Software development agreement

The creation of IT products is a rather complicated process and requires not only technical accuracy but also legally competent regulation of legal relations between the customer and the developer. Without a clear understanding of the rights and obligations of the parties, the established procedure for payment and the transfer of intellectual property rights to the software, even the most interesting and promising projects may be at risk. In addition, at this stage, the help of qualified lawyers is necessary.

What should be indicated in the contract?

When concluding a software development contract, special attention should be paid to:

• subject of the contract – a condition on the type of work to be performed, as well as its result – software, in which the customer is interested. In the context of the formulation of the subject of the contract and terms of reference, there are two models of interaction between the customer and the developer:

– Agile – the development process is divided into stages that can take place simultaneously, which makes it possible to immediately find disadvantages in the product and

– Waterfall – the development process is divided into stages that go one after the other (like a waterfall), and all the disadvantages of the product are obvious already at the testing stage;

• period of execution;
• payment model – depending on the project, either a fixed-priced contract or a time-and-materials pricing for complex orders, when it is almost impossible to determine the final price, can be applied.
• payment method – payment after handing over of the product, full/partial prepayment.
• the transfer of exclusive property rights to the created intellectual property is a very important issue, because the developer is the author of the software, and the copyright arises from the moment the program is created. VigoLex will consult you about what conditions must be indicated in the contract for the transfer of property rights to the software to be as correct and accurate as possible.
• procedure for transferring software and rights thereof – the contract should determine the method of transferring the software product. The fact of the transfer is confirmed by the Acceptance and Transfer Certificate (Act), which must contain a list of the work performed, provisions on the transfer of the created intellectual property object and exclusive property rights to it, an indication of the presence/absence of claims from the customer;
• place of storing the code – it is necessary to indicate where the code will be stored during development to avoid a situation when the customer receives the finished product and does not pay pursuant the contract.
• confidentiality – provisions on non-disclosure of confidential information or trade secrets should be included in the agreement;
• applicable law – (if the parties are residents of different countries) the law that should regulate the relations between the customer and the developer;
• resolution of disputes – through negotiations, in court, arbitration.

The software development agreement cannot be ignored in any case. As practice shows, even the most trusting relations between a customer and a developer do not guarantee a conscientious, timely, and high-quality fulfillment of obligations if the “rules” are not set contractually.