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.
The conclusion of a software development contract at the start of interaction between the customer and the developer can protect against many risks and guarantee the desired result in the future
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What is a software development agreement?
Typically, a software development agreement is a contract between a customer who needs to develop some platform, application or software and a contractor (IT specialist) who specializes in providing such services.
Software development agreement is a main document that regulates relationships between the client (customer) and developer (contractor).
How do you write a software agreement?
When concluding a software development services agreement, special attention should be paid to:
- subject of the agreement for software development – 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 for software development services agreement, 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 agreement for software development 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.
How software contracts are developed?
Firstly, you should precisely explain to your lawyers the details of the future software development and what deliverables are going to be developed. You should start the preparation of the IT development agreement only after your lawyers will fully understand you algorithm of cooperation with client/developer.
Secondly, you should review the prepared IT development agreement with your lawyers. Regardless the fact you are not a person who drafted the document, you should understand all the provision it contains, all strong and weak points included in the agreement and pitfalls it provides. This will allow you to conduct effective negotiations with the counterparty.
Thirdly, software development agreement is always a subject to negotiations. You should explain your counterparty the essence of the agreement: it is always different, e.g. software application development agreement will have different essential points than website development agreement. Sometimes, you may vacate some minor clauses to speed-up the conclusion of the agreement.
Software development agreement template – why it is a bad idea?
Software development agreed template will not contain the customized provisions you need as it is a template. If you do not have a customized provision in your agreement, there is a risk that your oral agreements will differ from the ones specified in the document.
For example, a template of a simple software development agreement will badly fit if you are going to conclude a software application development agreement as the latter has lots of specific provisions inside. Thus, it is highly unrecompensed to software development agreed templates.
How can we help?
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.
VigoLex team knows all the legal details of software development, therefore, is ready to help the customer and the developer to correctly settle the relations and achieve the desired result.
The VigoLex team has many years of experience and unique knowledge in IT law, online and offline gambling, as well as other high-risk business and e-commerce areas.
We do not have conventional solutions and traditional approaches, whereas every task is considered comprehensively with all traps and pitfalls.
We are not afraid of changes and new challenges. We are ready to improve and adjust in accrodance to the time-being requirements and client’s needs.
We understand that our client is interested not in the process but in the result. The result of the client is our reputation.
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A software development contract is concluded in a situation when one party – the customer (usually a client company or an outsourcing/outstaff company) hires a developer or a group of developers to perform tasks.
There may be different variations of a software development contract – it all depends on the specifics of the services provision in your situation. For example, the contracts for the development of an iOS application and for the development of a website will differ significantly.
There is one major risk – there will be no legally binding document that would record your agreements with the client/the developer.
As a result, the process of proving one’s innocence in the event of a possible dispute or disagreement either becomes very complicated or becomes impossible.
Hence – the risks of unfulfilled tasks, loss or non-receipt of payment, abuse by the counterparty, etc.
In the IT sphere, the procedure for pre-trial settlement of a dispute works quite effectively – a written claim is sent to the violator with the argumentation of the client’s position, which is supported by the references to the current legislation and the contract terms.
If it is impossible to resolve the conflict through negotiations and correspondence, the dispute must be resolved by going to court or arbitration. In each of these options, a well-drafted contract is the key to the success of the entire process.