The EU Data Act has arrived, and it's set to change the foundations of SaaS contracting.

A disruptive new right: walking away with two months’ notice

The headline is simple but disruptive: customers will be able to walk away from fixed-term agreements with just two months' notice, regardless of whether they signed up for twelve, twenty-four, or thirty-six months.

And this right doesn't just apply to new contracts going forward - it applies to existing deals as well. No grandfathering, no exceptions.

The challenge for SaaS providers

For providers, this creates obvious tension. Multi-year contracts have long underpinned revenue forecasts, investor confidence, and discounting strategies. The new regime strips away some of that certainty.

A client who took a discounted two-year plan can now exit well before the end of the term, leaving providers with unrecovered onboarding costs, lost margin, or stranded investment in implementation.

At the same time, the Act makes clear that you can't simply plug the gap with punitive exit penalties. Early termination charges must reflect genuine costs and must be offset against any savings you make when a customer leaves.

The challenge for SaaS providers

This doesn't mean the business model is broken. It means the contract has to work harder. Options include:

• ‍Prepayments and upfront fees: these remain permitted, provided they are expressly non-refundable. They ensure recovery of costs even if a customer exits early. ‍
• Clawback mechanisms: if discounts assume multi-year commitment, it's reasonable - and compliant - to claw back a fair proportion when the commitment isn't honoured.

Early termination fees: allowed, but carefully drafted

Early termination fees still have their place too, so long as they are anchored in evidence.

If you've invested staff time in onboarding or carried out bespoke configuration work, the law allows you to recover those costs when a client leaves. But the drafting needs to be precise: regulators will be alert to blanket "all fees for the rest of the term" clauses, and customers will challenge them.

The Act's emphasis on switching

You'll need to be clear about how a client can take their data with them - the format, the timeframe, and what cooperation you'll provide during the transition.

Leaving this vague only increases the risk of disputes. Providers who spell it out not only demonstrate compliance but also look more credible and customer-friendly.

Some are even publishing plain-language guides to switching, which double as compliance evidence and marketing material.

What providers should do now

The larger point is this: compliance here isn't about ripping up your commercial model. It's about tightening your drafting, evidencing your costs, and being transparent about your processes.

Review your templates. Re-work the termination, billing, and discount provisions. Write down your switching protocol. And make sure your sales and customer success teams know the new rules well enough to explain them.

The bigger picture

The Data Act doesn't mark the end of long-term SaaS deals. It marks the end of complacent drafting.

Providers who move quickly to adapt will protect their revenue, reduce legal risk, and build trust with customers who are themselves becoming more alert to their rights. Done well, compliance here isn't a drag - it's a chance to stand out.