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What Should I Look For in My Software Development Agreement?

If you want to have software developed for your business, you need to form a business contract that specifies the wants and needs of your business. It’s an essential tool to help clarify and realize the development process. It gives businesses and developers common legal ground to negotiate their transaction without worrying about theft or wasting their time. As a client, you have to have a firm grasp of what the agreement has to contain. Here are some of the most important examples of clauses that should be featured in your agreement.


Any kind of software agreement should include a warranty. The end product has to be a piece of software that matches the specifications that were given by the client. Determining the functionality of software differs from checking a physical product. Defects are subtle and may take a while to manifest themselves during the usage of the software. Because of this, the warranty has to include a clause that puts the burden of repairs on the programmer. These repairs have to be enacted without compensation and in a timely manner.

The agreement has to explicitly mention this type of warranty. Consumer laws protect the client, but only if the total costs of development are under forty thousand dollars. Because of this, it’s imperative that the contract contains the full warranty agreement.

Intellectual property transfer

As the creator, the software developer gets automatic rights to the software that they created. Your agreement should specify that the rights to the product are transferred to you once it is completed. This ensures that you can license and use the software as you see fit.

If the software developer is using your own tools to create the software, you have to include a warranty in the agreement that licenses these tools back to you.

The process of creating programs often includes the use of tools such as open source software. These are free for use by anyone for any kind of project. For legal reasons, the agreement should state which software was used in its design and provide proof of its status as free for use.

Time and cost guarantees

The agreement must specify the timeframe within which the project must be complete. The cost of creating the software might vary depending on how long the creation process took. Longer software development leads to a better product, but it also leads to higher costs.

The contract should contain a degree of certainty in regards to the length of the development process, but also how much it will cost. Some contracts will only contain guidelines, while others may have a strict schedule. Depending on your needs, you can choose either for your project.


During the process of creating the software, the developer might have to use some assets of your business. This means that they will have access to confidential business material and networks. It’s crucial that you protect the businesses’ most sensitive assets, lest they get into the wrong hands. For this, you can add a confidentiality clause in your agreement. This obligates the developer to keep your business materials secret.

Businesses take sensitive information confidentiality very seriously. They often task legal experts in the field of software development Stevensen Business IT Lawyers with drafting a contract for the project. Breaches in confidentiality constitute serious legal offences and it's good to have a rock-solid contract before you move forward with the development process.


No business contract is complete without a termination clause. Termination is the process of ending the agreement before the developer is able to complete the task. The clause itself should contain three important elements. The parties that are allowed to terminate the contract should be specified. The circumstances of the termination have to be laid out in a precise manner. Last, but not least, the method of communicating the termination must be specified.

Businesses have to make sure they aren't paying for services that weren't provided. Fees that were paid in advance for work that was not completed have to be refunded, as per the contract. Current progress with the software has to be transferred to the business so that they are able to find other developers to finish it.


Software development is a complex process. It requires a substantial amount of time and funds for the investment, but the end result is well worth it. If your contract contains all of these elements, you won’t run into any problems that could jeopardize your business.

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