s suspension right can impose a material risk where a customer is reliant on the services and the supplier is able to suspend those services and effectively apply undue pressure on the customer.
If a contract includes a right for a supplier to suspend their services, be careful to consider all the consequences that arise from this right and therefore try to limit the right as much as possible. The suspension right should always be reasonable and proportionate in light of the event causing the suspension. For example, if a single user out of a population of 10,000 users has posted unacceptable content, then it would be reasonable and proportionate to remove that single user’s access but it would be unreasonable and disproportionate to turn the entire service off for those 10,000 users.
Consider the following when discussing a suspension right:
Is there sufficient notice provided before the suspension is triggered?
Is the suspension notice issued to a representative within the customer that has sufficient authority to address the event as quickly as possible?
Is the suspension limited to, for example, a specific user that is causing the suspension trigger event rather than the suspension of the entire system or service?
If an end user is not relevant and multiple jurisdictions or sites are involved, is the suspension limited to the infringing sites or jurisdictions?
Do the relevant payment obligations continue to apply during the period of suspension?
Are rules for lifting the suspension agreed and included in the clause?