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The Cloud & The Law - Dealing with Compliance

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Cloud based solutions help companies utilize applications and store data for a fee based on usage. Most solution providers offer robust security for the client data.

For small and medium businesses, implementing cloud-based solutions offers great value for money that they have invested. But before you consider moving to the cloud, there are some important legal issues that you should look into before signing up with a suitable vendor. This is very critical especially when the business uses on-demand ERP applications and related tools for their internal operations, as sensitive data is involved. To make things easier for you and for the vendor, a contract has to be drafted between your company and the vendor with the terms and conditions specified without any ambiguity. Here are 5 important aspects the contract should deal with.

[1] Data Protection –. The contract should clearly state who would be the data controller, and which law is applicable when disputes arise. This is very important because there is a possibility that data might be stored in some other country. The contract should also contain clauses regarding disaster recovery plans, liability towards breach of privacy and security to prevent hacking. Adding these clauses ensures minimum confusion when any of the above happens.

[2] Data Transfer – The contract should clearly have an agreement on data transfer to another vendor in case the business decides to change the vendor or upgrade to advanced cloud-based solutions at a later stage. This agreement should ideally specify file format requirements and other data export mandates.

[3] Legal Affairs – The contract should have guidelines regarding the place of jurisdiction, in case of disputes or conflicts between the business and the solution provider. This will help protect the client as well as the vendor to verify about the legal requirements while opting for cloud-based solutions, by verifying the country’s cyber laws.

[4] Compliance Issues – The solution provider should clearly state to the customer, terms about data retention obligations, tax related and labor law related storage requirements, electronic invoicing legislations, electronic signature legislations, ecommerce legislations etc. The compliances vary according to the country in which the solution provider is located.

[5] Liability towards Illegal data – Both the company and the solution provider can be held liable for any illegal data hosted on the cloud. So, it is better to check for illegal content of any form, before storing it on the cloud. The contract should make a mention of this and how it will be handled.

Though it is better to know about the legal implications associated with cloud-based solutions, most solution providers are very friendly when it comes to handling legal issues with their clients making it perfectly safe to host applications and store data on the cloud.

In this day and age, a lot of awareness has been created about the legal implications associated with the cloud. Most vendors have clear-cut measures to deal with the same, and as the customer, all you have to do it evaluate their terms and gauge the suitability for your organization, to ensure smooth operations.

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