Software development agreement: explained

A software development agreement is a contract made between two parties, the developer on one side, and the client on the other. The agreement focuses on the developer creating a piece of software for the client. Now, these agreements vary in complexity and severity, all depending on the client and on the developer. Besides the actual description and intended usage of the product, there are factors that govern other important areas of this contract.

Namely, there are certain key factors that can be found in most, if not all agreements. These serve as roadmaps that are there to prevent any disputes from coming about. They are there to keep the entire agreement fair and to keep the parties equal. You can read about them in detail below.

Milestones and the development process

The first thing that needs to be regulated, besides the description of the software, are milestones and general communication. Setting up milestones that need to tracked and followed is an important part of these agreements. This serves as a way to show the client how the work is progressing, and can give him some insight into what is happening with the entire project.

The client is most often a layman in this field, which is why choosing a good lawyer is even more important for these kinds of agreements. Milestones are there to fill the client with a sense of security. The development process section should outline how much input a client can have, and how the presentation and provision of said input will look like.

Intellectual property

A big part of these agreements are sections dedicated to intellectual property ownership. Namely, this determines who is the real owner of the source code, on which the software is based on. It also regulates how and when the software can be copied (if at all) and who can own said copies. Intellectual property rights also include other materials that may be part of the software including, but not limited to, manuals and instruction books.

Ownership of the software is one of the more vital aspects of these agreements. If needed, get some professional advice. There are many companies in Australia, such as Stevensen Business IT Lawyers, that can help you out and that specialize in drafting agreements that deal with such matters.

The reason why you should always have backup with these agreements is that intellectual property ownership can include so many factors. Things like how many licenses are available, and what levels of licencing exist. How much modification are you allowed in regard to the software (if any)? Is any of the software open source? If you are using a licence, what model of licencing will be used? How will payments be handled, and will you have access to the source code if anything happens to the development company?

Maintenance and updates

Tehchnogly is constantly changing, and this means that the software made by the developer may need to be updated and maintained on a regular basis. This may be necessary due to the software being integrated with other programs which have been updated themselves.

So, this section should regulate how often should maintenance and upgrade be done? At what time periods, how many times a year, or month? Who are the individuals who will be performing the updates? Can it be done remotely, or do they have to have direct access to the client’s computers and hardware? What are the grounds that may lead to the discontinuation of support, upgrading, and maintenance services? Are there any situations where certain fees or rates can be applied (in instances of improper usage, for example)?

Termination and disputes

Another part of the agreement (and that can be found in most agreements) is the regulation of contract termination and the handling of disputes. Namely, what can cause the contract to end? How long will the contract last, and what can cause the premature termination of said contract? Most often, contracts are terminated early due to either party not fulfilling its contractual obligations.

It’s also there to regulate any disputes, if they should occur. It will set out the manner of dispute resolution, and specify which court will have jurisdiction over the potential proceedings, should they come about.


Software development agreements are an important tool that is there to protect both the clients and the developers. If used properly, it’s an excellent guideline to get the best results for both parties. These contracts serve as excellent safeguards that are there to keep things running smoothly and efficiently.

  Modified On Apr-30-2019 03:38:06 AM

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