Software development agreement template

Software Development Agreement

Parties: Developer · Client

1. Purpose

This agreement sets out the terms on which the Developer designs, builds and delivers custom software for the Client, from the agreed specification to acceptance of the final deliverable.

2. Specification and deliverables

The Developer will build and deliver the following software and related deliverables:

[[Describe the services and deliverables]]

The specification, including the functions, interfaces, platforms and performance the software must meet, is attached or described as [[Name or attach the specification]]. It is the measure of what the software must do. Documentation, test environments and training are included only if the specification names them.

3. Change control

Either party may ask to change the specification, the milestones or the fees. The Developer states within [[5]] business days what the change means for scope, price and schedule, and the change takes effect only when both parties have accepted it in writing or in electronic form. Until then the Developer continues on the original specification. Small clarifications that do not change effort or dates need no change request.

4. Milestones and client cooperation

The Developer delivers in these milestones: [[Milestones with their dates and deliverables]].

The Client provides on time the information, sample data, access, test accounts and decisions the Developer reasonably needs, and names a contact who can decide day-to-day questions. Delays caused by missing cooperation or by open change requests extend the affected dates accordingly.

5. Acceptance testing

Within [[10]] business days of each milestone delivery, the Client tests the deliverable against the specification and the agreed test cases, if any, and either accepts it or lists the defects found in writing or in electronic form. A deliverable with no defects, or only minor defects that do not prevent its intended use, is accepted; minor defects are fixed within the fix period. If the Client does not respond within the testing period, or puts the software into productive use, the deliverable is treated as accepted.

6. Defects and fix period

The Developer corrects, without extra charge, reproducible defects that are deviations from the specification and are reported within [[90]] days of acceptance of the final deliverable. The Client describes each defect so that the Developer can reproduce it. Faults caused by changes the Client or third parties made, by use outside the specification or by the Client’s own systems are not defects and are fixed as additional work if the Client asks.

7. Fees and payment

The Client pays the fees shown in the price schedule of this contract. Unless the schedule says otherwise, each milestone fee is invoiced when that milestone is accepted, and [[20]]% of the total is payable at signature as a first instalment. If a payment is more than [[14]] days late, the Developer may pause the work after notifying the Client, and the dates move accordingly.

8. Client data and security

Data the Client provides remains the Client’s. The Developer uses it only to build and test the software, keeps it on systems protected by at least reasonable technical and organisational measures, uses anonymised or sample data for testing where practicable, and deletes or returns it on request and when the agreement ends. The Developer follows secure coding practices appropriate to the software and informs the Client without delay of a security incident affecting the Client’s data.

9. Third-party and open-source components

The Developer may use third-party and open-source components if they fit the specification. Before delivery, the Developer lists the components used, their licences and any obligations those licences place on the Client. The Developer does not use components whose licence would oblige the Client to disclose the Client’s own source code unless the Client has approved this in writing or in electronic form. Licence fees for third-party components are [[included in the fees / paid by the Client separately]].

10. Source code and intellectual property

When the Client has paid all fees, the Developer transfers to the Client the rights in the software written specifically for the Client, including its source code and documentation, or, where the applicable law does not allow a transfer, grants the Client an exclusive, perpetual, worldwide licence to use, modify and distribute it. The Developer delivers the source code and build instructions with the final deliverable. The Developer keeps its pre-existing libraries, tools and know-how and grants the Client a non-exclusive, perpetual licence to use them as part of the software. Third-party and open-source components remain under their own licences.

11. Confidentiality

Each party keeps the other party’s non-public information confidential, including the specification, the source code before transfer, business data and security details, uses it only to perform this agreement and protects it with at least reasonable care, during the agreement and for [[3]] years after it ends. Information that is public, already lawfully known, independently developed or that must be disclosed by law is excluded.

12. Warranty and liability

The Developer warrants that it builds the software with reasonable care and skill and that, at acceptance, it materially conforms to the specification; it does not warrant that the software is free of all errors or fit for purposes the specification does not state. Except for intent, gross negligence, personal injury, breach of confidentiality or where the law does not allow a limitation, each party’s total liability under this agreement is limited to the fees paid or payable under it, and neither party is liable for lost profits or indirect damage.

13. Term and termination

This agreement starts on the effective date and ends when the final deliverable is accepted and the fix period has run out. Either party may terminate it by notice in writing or in electronic form if the other party seriously breaches it and does not remedy the breach within [[14]] days of being asked to. The Client may also terminate for convenience with [[30]] days’ notice; it then pays for the work done until termination and receives the work in progress, with the rights in it, once it has paid. The clauses on intellectual property, confidentiality and liability survive termination.

14. Independent parties

The parties are independent businesses. The Developer decides how to organise its work and may use its own staff and, with the Client’s consent, subcontractors for whom it remains responsible. This agreement does not create an employment, partnership or agency relationship.

15. Governing law and disputes

This agreement is governed by the law stated under Governing law. The parties will first try to settle any dispute in good faith. Otherwise the courts stated under Jurisdiction decide, unless mandatory law provides otherwise.

Payment terms

Each milestone fee within [[14]] days of receiving the invoice for the accepted milestone, by bank transfer to the account stated on the invoice.

Governing law

[[Country or state whose law applies]]

Jurisdiction

[[Courts that decide disputes, e.g. the courts of your city]]