How Oracle Attempts to Limit its Liability With its SuiteSuccess Subscription Services Agreement

By Pam Fulmer

When a company signs a cloud SuiteSuccess ERP agreement with Oracle America, Inc. and NetSuite, Inc. (collectively “Oracle”), it is important to understand the legal framework behind the deal. Oracle's June 1, 2024 Subscription Services Agreement (SSA) for its cloud ERP solutions is instructive and contains several provisions that benefit Oracle by either drastically limiting liability or escaping liability all together. In this blog post, we will explore these provisions and explain why such agreements should never be hidden in hyperlinks buried within a document described as an “Estimate Form”.  

Prospective Oracle customers need to be alert and understand how Oracle often presents its contractual documents to its customers in the ERP cloud solution space.  This may sound like a familiar story if you have dealt with Oracle.  Whether the customer initially reaches out to Oracle, or whether Oracle locates the potential prospect, the playbook is the same.  
Oracle deploys an aggressive sales team, which sets up multiple Zoom meetings ostensibly to gather the customer’s requirements for the ERP solution. Oracle devotes a good deal of resources to these initial meetings giving the customer the impression that Oracle will devote lots of resources to the implementation. Oracle customers in litigation allege that oral promises are made during these meetings, which are often not documented properly or at all in the final contract documents. Instead, customers allege that Oracle simply uses its standard paper promising only a NetSuite standard solution rather than the functionality that was agreed to on the Zoom calls. 

Oracle’s aggressive sales team often does not present the contractual documents ahead of time.  But even if they do, normally they do not include a PDF of the SSA, with the other PDFs provided.  We believe that this is intentionally done as it is our opinion that Oracle hopes that the prospect will miss the onerous terms of the SSA altogether, which are buried in a disguised hyperlink.  And even if the prospect does click on the grayed out and barely discernable hyperlink, the link does not take the reader right to the document.  Instead, the prospect is forced to click through several confusing pages on Oracle’s website to locate the SSA. 

The documents that Oracle eventually presents via a DocuSign do not include a PDF of the SSA. Instead, the documents are often presented to the customer in a pressured environment where the Oracle sales team says that if the documents are not executed immediately, the steep discounts will go away.  

Many NetSuite SuiteSuccess customers do not have legal counsel to review and advise them on the contract.  Instead, they succumb to the highly orchestrated pressure campaign and sign the documents without proper vetting.  At that point Oracle has them, because Oracle now has the many protections of the lopsided agreement, which we explain in more detail below.

1. Disclaimer of Warranties

The SSA includes a section that disclaims many types of warranties, including those involving third-party applications and services. Oracle does not guarantee that its services will be error-free or uninterrupted and explicitly states that it is not responsible for issues caused by third-party applications. (SSA ¶9).

This limits Oracle's liability, especially in complex cloud environments where multiple third-party vendors are involved. For example, if a third-party contractor recommended by Oracle causes issues with the service, Oracle can claim it bears no responsibility.

2. Limitation of Liability

Oracle limits its liability significantly in the SSA.( SSA ¶10)  According to the agreement, Oracle will not be liable for indirect, consequential, or special damages, and the total liability is capped at the amount paid by the customer in the last twelve months. This means that even in the event of a major issue, the customer cannot recover losses beyond the value of their most recent subscription fees.

This provision is a major risk for customers, especially if they experience business interruptions or data breaches caused by Oracle's services. Limiting damages to the subscription fee amount offers minimal financial recourse for the customer.

​The limitation of liability is one of the most favorable provisions for Oracle, which caps Oracle’s responsibility at the amount of fees paid by the customer within the past 12 months. For a large corporation like Oracle, this minimal liability offers substantial protection, even in cases of significant service failure. In contrast, customers are exposed to greater risk, particularly in cases where service failures lead to business losses far exceeding the capped liability.

3. Responsibility for Third-Party Applications

Oracle disclaims any responsibility for third-party applications or implementation partners, even where these were recommended by Oracle. SSA ¶¶ 6.5, 14.2.3. The agreement emphasizes that Oracle is not liable for data loss, errors, or interruptions caused by third-party applications, even if they are listed in the SuiteApp marketplace or are recommended by Oracle.  Likewise, the SSA provides that Oracle is not liable for deficient work of Oracle implementation partners, even where Oracle recommended them in the first place.

This limits Oracle’s exposure to liability when issues arise from third-party software or services, even if these services are crucial for the ERP solution to function. Customers are left responsible for the risks associated with such third-party tools or third party Oracle partners.

​4. Termination and Suspension Provisions

Oracle reserves the right to suspend services if the customer’s account becomes delinquent or if it believes there is a significant threat to the functionality, security, or integrity of the services. SSA ¶7.  This provision gives Oracle broad discretion to suspend services without bearing liability for interruptions caused by these suspensions.

While this protects Oracle's interests in maintaining secure services, it leaves customers vulnerable to sudden service interruptions that could impact their business operations. This provision lacks balance in protecting the customer’s need for operational continuity.

A close analysis of the termination provision in Oracle’s SSA reveals that the agreement can only be terminated by the customer for cause, not for convenience. This means that a customer can only end the agreement if Oracle materially breaches the contract and fails to remedy the breach within 30 days after receiving written notice. (SSA ¶7.3). While this provision might appear bilateral at first glance, since both parties have the right to terminate for cause, it actually benefits Oracle more. The reason is that customers are locked into the contract for its full term, regardless of changes in their business needs or satisfaction with Oracle’s services. Oracle, however, can terminate the contract if the customer breaches any material term, such as payment delinquency, which gives Oracle more leverage in enforcing the contract.  And as mentioned above, it has the power to suspend the services.

Moreover, the agreement includes automatic renewal provisions, where the subscription will renew for an additional year unless the customer provides written notice of non-renewal at least 30 days before the expiration of the current term. (SSA 4.A). This ensures Oracle retains long-term contractual commitments, as customers must actively manage the renewal process to avoid being automatically bound by another term.

The provision primarily benefits Oracle by locking customers into the agreement unless there’s a breach, while also ensuring automatic renewals unless the customer is proactive
​in canceling.

5. Confidentiality and Security

Although Oracle claims to protect Customer Data with reasonable safeguards, the agreement places the burden on customers to ensure the accuracy, legality, and reliability of their data. This leaves the customer responsible for many aspects of data integrity and security, which is crucial in cloud environments where sensitive information is stored. (SSA ¶8).

​While Oracle commits to basic security measures, this provision helps shield Oracle from liability if the customer's data is compromised. (SSA ¶6.10)

6. No Warranties for Performance

The SSA provides that Oracle does not guarantee that all service issues will be fixed or that its services will meet customer expectations. (SSA ¶9(b)). 

This is particularly risky for businesses that depend on Oracle’s services for mission-critical operations. If the cloud ERP solution underperforms or causes delays, Oracle’s limited warranties and liability protection leave customers with little recourse.

7. Integration Clause Seeks to Bar Oral Discussions Pre-Contract

The integration clause in Oracle’s SSA could be used against the customer by limiting the customer's ability to rely on any promises, statements, or agreements that are not explicitly included in the contract. This clause typically states that the agreement constitutes the entire understanding between the parties and supersedes all prior discussions, negotiations, or other agreements, whether written or oral (SSA ¶14.1).
Oracle could use this clause to its advantage in several ways:
1.    Prevents reliance on prior representations: If Oracle’s sales team made specific promises about the performance, capabilities, or features of the service that are not expressly included in the SSA, Oracle will argue that the customer cannot later claim these promises as part of the contract. For instance, if Oracle's representatives verbally assured the customer of certain included functionality, but those terms are not in the written agreement, Oracle can argue that such assurances are not enforceable.
2.    Limits modifications to written amendments: The clause stipulates that any changes to the agreement must be made in writing and signed by both parties. This means that even if Oracle’s representatives agree to make certain accommodations or offer concessions during the course of service, those will not be binding unless they are formally documented.
3.    Nullifies external documents: Oracle could reject any attempt by the customer to rely on external materials such as marketing brochures, proposals, or emails as part of the contractual obligations, arguing that the integration clause bars the inclusion of any terms or representations outside the SSA.
In essence, Oracle could use the integration clause to solidify that only the specific terms written in the contract are binding, eliminating the possibility of the customer introducing external agreements or promises in case of a dispute. This can work strongly in Oracle’s favor, especially if the customer was led to believe certain non-contractual assurances would apply. 

8.  Why the SSA Should Never Be Hidden in Hyperlinks

An agreement like the SSA should never be hidden behind a disguised hyperlink in an estimate form for several reasons:
1.    Transparency and Fairness: Hiding critical legal terms makes it difficult for customers to fully understand the terms they are agreeing to. This undermines transparency and could lead to customers unknowingly accepting provisions that are not in their best interest.
2.    Informed Decision Making: The SSA contains clauses that significantly affect the customer’s legal rights and liabilities. If these terms are hidden, it prevents customers from making informed decisions based on the true scope of their risk.  In other words, the customer will be taking on risk but it won’t even know of the risk.  This flies in the face of the requirement that there must be a “meeting of the minds” in order for a binding contract to be formed.
3.    Potential for Disputes: A hidden SSA can lead to future legal disputes, as customers may claim they were unaware of the provisions. Making such a critical document accessible only through obscure hypelinks could be seen as an attempt to downplay or obfuscate important terms.  For example, if Oracle customers don’t know of the SSA then they don’t know about the requirement for a written notice of breach and a mandatory cure period of 30-days.  That is why when the customer approaches Oracle it usually asks to “cancel” the contract, not understanding that there are certain requirements that must be met to terminate.  Oracle usually responds that the contract cannot be “cancelled”, neglecting to provide the customer with a copy of the SSA and the termination provision, which allows for termination for material breach and a failure to cure.
4.    Industry Best Practices: It is a best practice to present all critical agreements directly to customers for review before they sign any contractual forms. This builds trust and ensures that all parties are clear on the terms from the outset.

​In conclusion, Oracle’s Subscription Services Agreement is designed to limit its liability and protect its interests, often at the expense of the customer. From disclaimers about third-party applications to limitations on termination rights and automatic renewals, the contract places significant responsibility on the customer while minimizing Oracle’s exposure. Provisions like the integration clause further strengthen Oracle’s position by ensuring only the written terms are enforceable, leaving customers with little recourse for any external promises unless they can meet the heavy burden of proving fraud in the inducement. This highlights the importance of thoroughly understanding the terms of such agreements and ensuring they are presented transparently, not hidden behind hyperlinks.