Software development agreement

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.