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4 Keys To Successful Software Development Agreements

software development agreementsWhether you are a software developer, or your business outsources app development, you’ll need software development agreements to protect your legal interests. Many business owners think they can simply copy and paste agreements they find online, but this is a recipe for disaster.

Why is it risky to “borrow” a Software Development Agreement Template?

Borrowing an agreement drafted by and for another company can lead to serious legal repercussions. App development contracts are considered intellectual property and can only be used under license from the copyright owner (usually the lawyer or firm who drafted the contract). If you have not paid for the right to use the agreement (or worse, if the legal form generator you are using doesn’t explicitly own the forms), you could face hundreds of thousands in legal damages.

Also, legal agreements are unique and will vary depending on your (and the other party’s) needs. Even if you download a template with legal permission, you could unintentionally omit clauses which you require or subject yourself to unnecessary obligations.

There are four essential things you should know before creating a software development contract:

  1. the standard items you need to include in your agreement;
  2. how to handle ownership of intellectual property;
  3. when you’ll need additional contracts; and
  4. how you will handle maintenance of the app after development.

1. Standard Items You Must Include in Your Software Development Contract

While your contract should be tailored to your unique situation, there are some common issues you’ll want to address in any Software Development Agreement. Be sure to discuss the scope of work you will be performing for the agreed-upon cost and how you will handle change orders. You also want to outline key milestones and deliverables.

If the client is not satisfied with a deliverable, will you agree to any edits? If so, describe how much time your client has to request a change and how many changes you will make.

If you plan on outsourcing work to third-party coders or programmers, make that clear in your contract.

Also, detail payment expectations and any warranties you are willing to provide for your client.

2. Intellectual Property Ownership: How to Balance Competing Interests

One of the most important aspects of your contract will be defining ownership of the intellectual property you are creating. Consider whether you or the client will maintain ownership rights or if you will be granting a license to use your software.

Software developers often want to keep ownership of the code used to create a client’s software so they can recycle the code for future projects. Clients, on the other hand, often want to own the intellectual property subject to a software development agreement to prevent the developer from re-selling the software to potential competitors.

Fortunately, there are creative ways to balance these two competing interests by creating a software license with non-competition provisions. This enables the developer to retain ownership over intellectual property while also restricting the purposes for which the code can be recycled.

3. If You Are Developing Multiple Apps for a Client, You Need a Master Service Agreement

A Software Development Contract is typically utilized for a single project only. However, if you are anticipating an ongoing relationship and multiple projects for a single client you will also want to execute a Master Services Agreement.

This Agreement should outline the essential terms that apply to all apps being developed and additional agreements for each project should be attached as “work orders.”

Related Article: How To Modify A Software Development Agreement

With each work order, you can reference the key terms used in the Master Agreement or you can make exceptions to certain provisions based on the unique needs of each project.

4. You Need to Plan for Maintenance, Support, and Upgrades

Virtually any form of software application will require bug fixes and upgrades to keep the program up-to-date and functioning properly. A well-written software development agreement will detail who is responsible for maintenance of the application, additional costs involved (if any), and how to request support for bugs and glitches.

Developers who maintain ownership over the intellectual property and merely license the software to the client often take responsibility for ongoing maintenance, support, and upgrades: but it is imperative that these details are clearly outlined in your contract. Ironing out all of the details of your agreement will go a long way toward preventing disputes, ensuring a good working relationship, and keeping clients satisfied.

Software development agreements are highly detailed, unique legal documents. It is wise to seek the counsel of an experienced software attorney to prepare development contract templates that you can use repeatedly while still protecting your best interests.

Our software attorneys prepare app development agreements on a flat fee basis. To learn more, check out our Software Development Legal Protection Package.

Mike Young, Esq.

Author Mike Young, Esq.

Mike Young has been practicing business and technology law since 1994 and is an angel investor in startups. He's been an entrepreneur since 1988. To get legal help from Attorney Young, click here now or call 214-546-4247 to schedule a phone consultation.

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