Software Development Agreement

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Updated Sep 7, 2023
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A software developer agreement is a legal document that specifies the software services to be performed or delivered, stating all the main requirements, terms and conditions of the project being developed by the vendor for you as a client. Download this legal form in PDF or Word format and create a concise legal document for your business needs.
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Template Description

Paper titled "Software Development Agreement", man sitting at the computer and coding

Today, the majority of individuals depend on the use of various forms of software to facilitate their everyday duties, hobbies, or professional jobs. So, what exactly are the legal requirements to design software for a client? Where should you establish the terms and conditions for your work? 

This is where a software development agreement can be a useful tool. You should create a software development agreement sample when you're a business proprietor or an IT department professional, and you want to enter into an agreement with a reputable developer to assist with the needs of your business. 

Here at Lawrina, we have a custom software development contract and available for you to download. Create a brief legal document for your company's needs by downloading this legal form in PDF or Word format and filling in your desired information and terms.

What Is a Software Development Agreement?

A software development agreement is a contract that outlines the specific terms and conditions of a software development project agreed upon by both parties –– the hiring company and the software developer. 

The project's outcomes and objectives should be specified in the software development services contract, along with the roles and obligations of every party. The basic terms and conditions should be fairly equitable but can be changed to favor the developer's or the client's interests as needed. 

Parties of the Software Development Agreement

An app development contract establishes a legal contract between two parties: a software developer and a business client. 

  • The Client, the one sourcing the software development project, can be a single person or an organization. In the software development services contract, the client outlines and specifies what the software developer will be required to do, what project objectives the developer should accomplish, the project’s deadline, and the developer’s fees.
  • The Developer, a professional who agrees to work on the client’s software development project, can be a freelancer or an entity. Working in accordance with the software development agreement, the developer accomplishes all the development project objectives by the client’s stipulated deadline. In exchange, the developer charges a development service fee, upon successful negotiation with the client and reflected in the software development agreement. 

Key Terms

  • Fully Comprehensive Work Plan –– Since the freelance software developer contract sample outlines when the software development team must complete a certain amount of work, a comprehensive work plan must be given.
  • Payment Conditions –– Payment conditions should be clearly specified in your website development agreement template. Setting payment schedules and thresholds guarantees that you won't have to wait to be paid for your services. 
  • Ownership/Rights to Intellectual Property –– Intellectual property rights to the software being developed can be difficult to navigate in your contract. Courts may automatically assume that the developer owns and controls the intellectual property rights in the software unless the contract states otherwise. You will need to consider who will retain rights to the software once it is completed and specify your decision in the agreement.  
  • Use of OSS or Open-Source Software –– The majority of developers frequently use open-source software when creating new software.  Parties should agree in advance on a comprehensive list of libraries or programs required to create the software, and this list should be specified in your contract. 
  • Guarantee & Indemnification –– This provision is a standard component of most legal agreements. In the software development agreement, the developer and the client must reach an understanding of warranties and indemnity to divide risks in case anything goes wrong. 
  • Terms of Confidentiality –– Tight confidentiality requirements are necessary to protect the client's private information, since the programmer likely needs the client’s data or information to construct the software. 
  • Testing –– The software development contract must include the necessary testing processes to ensure the software is working appropriately. In particular software development methods, testing is a distinct phase of development.
  • Termination Terms –– This section of the software development agreement should define terms in the event that one or both parties desire to end the contract. It should also describe the process for terminating the agreement, what will occur with regards to any outstanding debts, and any clauses that may continue to impose obligations after the termination date.

Types of Software Development Contracts

Software development contracts can vary greatly depending on the needs of a business. They typically fall into one of three categories: fixed-fee, time-and-materials, or dedicated team. Each variety has advantages and disadvantages, making it crucial to select the best one for your project. The following details can help you decide which type of agreement works best for your needs: 

Fixed-Fee Contract

A fixed-fee software development agreement commits the developer to finish the software development task for a set sum of money. Clients with a set budget who want to know in advance how much they will need to spend may find this software development contract useful.

Time-and-Materials Agreement

Under a time-and-materials software development agreement, the developer is compensated for both the time they devote to working on the task and any resources they pay for and utilize in that process. Time-and-material agreements work best for complicated projects with ambiguous scopes, since they allow developers to bill clients according to hours worked and materials used. 

Dedicated Team Agreement

A dedicated team software development agreement template requires  the developer to provide a group of developers who will work as a team solely on a client’s  project. A dedicated team software development contract is ideal for clients who require a large amount of involvement with and authority over the development phase, or who need to ensure that the software project is completed on schedule.

What Is Included in a Software Development Contract Template?

A software development contract template is a formal agreement that spells out the specifications of a software development project. It usually covers the scope of the task, the budget, the schedule, the ownership of any intellectual property, and the terms of payment. The free software development contract template typically includes the following important aspects: 

Project Scope

This part of the software development contract template needs to be explicit about the expected features and capabilities of the program, as well as the overall range of work that will be done on the project. Typically, it includes the project’s timetable, software and hardware prerequisites, and the necessary capabilities and operations of the software. Before the development project starts, the software developer and the client must come to an agreement on the project's scope and record it in the contract. This will lessen the likelihood of future confusion or disputes. 

Payment Terms

This part of any software development agreement sample must specify how the developer will receive payment in exchange for their services. The payment process provision should include the payment schedule, overall expected project cost, and any additional fees that may accrue throughout the development process. A final payment, progress payments, and down payments, are all included in payment terms, if applicable. Both the developer and the client should value the payment term, since it ensures that all financial obligations of both parties are clear. 

Schedule

This segment of the software service agreement must outline a timetable for finishing the task, including significant checkpoints throughout the process and any applicable due dates. A software development agreement template's schedule of work lists the dates by which multiple development objectives are to be accomplished. This makes it more likely that both parties will be working towards the same goals within the same timeframe and that the undertaking will be finished on schedule and within the stated budget. 

How To Write a Contract for Software Development

A software development contract agreement is a legal contract established between a client and a software developer that is generally enforceable in court. It describes the parameters of the task, the budget, the schedule, and each party's obligations. In the unlikely scenario of any disagreements, a comprehensive software development agreement can assist in defending both parties. 

Although our software development contract template saves you the hassle of outlining an agreement from scratch, it is in the best interest of both parties to understand all the provisions included: 

1. Developer's Duties

The developer’s obligations should be specified in the software development contract agreement. These often include responsibilities beyond simply completing a project. In accordance with the requirements of your agreement, the developer will likely be obligated to create, test, and hand over the software, as well as provide any required documentation and support. The parameters of the agreement will determine the developer's precise responsibilities, so it is crucial to read the contract completely before signing it. 

2. Client's Responsibilities

It is the client’s responsibility in the software development contract agreement to provide a thorough breakdown of the tasks to be completed by the developer. This should include the scope of work for the software development project, as well as any third-party resources required for the project.‍ The client must also clearly outline all payment information in the software development contract.

3. The Product Timeline and Budget

Every software development contract must have a clear schedule for submission of work, approval goals, project start dates, and, if the agreement is for a single project, the date of final delivery. If your software development agreement continues beyond one project, you should specify the length of the developer's and the company's written notices. Normally, this notice period lasts for two weeks to one month. 

4. Termination

Although termination can be a difficult subject to negotiate, termination clauses must be included in any software development contract. This clause will govern how either or both parties can go about terminating the software development agreement if circumstances change. With this in mind, it’s crucial to include contract termination terms and conditions that both parties agree to.

5. Confidentiality

When it comes to a software development agreement, confidentiality terms are of the utmost importance. It is highly likely that the developer will have access to the client’s private data. The agreement must guarantee that the developer won't divulge that information and endanger the client’s assets or reputation. 

6. Intellectual Property Rights

Even if your software is not new, developers you hire still apply various techniques to improve the user experience and efficiency of a high-quality product. Therefore, their contribution to your “order” must be legally protected from third parties.

There are many cases when a third party claims that the developer you hired did not originate the improved software design but used a process owned by the third party. They may even sue you and your company for infringement of their intellectual property. You should consult with your intellectual property (IP) lawyer before and at the end of the software development process to ensure you and your own intellectual property rights are protected.

7. Post-Production Maintenance & Services

The software development services contract should also outline and clarify the scope of any post-production maintenance and services (which take place after the completion and deployment of the software). 

With a free software development contract template, you can find examples of the following clauses:

  • The kinds of services to be offered; 

  • How frequently services should be delivered;

  • The extent of the assistance that will be given; 

  • How long the post-production maintenance and services period will last;

  • How much these services will cost.

When To Use a Software Development Agreement

Using a software development contract template is necessary when you choose to employ a third-party software developer to create and deploy unique software solutions for your company. A software developer contract will ensure that both parties agree on the project's specifications, budget, and schedule. Additionally, it will protect you if any issues or disagreements arise. Use of a software development contract is an absolute necessity in the following circumstances: 

  • When hiring an outside software developer:
  • To design specialized software for your company;

  • To upgrade or enhance current software;

  • To provide continuous maintenance for your program.

Common Use Cases

The following table outlines a few common use cases of a software development contract: 

  1. Customized Software Development: When an organization or company requires customized software development, they tend to sign a software development agreement with a third-party provider that can develop the necessary software for them.
  2. Software Upkeep & Support: When a business or organization wants its software updated or endorsed, it will enter into  an agreement with a software development firm to provide those services.

When Not To Use the Software Development Agreement

There are some circumstances when one need not use a software development agreement: 

  • If someone already employed by your business has the ability to design the software; and
  • When you’re working on a small, simple, and easy-to-complete software development project.

Legal Disclaimer

Please note that Lawrina does not provide any legal services. The information on Lawrina’s Site and its downloadable content, including legal articles and templates, shall not be considered legal advice and is not guaranteed to be correct, complete, and up-to-date. If you require legal advice on your issue, we recommend you contact a qualified attorney licensed in your state. You personally assume full responsibility for any consequences, damages, and costs associated with your use of any content of Lawrina Services available on Lawrina’s Site. 

By using Lawrina’s Site you agree with mentioned above and give your irrevocable consent to comply with and to be bound by the provisions of Lawrina Service terms. 

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Frequently Asked Questions

Can I still contact my developers or vendors regarding the product after we finish our agreement?

The conditions of the software development agreement will determine whether you can continue to contact your programmers or vendors about the product after it has been completed. A support and maintenance clause, which specifies the developer's obligations after the product is delivered, is frequently included in software developer agreements. 

Can I agree on a contract for software development with a freelance IT specialist?

Yes, you and a freelance IT professional can negotiate a software development contract. You may safeguard your interests and guarantee the effective completion of the software development project by using a software development agreement template to establish a legal agreement with the freelance IT specialist. 

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