A computer software is an intellectual property created by a software developer. It is protected under the Copyright Act, 1957, where the rights and duties of the owners are specified. Typically, the rights associated with a software lie with the developer who creates it. The developer is entitled to transfer any or more of his rights to a third party by way of agreement.

Software development is a process in which a developer creates a computer software using his programming skills and knowledge according to the specifications mentioned by the company.

What Is A Software Development Contract?

A software Development Contract is an agreement entered into between a company and a software developer where the company mentions their concepts and requirements. The developer then goes on to create the software based on the time limits specified by the company.  

Such contracts are usually essential in software companies where developers are hired for creating computer softwares for both commercial and private use. It therefore becomes essential to demarcate the extent of rights of both developers and the companies with regard to the software.

What Are The Contents Of A Software Development Contract?

A software development contract usually contains the following details-

• Developer’s duties
  All duties to be complied with by the developer shall be specified in the contract, including:
  a. Development of the software according to the Software Requirements Specifications given by the company and following the milestones prescribed by the company in various stages.  
  b. Answering of queries regarding the software for a specified period even after delivery.
  c. The developer shall also acknowledge the company’s right to terminate the contract on breach of the terms of the contract on part of the developer and
  d. The limit of support to be provided by the company and the time frame for completion of the project.
• Acceptance
  The acceptance period after delivery maybe mentioned during which the company may assess and test the software to be fully compatible with the specifications. The delivery is deemed complete when the developer delivers the product which fulfils all the specifications. A Rejection clause may be added where the company may reject the product if the software is not delivered according to their specifications or if the developer is further unable to deliver the complete product. The rejection has to be in writing.

• Delivery details
  The contract shall mention the date by which the software shall be fully complete and conform with the specifications along with:
  a. The corrections to be done by the developer upon non conformity of certain sections of the complete product. And,
  b. The method by which the company shall intimate the developer regarding any non conformity.

• Training
  The developer’s obligations as to training the company personnel with usage of the software shall be mentioned along with the approximate hours of training and the place of training. Any additional costs with respect to training shall also be mentioned.

• Support and Maintenance
  The period of support and maintenance for the software to be provided by the developer shall be mentioned along with the details about renewal.

• Compensation
  The contract shall mention the total monetary consideration payable to the developer by the company,including the breakup, which is usually mentioned in hourly basis. Apart from that, the time periods in which periodical invoices are to  be sent by the developer shall be mentioned. Any details about initial and further payments also shall be mentioned.

• Intellectual Property Rights
  The contract shall mention that the company shall be vested with the copyrights and other Intellectual property rights with regard to the software, for example – trademarks, if applicable.

• Further Changes
  All details regarding the procedure for requesting changes in specifications of the software shall be mentioned. The developer may be obliged to accommodate such changes without additional cost to the company, provided they are reasonable. The company may also agree for providing further compensation for significant changes made at a later stage. Provisions for withdrawal of such changes may also be mentioned.

• Confidentiality
  One of the most important details of a software development contract is confidentiality. Here, the developer undertakes not to disclose any details to any third party regarding the company, its operations or clients. The developer also agrees not to create copies of the software or to distribute the same to third parties.

• Developer’s warranties
  (a) The developer is required to warrant that the software is not in violation of any agreement the developer has with any third party, and also that it does not violate the Intellectual Property Rights of any other third party.
  (b) The developer warrants the smooth functioning of the software according to the specifications of the client and agrees to fix any malfunctions in case they arise within the specified period. Being the author of the intellectual property, he/she shall assign the rights of the same to the company under the agreement.
  (c) A disclaimer may also be added that the developer shall not be responsible for any warranties not expressed in the contract.

• Assignment
  It shall be mentioned that the developer may not assign any rights under the contract to any third party without the consent of the company.

• Indemnification
  The developer agrees to indemnify the company from any lawsuit(s) that may arise due to the infringement of any Intellectual Property Rights of third parties by the  Developer.

• No Modification unless in writing
  It shall be mentioned that no modification of the agreement will be allowed unless mutually consented by both parties.

• Acknowledgements
  It shall be mentioned that the developer is an independent contractor and that the contract does not create any partnership, joint venture, employer-employee relation or principal-agent relationship with the company.
  It shall also be mentioned that the contractual relationship will be that of a ‘work for hire’ relationship as mentioned in the Copyright Act, 1957.

• Termination
  The methods of effecting the termination may be specified in the contract. It may be for specific reasons mentioned in the contract after providing sufficient notice to the other party, for example – material breach of the terms or failure to perform any part of the contract. It shall be at the discretion of the non-breaching party to terminate the agreement.

• Dispute Jurisdiction
  The contract shall mention the court under whose jurisdiction any dispute shall lie on violation of any of the terms.

A well drafted Software Development Contract safeguards the interests of both the company and the developer and avoids ambiguities in the complex world of Intellectual Property Rights.

Create Software Development Contract With LegalDesk

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