For a free account this might well work.
For a paid account, a unilateral-termination right, if not worded properly, could kill all the legal protections of the terms of service by turning the TOS into an "illusory contract." [1] The SaaS provider could lose its limitations of liability, choice-of-law and choice-of-forum clause, arbitration provision, etc.
A better approach might be to provide that the SaaS provider can temporarily suspend the account for good reason, and perhaps enumerate some example reasons. That could be coupled with a termination for cause clause (with termination following notice and an opportunity to cure except in egregious cases).
Usual disclaimer: I'm not your lawyer, this isn't legal advice, YMMV, small differences in fact can make big differences in outcome, check with your own lawyer before making decisions, etc., etc.
[1] http://en.wikipedia.org/wiki/Illusory_promise. For more information and citations, see http://www.oncontracts.com/using-wordpress-coms-terms-of-ser... (self-cite).
That sounds right --- the key difference is the refund, which wasn't mentioned in Patrick's original post.
If termination is for cause, you might not have to give a refund (although it'd look better to outsiders, and thus be more defensible in court, if you did give a refund).
How do you word this correctly to still be able to terminate whenever you want?
(I know one should speak to a lawyer, and I'm not running a SaaS business, I'm just curious of the generics)
Of course, conversely, as the person receiving service, you absolutely want the provider to have binding obligations -- and "we can cancel this at any time for any reason or no reason with no obligation to give you anything, including your data, afterwards" isn't what you want from a service you are relying on in any kind of business use.
> As a separate matter: if these clauses discomfit you, speak to enterprise sales.
Or just don't use the service that offers them. The reason services use boilerplate like this isn't that its essential, its that the perceived cost/benefit ratio warrants it because most people don't read TOS and don't change behavior based on them.
Data retention is a separate issue, but I can envision reasons why I'd want to reserve a maximally "We don't owe it to you" clause, as a SaaS operator. (Slack, for example, allows arbitrary file uploads. This is a high risk feature, for a lot of reasons, data security, copyright compliance, and explosive reputational risk being only three of them.)
As a separate matter: if these clauses discomfit you, speak to enterprise sales. For $10,000+ you can negotiate better ones. If you do not wish to pay $10,000+, that's fine, but you don't get custom legal language.