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Software Development Agreement

A software development agreement is a contract that defines the terms, conditions, and expectations for the development services provided, including scope, timelines, payment, and intellectual property rights.

BLUF (Bottom Line Up Front)

It's crucial that your Software Development Agreement clearly articulates the following:


  1. Deliverables

  2. Price

  3. Timeline


Disputes are most likely to arise where the parties disagree on one of those three points. So here's how to get them right:


  • Draft a detailed Statement of Work that covers the expected deliverables, along with applicable requirements and specifications. Additionally, if there's something not covered in the SOW, then the SOW should state that. For example, developing a "Basic" chatbot for an application should state that it does not include an "Advanced" chatbot that utilizes artificial intelligence. 

  • Tie pricing to the specific deliverables to the maximum extent. When that's not feasible, such as hourly engagements or Agile development, break the pricing down into smaller increments, such as weekly hours or attaining certain milestones.

  • Include estimated delivery dates, along with determined review periods and acceptance criteria. This helps to say, "Everyone is good with what we have done so far; now let's keep going." 

  • Draft express change control procedures and accurately document all changes to the original scope. Additionally, ensure that you can clearly evidence acceptance of any changes by both parties.

Software Development Agreement
  • 3 day money back guarantee
  • Includes detailed instructions
  • Option to add attorney review later
Attorney Review - $350
  • Detailed attorney review + feedback

Sample

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Software Development Agreement

What is it 

A software development agreement is a legally binding contract between a client and a software development service provider. It outlines the terms and conditions under which the development services will be provided, including the scope of work, deliverables, timelines, payment terms, intellectual property rights, confidentiality, warranties, and dispute resolution mechanisms. The agreement ensures that both parties have a clear understanding of their roles, responsibilities, and expectations, helping to prevent misunderstandings and legal disputes during and after the development process.

Why is it important

Software Development Agreements are important because they provide a clear framework for the collaboration between a client and a software developer, helping to prevent misunderstandings and disputes. These agreements define the scope of work, deliverables, timelines, payment terms, intellectual property rights, and confidentiality obligations, ensuring that both parties have a shared understanding of their roles and responsibilities. By addressing key issues upfront, the agreement protects both parties' interests, sets expectations, and provides a legal basis for resolving any conflicts that may arise during the project. This clarity is essential for the successful completion of software development projects, where technical and creative aspects can often lead to complex challenges.

When is it needed

Software Development Agreements are needed whenever a client hires a developer or development team to create, modify, or maintain software. These agreements are essential in situations where: 


  1. Custom Software Development: When a company or individual commissions custom software tailored to specific business needs or requirements. 

  2. Outsourcing Development: When a company outsources development work to an external vendor, agency, or freelance developer. 

  3. Collaborative Projects: When multiple parties collaborate on a software development project, such as joint ventures or partnerships. 

  4. Large or Complex Projects: When the project involves significant complexity, multiple phases, or a long-term timeline, requiring clear guidelines on deliverables, timelines, and responsibilities. 

  5. Intellectual Property Concerns: When the ownership of the software and associated intellectual property rights needs to be clearly defined and protected. 

  6. Risk Management: When there are potential risks, such as project delays, scope changes, or quality concerns, that need to be managed through detailed contractual terms.

  7. Regulatory or Compliance Requirements: When the development must comply with specific industry standards, regulations, or data protection laws, and these requirements need to be documented and enforced. 


In these and similar scenarios, a Software Development Agreement provides a legal framework that clarifies expectations, protects both parties' interests, and helps ensure the successful completion of the project.

Key Provisions

A Software Development Agreement typically contains several key provisions that are essential for defining the rights, responsibilities, and expectations of both the client and the developer. The most important provisions include: 


  1. Scope of Work (SOW): Clearly defines the specific tasks, deliverables, and milestones that the developer is expected to complete. This section often includes detailed specifications, timelines, and objectives to avoid misunderstandings. 

  2. Payment Terms: Outlines the payment structure, including the total cost, payment schedule (e.g., upfront, milestone-based, or upon completion), and any additional costs or expenses. It also specifies terms for late payments and the consequences of non-payment. 

  3. Intellectual Property Rights: Specifies the ownership of the software and any associated intellectual property (IP). Typically, this section clarifies whether the client will own the final product or if the developer retains certain rights, and it may address any licensing of pre-existing code (background IP). 

  4. Confidentiality and Non-Disclosure: Ensures that both parties agree to keep any sensitive or proprietary information shared during the development process confidential. This provision protects trade secrets, business strategies, and other confidential information. 

  5. Warranties and Representations: Details the warranties provided by the developer, such as the software being free from defects or not infringing on third-party IP rights. It may also include a warranty that the software will perform as specified. 

  6. Acceptance Criteria and Testing: Defines the process for reviewing and accepting the completed work, including the criteria that the software must meet and any testing phases required before final approval. 

  7. Change Management: Outlines how changes to the project scope, timeline, or budget will be handled. This provision typically includes a process for submitting, approving, and pricing change requests. 

  8. Termination Clause: Specifies the conditions under which the agreement can be terminated by either party, including termination for cause (e.g., breach of contract) and termination for convenience. It also addresses the consequences of termination, such as payment for work completed up to the termination date. 

  9. Liability and Indemnification: Limits the liability of both parties and outlines indemnification provisions, which protect each party from legal claims arising from the other party's actions or omissions. 

  10. Dispute Resolution: Establishes the process for resolving disputes, such as through mediation, arbitration, or litigation. It may also specify the governing law and jurisdiction. 

  11. Support and Maintenance: If applicable, this provision outlines the terms for ongoing support, maintenance, and updates after the software is delivered, including the duration, scope, and any associated costs. 

  12. Force Majeure: Addresses circumstances beyond either party's control (e.g., natural disasters, pandemics) that could delay or prevent the fulfillment of contractual obligations, and how such events will be handled. 


These provisions are crucial for setting clear expectations, protecting both parties' interests, and ensuring a smooth development process.

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