Software Development Agreement

Software Development Agreement: Set Clear Terms for Your Software Project

A software development agreement is a contract between a client and a developer, whether a freelancer or a company, to design and build software. It sets out the specification and milestones, the fees and how they are paid, how the software is tested and accepted, who owns the code, warranties, liability, confidentiality and how either side can end the agreement. Robot Lawyer drafts the agreement from your answers, for the law of the country or state you choose, and on the Verified plan a qualified legal professional checks it within 24 hours before you sign.

CONTENTS

What Is a Software Development Agreement?

A software development agreement (also called a software development contract or bespoke software agreement) is used whenever one party pays another to build an app, website platform, system or other software.

A written agreement avoids disputes about scope, deadlines and payment, sets out when the work counts as finished, and makes clear who owns the code and can use it once the project is done.

When Should You Use One?

• Custom software
  When you commission an app, platform or internal system.
• Freelance developers
  When you hire an individual developer for a project.
• Development agencies
  When an agency builds software for your business.
• Milestone projects
  When the work is delivered and paid for in stages.
• Valuable code
  When ownership of the source code matters to your business.

What's Included in Your Agreement?

• The project
  The software to be built, the specification and the milestones.
• Fees and payment
  The price, payment stages, invoicing and late payment.
• Acceptance testing
  How the client tests the software and what happens if it fails.
• Intellectual property
  Whether the client owns the code or the developer keeps it and grants a licence.
• Warranties
  The standard of the work and a period for fixing defects.
• Liability
  Limits on each side's liability.
• Confidentiality
  How each side protects the other's information.
• Changes and termination
  How changes are agreed and how the agreement ends.

How to Prepare for a Software Development Agreement

The agreement works best when the project is clear before anyone signs. Before you start, agree:

• A written specification
  What the software must do, the platforms it runs on, any integrations and any performance or security requirements. The more precise it is, the easier it is to test.
• Milestones and deliverables
  The stages of the project, each with something that can be delivered and tested, and a target date.
• Acceptance criteria
  How you will decide that each stage works, for example a test plan or a list of features that must pass.
• The price and payment model
  A fixed price, time and materials at agreed rates, or payment by milestone, with when invoices are sent and paid.
• Ownership of the code
  Whether the client owns the code once it is paid for, or the developer keeps it and grants a licence, and how third-party and open source components are handled.
• Support after launch
  Any period for fixing defects free of charge, and whether ongoing maintenance needs a separate agreement.

Common Mistakes to Avoid

Many software disputes come from gaps that are easy to close at the start. Starting work on a vague brief makes it hard to say when the software is finished, so record the specification and acceptance criteria before work begins. Paying everything upfront leaves the client with little leverage, while paying nothing until the end leaves the developer exposed, so stage payments are usually fairer for both sides.

Do not assume that paying for code means you own it. In many countries the developer keeps the copyright unless it is transferred in writing, so your agreement says clearly who owns what. Agree how changes are requested and priced, so extra features do not quietly delay the project or increase the cost. Finally, check how either side can end the agreement and what the client receives if the project stops part-way, such as the work completed and paid for. If you need a licence to existing software rather than new development, a Software License Agreement may suit you better.

How It Works on Robot Lawyer

1. Answer the questions
   Tell us about the project, fees, timetable, acceptance, IP and liability.
2. Generate your agreement
   We draft a clear, balanced agreement from your answers.
3. Get it verified
   On the Verified plan, a qualified legal professional checks your agreement within 24 hours and makes amendments where needed. The Essentials plan does not include this check. See how our documents are verified.
4. Sign and start
   Download it, sign it with the other party and keep a copy.

What Your Document Looks Like

Your agreement is a numbered contract: the parties and background, definitions, the services, milestones and acceptance, fees, intellectual property, warranties, liability, confidentiality, termination and general terms, with signature sections and schedules for the specification and the fees. Here is an extract from a sample agreement we generated:

5. Acceptance

5.1 The Client shall test each Deliverable against the Specification within 10 Working Days after delivery. Acceptance shall be assessed against the agreed milestone test plan and any further objective acceptance criteria agreed in writing before work on that Milestone starts.

5.2 The parties shall act reasonably and promptly to agree and record any further functional detail and objective acceptance criteria needed to make the Specification testable. Any such clarification shall form part of Schedule 1; an alteration to scope must follow clause 6. Work shall continue meanwhile on a reasonable reading of the Specification and in accordance with good industry practice.

5.3 Within the testing period, the Client shall either confirm Acceptance in writing or give written notice describing the Defects, the relevant requirement or test criterion and sufficient information reasonably available to reproduce the failure.

How It Works in Different Countries

• UK
  Copyright in code written by a contractor usually belongs to the contractor unless it is assigned in writing. Limits on liability between businesses must be reasonable under the Unfair Contract Terms Act 1977.
• United States
  Code written by an independent contractor usually belongs to the contractor unless it is assigned in a signed written agreement. Contract law is set by each state.

These notes are general. Check the current rules where the work is done.

Software Development Agreement FAQs

Who owns the code?

That depends on the agreement. Your agreement either transfers ownership to the client, or lets the developer keep it and grants the client a licence, as you choose.

What is acceptance testing?

A period for the client to test each delivery against the specification. If it fails, the developer fixes the defects and delivers it again.

What if the project changes?

Changes are agreed in writing, with any effect on the price and timetable, before the work is done.

Should liability be limited?

Most software agreements limit liability. If you don't set your own limit, your agreement caps it at the total price, with the usual exceptions the law requires.

Should we use a fixed price or time and materials?

A fixed price gives the client certainty and suits well-defined projects. Time and materials suits projects where the scope is likely to change. Your agreement records the model you choose.

What about open source software used in the project?

Open source components stay under their own licence terms, which the client will need to follow. Ask the developer to list any open source software they plan to use.

Can I use this agreement outside the UK?

Yes. Your agreement is drafted under the law of the country or state you choose. Our lawyers are qualified in England and Wales and, on the Verified plan, check documents for good practice, clear formatting and the law of England and Wales. They are not qualified in other countries' law, so if your agreement is governed by another country's law, we recommend having a local lawyer check it too.

Create a Software Development Agreement

Agree the scope, price and ownership of your software before work starts. You can start with a 7-day free trial. See our pricing for the plans. Related documents: Website Development Agreement, Software License Agreement and SaaS Agreement.