Software Development​ Agreement

What is a software development contract agreement?

A software development contract agreement is an official document between a client and a software developer that defines terms and conditions under which custom software is created and delivered to the client. This agreement helps both parties manage expectations, reduce risk, and clarify legal obligations.

A software development agreement sets out the rigid legal framework by defining the following essential provisions:

• description of software;
• timeline of provision of services (i.e., key dates and milestones);
• general requirements (e.g., usage of subcontractors);
• protection of intellectual property rights;
• payment terms;
• confidentiality clause; and
• termination clause.

This software development contract agreement could be customized for the development of various software tools, including mobile apps, websites, SaaS platforms, and many more.

An agreement for the development of software is a special type of services contract. Under a services contract, a service provider is engaged in the provision of a specific service to the client, and the client has a payment obligation in return. The software development agreement has two parties—a software developer or a service provider and a client. The client is usually a person or a business that orders the development of software.

Parties to a software development agreement are independent contractors. Therefore, their relationships fall out of the scope of an employment contract.

How to draft a software development agreement template?

Drafting a software development agreement template might be a daunting task. While every software agreement is unique, the presence of certain clauses within the contract is essential for a document to become a legally binding contract.

Below you can find the list of most important clauses every software development agreement should have:

Details of the parties

The text of a contract should clearly define the identities of a client and a software developer. The preamble of a contract should include their names, addresses, and contact details. Either party should include their signature at the end of a contract. Without a signature, a document cannot become a legally binding contract. Moreover, it could not be enforced in a court in the case of a dispute.

It is also common to appoint additional contact persons. Those contact persons are also known as project managers. Usually they remain the first point of contact between the parties to ensure smooth collaboration.

Description of the software

A good software development agreement sample should always include details of software. Software is a final deliverable for the purpose of this contract and therefore should be described precisely:

• type of software (e.g., mobile application, e-commerce site, website);
• name of software;
• technical description and parameters (e.g., a website should be written on WordPress);
• timeline of provision of services;
• other additional information.

The parties should also discuss well in advance the exact scope of services to avoid scope creep and potential conflicts. For instance, some developers agencies may provide design services for software, while others don’t. Therefore, it is crucial to clarify if design services are included in the development or not.

We also recommend discussing the division of intellectual property rights over the created software. The copyright to created software should belong either to the client, to the software developer, or to both.

Technical support

A solid software development agreement sample should define the client’s testing period after the delivery of software. The testing period is a period of time within which the client can test the developed software in order to find out any technical issues.

The testing period could last from a few weeks to a few months, depending on the complexity of the software. If certain technical issues are identified, a software developer is obliged to fix them for free.

Payment terms

A custom software development agreement allows parties to define the exact payment model that suits their needs. A payment could be performed in either of the following ways:

• a fixed fee;
• hourly rate;
• daily rate; or
• weekly rate.

Some software development agreements may prescribe payment of an additional deposit before the date of commencement of services.

Parties should also agree to define the acceptable payment method under the contract (e.g., bank transfer or cash). The coverage of additional expenses should also be outlined in the text of the contract. Additional expenses in the course of software development may include, for instance, usage of paid premium plugins by a developer.

Termination clause

As a rule of thumb, a contract agreement for software development ends upon the development of software and its delivery to the client. At the same time, it is possible for each party to terminate a contract earlier. A software development agreement could be terminated before its natural end in either of the following situations:

• a client fails to pay for rendered services;
• a software developer misses important deadlines or key dates;
• either party commits a material breach; or
• either party goes into bankruptcy.

An early termination of a contract is possible by sending a prior written notice from one party to the other.

Confidentiality clause

In the course of a software development agreement, both parties are exposed to sensitive information about each other’s business. In order to protect such sensitive information from disclosure, parties add a confidentiality clause.

A contract agreement for software development obliges both parties to maintain strict confidentiality during the whole term of collaboration. Once the contract ends, the parties should maintain confidentiality for a certain period of time—from a few months to a few years. The exact duration should be defined by the parties themselves.

How to customize a software development agreement at FasterDraft?

In order to tailor a software development agreement template to your needs, follow a few easy steps below:

1. Click the button “Create Document.”
2. Answer questions in the questionnaire.
3. Select a document’s format—software development agreement PDF or Word
4. Make a payment.
5. Download a customized document.