SOFTWARE DEVELOPMENT CONTRACTS

• Full name, [registered] address, telephone number, facsimile number and ACN (if applicable) of supplier and customer
  This avoids confusion at a later date as to who the parties to the contract are - in many cases confusion may arise due to similar business and company names.
• Recitals which give an overview of the roles of the parties to the agreement
• Definitions
  Should include definitions of all important terms used in the agreement to avoid confusion or ambiguity, for example:
  • What you consider to be your confidential information
  • What is the Intellectual Property
  • What is to be designated as your library code
• Scope of your agreement
  Have you considered the development timetable and acceptance tests?
  What is the duration of the agreement - fixed or deliverable?
• Software Specification
  Is it agreed?
  Is installation, documentation and testing etc included
  Performance Warranty
  Variation procedure
• Intellectual Property Rights
  Who is to be intellectual property owner?
  If intellectual property rights are to be retained by the supplier, what are the terms of the licence?
  • Non transferable
  • irrevocable
  • in perpetuity or fee per annum
    Are there any limitations on use of the product?
  • Seats
  • Machines
    Who owns the Tools used to build the product?
    Are you assigning the copyright in your library code or licensing the use of same?
    If licensing the use of your library code, designate how the library code is to be used.
• What support do you have to provide to your customer?
  Usually developers will provide support services pursuant to a separate agreement which will include:
  • What is the duration of support?
  • Is renewal of the Agreement automatic?
  • What is the Supplier to provide?
  • What products are supported?
  • Is upgrade to new levels of products compulsory if requested by Supplier
  • What level of support is required - On Site and/or Off Site, telephone support, e-mail support
  • Hours of operation
  • Are any warranties offered?
  • Are there performance criteria which must be satisfied?
  • Time frames for support
  • Guaranteed running time?
  • Are Updates/New Releases of supported products included?
  • Training
  • What services are excluded from Support
  • Consumables?
  • What does the customer need to supply?
  • Source code?
  • Access to premises
  • Access to equipment/modem facilities
  • Method of request for support
  • Fees
  • Limitation of Liability
  • Termination
  • Right to subcontract
• What access will you need to your customer's site, personnel, software and equipment?
• What are the prerequisite platform requirements?
  Agree on the required hardware and software platform.
  Any additional software to be detailed and supplied at who's expense?
• What are your fees
  Usually involves multiple calculations so they should be expressed in a schedule to the agreement
  On what notice can you increase your fees?
  Are your fees exclusive of taxes, duties, fees or other government levies or charges?
  What interest is to be paid on overdue amounts? Will you want to suspend further services or your remaining obligations to the customer if you are not paid?
• What are the customer's obligations for security of the developed software to minimise the likelihood that there is unauthorised use of the software?
• How is the customer allowed to deal with your confidential information?
• Do you want a restraint period to avoid your employees or subcontractors being engaged directly by your customer?
• Intellectual property right indemnities
  What warranties do you want to give with respect to Intellectual Property?
  How will you indemnify your customer if your software is found to infringe another party's intellectual property?
• How will you deal with defects?
  No obligation to fix unless substantial
  Fixed without fee
  Period of defect correction
  Quality Standards
  Implied terms
  • Due care and skill
  • Fit for purpose
• Limitation of liability - is it valid?
• Indemnity for loss suffered by third parties
• Financial Undertaking
• Does your customer need to obtain appropriate insurance.
• How are the parties able to terminate the agreement?
• Which clauses do you want to survive the termination of the agreement?
• Are you or your customer able to assign, novate or sub-contract your rights or obligations under the agreement?
• What is the governing law for the agreement?

• Schedule 1 - General Contract Details
• Schedule 2 - Work Order Request
• Schedule 3 - Fees

STEVE WHITE
WHITE SW COMPUTER LAW
MAY 1998

www.computerlaw.com.au

© White SW Computer Law 1998

This article is a guide only and should not be used as a substitute for proper legal advice, readers should make their own enquiries and seek appropriate legal advice.