What Clauses Should Be Included in a System Maintenance Contract? Explaining the Points to Consider

It is becoming increasingly common for companies to conduct their business activities using systems developed by other companies. However, the process doesn’t end with the system’s implementation. Maintenance is necessary to address any issues or bugs that may arise after implementation. Typically, such maintenance tasks are outsourced to external parties.

This article will explain the clauses that should be included and the points to be aware of in system maintenance contracts, targeting those in companies considering entering into such contracts and engineers.

What is a System Maintenance Contract?

A system maintenance contract refers to an agreement concerning the maintenance of a system.

System maintenance involves rectifying issues such as bugs or malfunctions in a system, and restoring it to its normal state.

Another term often used in conjunction with system maintenance is system operation. System operation refers to maintaining the normal state of a system and preventing issues such as bugs or malfunctions from occurring.

Given the nature of systems, there are many cases where bugs or malfunctions occur. Therefore, system maintenance is an important task for keeping a system running normally.

Examples of Specific System Maintenance Tasks

Specific tasks involved in system maintenance include system backup operations and repair work when trouble occurs.

System backup operations refer to the task of duplicating data within the system and saving it to another storage medium, in preparation for data corruption due to bugs or malfunctions in the system.

Repair work when trouble occurs refers to resolving the trouble and restoring the normal operation of the system when a problem arises.

Key Points to Consider in System Maintenance Contract Creation and Review

System malfunctions or bugs can potentially cause significant disruptions to a company’s operations, making system maintenance a crucial task.

In order for system maintenance to be carried out properly, it is important to have a well-defined system maintenance contract in place.

In the following, we will explain the key points to consider in a system maintenance contract.

Clearly Define the Scope

Even when we talk about a ‘system’, there are various types of systems and their scopes can also vary.

If the scope of the system is not clearly defined, there may be discrepancies in understanding between the client and the contractor, which could lead to potential issues.

Therefore, it is important to clearly define the scope of maintenance in a system maintenance contract.

For clauses related to the scope, for example, you could consider stipulating the following:

Article ● (Purpose)
The Client entrusts the Contractor with the maintenance of the system used for the Client’s customers, referred to as ‘the System’ hereafter. The Contractor accepts this entrustment.

Clearly Define the Tasks

As mentioned earlier, ‘maintenance’ can encompass various tasks.

Therefore, it is important to clearly define the tasks involved in maintenance in a system maintenance contract.

For clauses related to the tasks, for example, you could consider stipulating the following:

Article ● (Tasks)
1. The Contractor shall perform the tasks based on the instructions of the Client. The tasks shall include the following:
(1) Investigation and analysis of the cause of the System’s malfunction
(2) Recovery work from troubles caused by the System’s malfunction
(3) Response to inquiries about the operation and management of the System
(4) Support for related tasks
2. The Contractor and the Client confirm that tasks not specified in the previous paragraph (including but not limited to the tasks listed below) are not included in the tasks. The Client may request the Contractor to perform tasks not specified in the previous paragraph for a fee, upon mutual consultation.
(1) Changes to the System’s specifications and other development tasks
(2) ●● tasks

Clearly Define the Response Time and Method for Maintenance Tasks

Unexpected bugs or malfunctions can occur in a system at any time.

However, there may be times when the person responsible for maintenance cannot perform the tasks due to staffing issues or other tasks.

Also, since system recovery needs to be carried out as quickly as possible, it is important to have a clear method of communication in place in advance.

For clauses related to the response time and method for maintenance tasks, for example, you could consider stipulating the following:

Article ● (Response Method and Time)
1. The response method for the tasks shall be by phone or email.
2. If it is essential to dispatch the Contractor’s employees for the performance of the tasks, the Client shall bear the cost incurred by the Contractor for the dispatch.
3. In addition to the previous paragraph, if it is necessary to dispatch the Contractor’s employees or a third party for the performance of the tasks, or if the Client wishes to dispatch, the Client shall bear the cost incurred by the Contractor for the dispatch.
4. The response time for the tasks shall be from ● a.m. to ● p.m. on weekdays. However, if a response is required outside of these hours, the Client may request the Contractor to perform the tasks outside of the response time by paying an additional fee set by the Contractor.

Key Clauses and Explanations in System Maintenance Contracts

In the previous section, we explained the particularly important clauses in system maintenance contracts. In the following, we will explain other key clauses of system maintenance contracts.

Clause on Fees

Monetary clauses are likely to cause disputes, so it is important to clearly define the clause on fees.

For the clause on fees, it is of course necessary to define the amount of the fee and the specific calculation method, but it is also advisable to define the timing of payment.

Confidentiality Clause

When performing system maintenance, it is anticipated that the contractor may come into contact with the client’s confidential information during the course of the work.

Therefore, it is also possible to establish a confidentiality clause to protect the client’s confidential information.

Personal Information Protection Clause

When performing system maintenance, if the system is related to customer management, it is anticipated that the contractor may come into contact with the personal information of the client’s customers during the course of the work.

Therefore, it is also possible to establish a clause on the protection of personal information to protect the personal information of the client’s customers.

Workplace Clause

Depending on the content of the system maintenance work, it is assumed that the contractor may perform work at the client’s office.

Therefore, it is necessary to establish a clause on the workplace to ensure that the contractor can smoothly perform maintenance work.

Damage Compensation Clause

In the case of system maintenance, it is anticipated that unforeseen circumstances may arise where the maintenance work by the contractor does not go well, and the client may suffer damage.

When a system is involved, it is possible that the damage could greatly expand, so it is considered to clearly define the range of damage in the damage compensation clause.

Also, it is considered to add a limitation to the amount of damage compensation, such as limiting the maximum amount of damage compensation to the range of fees.

Summary: Consult Lawyers for System Maintenance Contracts

We have explained the points to consider in system maintenance contracts for those companies and engineers who are considering entering into such agreements.

In system maintenance contracts, it is important to understand the general tasks of system maintenance and grasp the points to check in the contract before creating and concluding it.

If you are considering creating a system maintenance contract or planning to enter into one, we recommend consulting with a lawyer who has specialized knowledge in this field.

Introduction to Our Firm’s Measures

Monolith Law Office is a legal office with high expertise in both IT, particularly the Internet, and law. When safely utilizing the subsidy agency business, it is necessary to create a contract. Our firm handles the creation and review of contracts for various cases, from companies listed on the Tokyo Stock Exchange Prime Market to venture companies.