Cloud Computing Agreement
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This article is written by Sangeet Kumar Khamari, from KIIT School Of Law, Odisha. This Article talks about cloud computing and the different clauses which make the people more comfortable while using it and also tells about the mistakes that are committed by people. 


In today’s world, technology has grown up to such a position that people are very much happy to utilise it. We use cell phones, laptops, tablets and many more electronic gadgets and by using those gadgets we feel free from the workload. Then we use social media like Facebook, Instagram, LinkedIn and many more to connect with people who live in various parts of the world.

Technology has also developed a software called cloud computing from which we can share anything like photos, files, etc. and also store data without any help of any hard disk or hard drive. Now we shall discuss cloud computing in this article.

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Examples of cloud computing are such as Google’s Gmail, Google’s drive, Google’s photos, etc.

What is Cloud Computing?

Through the internet, transferring of different services is known as cloud computing. Cloud computing services include tools and applications like email, backup, data storage, servers, database, networking and software. Other than keeping files on a hard drive or local storage device, storing in the “ cloud-based storage” makes it possible to save the files to a secure database. Cloud computing makes an easy way for the people and businesses to certain advantages like cost savings, gain in productivity and it is also speedy and secure. For example, If anyone stores data in google drive in his or her computer, then he or she can access the data from anywhere using mobile phone or tablets by signing it to their user ID.

As we know, cloud computing is already an evolved technology, It is useful in reducing capital expenditure and operational cost. Before this technological improvement, there was the best utilisation of hardware in data centres. If someone has to use the hardware for once then he/she has to invest in it.

Why is it called cloud computing?

It is called cloud computing because, just like the cloud is formed by the mixture of an infinite number of water droplets and not a fixed structure, but it moves from one position to another, so cloud computing is also formed by many users and networks. Many times cloud computing gains some users and also loses some users, so it doesn’t have any fixed structure like clouds.

Companies use cloud computing for their employees to store data and files on servers and access them through the internet. This means there is no need for the users to access it in a particular place, they can access it from anywhere using their mobile, tablets etc.

Who are the major providers and users of Cloud Computing Services?

Companies like Google, Amazon, Microsoft, etc., majorly use cloud computing services in a significant way. However, to use this technology, businesses are required to enter into a proper agreement, so that it can either be regulated or tailored to customers especially when they are using it on a large scale. Cloud computing contracts tend to be standard form contracts with pre-decided terms. Section 10A of the Information Technology Act approved them valid and made them legal. There are certain essential clauses in a Cloud Computing Agreement which businessmen are required to check before entering into the agreement. Clauses like liability, indemnity, termination of contract and many more which we will discuss in the next headings.

Essential Clauses of Cloud Computing Agreements

Commonly, Cloud Computing Agreement is supplied in a closed restricted radius. Therefore, the cloud providers can say that in modifying their service agreement, some users negatively affects their capability in using advantages of cloud computing. Now we shall discuss some essential clauses of Cloud Computing Agreement:


Indemnity is very important depending upon the limitation of liability provision in the agreement. Cloud Service Agreement puts limitations on providers while indemnification to the third party from claiming Intellectual property infringement. Indemnification can be claimed to the type which is arising out on relating to the violation of law, theft, fraud, death etc.

Limits of liability

In the Cloud Service Agreement, the cloud supplier’s risk or liability is mostly limited to coordinated harms and is covered with an aggregate sum for all the claims made under the agreement. Cloud providers generally characterize the obligations as numerous of the month to month charges, by and large running from three to a half years of expenses. While this technique of arriving at the point of confinement is generally acknowledged, the genuine dollar sum ought to be approved by each party in light of the potential harms. What’s more, in spite of the fact that these arrangements tend not to be equal, clients ought to consider whether their risk to the supplier ought to be likewise restricted.

Use of customer data

Cloud Service Agreements commonly put forward specific purposes for which the cloud supplier may utilize client information. For example, the cloud supplier may express that it screens or uses client information “as important to work this administration or some other provider administration” or on the other hand “to secure provider’s privileges” or “so as to improve provider’s items.” Customers ought to cautiously survey and assess whether they are alright with the utilizations, thought about by their planned cloud supplier’s understanding, and consider whether to look for explicit impediments on such uses.


In the present, important implementation services are being provided, therefore, the definition of “services” in a Cloud Computing Agreement should be broadly expressed as to capture all of the services being provided. The users should understand the requirements and facilities of the services which are being provided to check if any extra functions or features are needed. Any work which is required to support such features and functions should be discussed and identified. Usually, a cloud computing offering can have limited configuration and modification option, for e.g., multi-tenant application, and in that order the providers can easily manage the services and can also provide a scalable solution.


A consumer or a customer’s right to terminate normally isn’t thought about in a cloud supplier’s structure understanding, under certain conditions, such assistance might be basic for the client to guarantee business congruity. A termination arrangement would require the cloud supplier to keep playing out its administrations for a predefined time frame and also help with the systematic progress either to the same client or for another business transaction. Customers secure the right to terminate, however, the providers also require a reasonable notice period or an additional payment as a termination charge in exchange for the customer’s termination right. Such arrangements additionally ought to indicate the methods by which the client will recover information, it has put away in the cloud,the time span for the recovery or conveyance, furthermore, the design in which the information will be returned.
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Secure destruction of customer data at Termination

Cloud Service Agreement ordinarily accommodates the return or destruction of the client’s information upon lapse or termination of the services which are provided, as a rule after a predefined time frame and at the appointment of the client. These arrangements are practical concerns associated with recovering data to facilitate the transition to the other cloud service or on restricting the cloud supplier’s commitment to keeping up information for the client after termination. From a data security point of view, and to certain data protection laws with respect to the safe removal of individual data, these terms additionally ought to indicate the safe removal techniques by which information will be demolished.


Generally, a Cloud Computing Service fee is charged by as per the data storage used, for virtual machines per hour and per active user per month. So accordingly, the users have to pay for this. The user must know the price before signing the agreement, therefore, they should fix an amount in the agreement for the time period they would use it. And also, the users should identify all potential revenue streams and also be sure about the fees they will pay are of the same revenue stream for e.g. the user wants additional storage after using some amount of data, they have to pay for it.

Common Cloud Computing Mistakes & How to Avoid Them

The appearance of cloud computing has changed the view and possibilities of the business world. Instead of storing and maintaining a computer in the house, we can access and also can store everything online with the help of cloud computing. But while cloud computing is cost-effective and exhibits a number of benefits for both business and individuals, without taking risk it can’t happen. Admitting these risks is the first step to avoid the potential hazards of cloud-based computing. Four most common cloud computing mistakes are as follows:

Giving too much access

The cloud consists of many applications which can be useful in future. A lot of sensitive information( for e.g. any confidential information of a company) is or may be hosted by it. It is very important that the companies identify their weakness while storing data in the cloud, and also take necessary steps for its protection.

High-level securities are implemented to control access to any sensitive data. With this security, the staff members should only know the secret of the cloud to perform their function which is very necessary.

Unencrypted data

Generally, companies make mistakes by believing that cloud computing is enough to secure the data. But, they are wrong, they must continue to make code of data to secure while using the cloud-based services.

Poor connectivity

We can’t ignore the network connectivity because this can be a highly devastating oversight as cloud access and its usage depends upon internet access. Always be sure that the company is using a good network connection and good provider so that there won’t be loss of productivity or compromise of data.

Choosing the wrong provider

Lastly, when considering cloud providers, be sure to go with one that offers transparency and visibility into the cost of use. Many companies fail to consider the value of complete cloud implementation until it is too late.


Cloud computing is very essential in the modern era as well as in the field of information and communication technology, as it has brought a change in the way of working and made an easy way to someone who was using the objects to store data or files and faced many problems because of the quantity of space where the files or data were stored were very large, and it was not possible to travel with that object. 

Now science has developed its technology through which people can use the object and access it freely. Like earlier a floppy disk which is a large object consisted of only 10 to 12 Mb, but now we have memory cards which have a capacity up to 256 GB and are also very small.

Due to the cloud computing technology, the developer with many ideas about the internet services will not have to expend huge amounts of money for developing software and hardware infrastructure abilities and they could focus on the effective provisioning of utility services. The provisions discussed above are by no means exhaustive, but it offers a starting point for evaluating cloud providers agreements.

Cloud services have reached the maturity phase of growth to the developing economies in the world. Thus, cloud service providers are focusing on developing economies like India for future growth. Many large companies like Microsoft, Google, etc. see a significant increase in the potential of India for cloud services.


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