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Here’s Why You Need a Good Software Development Contract

If you’re in the software or IT business, you need a thorough, carefully constructed software development contract. This contract should protect you and your business. It exists to give you legal backing in case of any disputes.

Businesses rely on software development for everything. Software has taken over many areas of business like running internal administrative tasks, marketing, business development, and customer service. Companies use apps, social media, web sites and more to stay on top of fast-moving trends.

Protect Yourself and Your Business

Be on strong footing as a trusted resource. You’ll be developing the software your clients need to drive their businesses forward.

There are also some downfalls. If you don’t carefully protect your rights, you could find yourself in a costly, time-draining legal dispute.

Don’t let worries about these problems keep you from focusing on what you do best. Let us do the work. Our firm can draft a software development contract that creates a positive experience for you and your clients.

Your Software Development Contract Is Your Safety Net

A contract clearly answers the questions that come up during a software development project. A contract is your best protection against inevitable conflicts over things like:

  • Intellectual property rights. Who keeps the software, the code, and background technology?
  • Work phases. How do you determine how much work should be completed at each stage of the project?
  • Payment. What payment terms are agreeable to both parties?
  • Copyrighted material. Who owns the copyrighted material that goes into software development?
  • Specifications. This is one of the most important parts of the contract. Well-written specifications lay out exactly what the finished product will be.

If these elements are not spelled out in the contract, then you could end up with a host of problems, including:

  • Unhappy clients.
  • Clients who withhold payments.
  • Hours, weeks or months of lost work.
  • Dissatisfied subcontractors who won’t work with you again.
  • Time-consuming and expensive legal battles.

You can avoid all of that with a software development contract. A strong contract lets you run your project as you see fit, not the way you’re told to by a client. Give yourself the upper hand.

How to Create a Strong Software Development Contract

Experienced legal help is your best resource for thorough legal protection. You should work with a law firm that has experience creating software development contracts. Since many software contracts cross geographical borders, you should find one with relevant international experience

Our firm has developed contracts for several local and international software and IT companies. Software development contracts has helped many of our clients, such as Web Design Sun. They have ensured that the software developer and the client are on the same page about development services, timelines, and payments.

A Good Contract Is Flexible

You don’t need to develop a new contract for each client. If you create one strong document, you can adapt it to each client’s needs and specifications. Using the same contract gives you consistency across projects and protects you and your company from the same issues in every situation.

Key Points That Every Software Development Contract Should Address

Development Specifications

Specifications are a key part of any software development contract.

Your contract should spell out what the final product will look like, how it will work and what the client can expect when using it.

Your contract should define:

  • A “functional specification” describing how the software works in nontechnical terms.
  • Your own detailed, technical specifications.
  • What the client can expect to receive on completion.
  • Any training the client or their staff will need to use the software.
  • Whether you will include manuals or other written guides.

Work Phases

Work phases set a schedule for the project. They work like a roadmap of where the contract is going and the stops it will make along the way.

Every good project should have a carefully defined calendar. Specific dates should be stated to determine when each phase is complete.

Defining each stage helps you and your client determine if the process efficient. It also lets your client make changes before the project is finished.

The section on work phases should also define how many changes the client can make, when and how acceptance testing will take place, whether there will be an additional payment for changes, and what constitutes the completion of a phase.

Intellectual Property Ownership

The details of intellectual property rights can make or break your relationship with your client.

If you are writing new code or using the code you’ve already developed, do you give up ownership of that code?

Many developers and IT professionals have found that clients are claiming ownership of codes and other background information that was never supposed to be given up. Protect your hard work and your intellectual capital with a contract.

Copyright Ownership

Copyrights present many potential pitfalls. They’re also the primary reason for contract disputes in software development. Your contract should answer these questions:

  • Are you retaining ownership of the software you develop?
  • Are you transferring ownership?
  • Is the client using the software under a license?
  • Will you be using open-source software?
  • Are you working out some combination of the above?

You also need a clear definition of  the materials given to you by the company. The company may requests that you incorporate certain logos, trademarks or slogans into a design. You need to make sure that they own the copyrights to these materials. The use of intellectual property must be legal.


Your contract should include a schedule of payments, detailing:

  • The date that each payment must be made.
  • How payments will be made.
  • Additional fees that may be charged.
  • Total estimated cost.


As a developer, you should limit your warranty to what is laid out in the specifications. You should include a time period in which you will make any repairs or upgrades to the software.


Business is global. Projects often cross geographical lines. You need to make sure that a contract signed in one country is valid in another. Choose a law firm with experience in international contract negotiations.

Confidentiality and Noncompete Clauses

A good confidentiality clause protects both parties on a work project. In this part of the contract, you both agree not to share confidential information. You also agree not to solicit business or lure employees away from each other.

Dispute Resolution

What happens if negotiations break down? A dispute resolution clause outlines the steps to take if you do end up in a legal battle. In most cases, it will first suggest mediation. Don’t agree to a clause that makes you give up your right to take legal action.

Don’t Leave Home Without a Strong Software Development Contract

An old advertisement for American Express used to advise travelers, “Don’t leave home without it.” We advise that you never begin a software development project empty handed. Never show up without a good contract.

Our firm has the knowledge and experience to help you prepare a software development contract. One that will safeguard your business and your intellectual property rights. Before you start your next project, contact us.

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