5 Key Items To Include In A Software Development Contract

July 8, 2022
Photo by Romain Dancre on Unsplash

There are several key items to include in a great software development contract. Today’s leading development companies all draft, send, and sign formal agreements before a single line of application code is written. These contractual documents specify the project scope, define the services to be provided, and outline what the final product will look like. Simply put, it highlights the what, how, when, and how much for business development operations. As a software company owner, you should understand how to prepare a notable, organized development contract. This way, you can beat the odds and succeed on your next project. To get started now, read on to learn about the key items to include in a software development contract.

Delivered Services & Project Scope

First and foremost, your software development contract needs to include a clear breakdown of provided services and project scope. Outline exactly what you will be providing the client over the course of the software development life cycle (SDLC). Emphasize the development of specific functionality, in-depth performance testing, and architecture design work. You should also spotlight the allowed number of revisions and what post-deployment support will be available. Oftentimes, clients will request detailed project specifications to be attached to the agreement before signing. This gives them better insights on what to expect during the development process. Surely, project scope is a key item to include in your custom software development contract.

Development Process Breakdown

In addition, your software development contract should go deeper into what the programming process will look like. You want clients to understand the structured process you’ll follow when designing, developing, deploying, and distributing bespoke software solutions. Include specific details about the programming tools, operating systems (OS), and supporting technologies your team will use throughout the SDLC. For example, you might be using tools by JFrog to adopt the best practices in a Cloud native DevOps environment. Many teams use these resources to accelerate innovation, distribute critical workflows, and promote security consistency. Indeed, include clear details about your process in your formal software development contract.

Payment Terms

Of course, your software development contract needs to include more information on payment terms. Your contract should clearly highlight payment responsibilities, due dates, and different payable milestones. You should also specify whether or not your incurred expenses will be reimbursed. This is especially true if you need to acquire third-party licenses, plugins, or applications to configure the software. Additionally, emphasize what should happen if a payment is late or missed. Most contracts state that failure to pay could result in legal action and financial consequences. Absolutely, the best software development contracts should provide lots of information regarding payment terms.

Intellectual Property (IP) Rights

More, your custom software development contract needs to clearly specify, outline, and emphasize intellectual property rights. In most cases, the software developed will be the IP of your client. This means the source code belongs to them. Your contract should also specify what happens if the contract is terminated at any point. Decide on if they will get to keep the code in-progress if the final product is not complete. Also, include a contractual clause about confidential data destruction. After the project, most end-clients will want all the designs, prototypes, and other initial plans to be destroyed. Certainly, you need to include intellectual property rights within your custom software development contract.

Termination Of Work Rights

Further, you want to include information about termination rights within your development contract. This is crucial to preserve your reputation and avoid legal penalties. Generally speaking, most dev contracts allow either the client or vendor to terminate service with approximately six weeks notice. This gives allows both parties the option to a clean, fair break if it simply is not a good fit. Definitely, termination of work rights is a must-have item to include in your software development agreement.

There are several essential items to include in your next custom software development contract. For a start, your contract should clearly breakdown the services to be provided, as well as the project scope. In addition, it should provide clients with a deeper understanding of your development process – including all the tools, resources, and technologies you’ll be using. You also want to include information regarding the payment terms. Also, a formal contract will highlight intellectual property rights and source code ownership. This is important to avoid the risks of software IP theft down the road. Further, include your rights in the event of contract termination. Follow the points highlighted above to learn about the key items to include in a software development contract.

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