Software Development Agreement

What is a Software Development Agreement?

A Software Development Agreement is a contract entered into between a Service Provider (individual/entity developing the software) and a client. The Service Provider will act as a third party who is merely appointed to develop the software without any employment or agency relation. This Agreement will set out the exact scope of work, as well as timeframes for completion of work, payment terms and dispute resolution mechanisms.

Software is like digital tools or programs used on a computer or laptop such as Microsoft Word for word processing and Adobe Photoshop for editing photos.

This software Development Agreement can be used for the one-time development of the software or continuing development support.

What is the difference between a Software Development Agreement and a Service Agreement?

A service agreement covers broader services such as IT support services, and HR services, and often does not include any IP ownership or transfer. On the other hand, a Software Development Agreement merely focuses on software development and related aspects such as project details, intended use cases of software, etc.

What is the difference between a Software Development Agreement and a Website Development Agreement?

A Website Development Agreement focuses on various aspects of website creation including design, backend, and frontend codes, use cases, etc. and IP is often completely transferred to the Client on completion of website creation. On the other hand, a Software Development Agreement merely focuses on software development and related aspects such as project details, use cases of software, etc. Under a Software Development Agreement, the IP rights may be with the client or developer as defined under the Agreement.

Is it mandatory to have a Software Development Agreement?

No, it is not mandatory. However, having a written Software Development Agreement helps avoid misunderstanding and any potential disputes in future.

Who can enter into a Software Development Agreement?

Any individual above the age of 18 years or a registered entity can enter into a Software Development Agreement.

What can be the duration of a Software Development Agreement?

The duration can vary based on the project's complexity and scope. The parties can decide the duration either as a fixed period or as an ongoing project. It can be a few months for small projects or several years for a large, ongoing project.

What must be done once a Software Development Agreement is ready?

The Software Development Agreement will be legally binding when it has been printed on non-judicial stamp paper or e-stamp paper, signed by both the Service Provider and the Client, and dated. By purchasing an e-stamp paper, the stamp duty can be paid online and also the printout of the stamp paper can be taken online. The value of the stamp paper would depend on the state in which it is executed. Each state in India has provisions in respect of the amount of stamp duty payable on such agreements.

Both the Service Provider and the Client should keep a signed copy of the Software Development Agreement. In order to do this, two different copies can be signed, or if only one copy is signed, it can be photocopied and then distributed between the parties.

What must be included in a Software Development Agreement?

A Software Development Agreement must include the following clauses:

• Parties involved: Name and details of the client and developer.
• Project details: Description of the work to be performed;
• Deliverables: Specific outcomes expected from the development.
• Timeline: Project schedule and deadlines to be followed by the developer.
• Payment terms: The total cost, payment schedule and method of payment.
• IP rights: Ownership and usage rights of the developed software.
• Termination: Conditions under which the agreement can be terminated.

   

Which laws are applicable to a Software Development Agreement?

The principles of the contract under the Indian Contract Act, 1872 would govern this agreement. The rules and regulations of the Infomation Technology Act, 2000 will also be applicable.

How to modify the template?

You fill out a form. The document is created before your eyes as you respond to the questions.

At the end, you receive it in Word and PDF formats. You can modify it and reuse it.