Overview of Software Development Agreement


What is this document?

A Software Development Agreement is an agreement between a developer and a customer, where the developer will be developing software for the customer.


When would I use this document?

A Software Development Agreement can be used when a customer would like to hire or scope an external developer or development company to create a software for their needs. For example, if a company needs to offer services or products on the internet but does not have the in-house ability to build the software, they would hire an external developer or development company. Another example would be where a person has a terrific idea for a new app, but does not have the software expertise to develop the app.


Who Signs this Agreement?

The developer or developer company and the customer will sign the agreement. Depending on the complexity of the agreement, there may be additional documents (eg. Work Orders or Statements of Work) to sign.


More details about this document

The party providing the software services is generally called a “Developer” or “Service Provider” and the party requesting the software services is generally called the “Customer” or the “Company”. The party names can vary depending on the drafter of the agreement.

Software Development Agreements vary in length, depending on the project timeline, compensation, and the software being developed. Depending on the negotiating power of the parties, a Software Development Agreement can be pro-customer or pro-developer.

A developer will want to include clauses such as strict payment, interest rate, deemed  acceptance, clear scope of work , and clauses protecting its background intellectual property.

A customer will want to include broad liability and indemnity clauses for the developer, security clauses, scope of work clauses, warranty clauses, the right to terminate the contract, and representations, warranties and covenant clauses protecting the customer.


What are the core elements of this document?

The core elements of a Software Development Agreement include: acceptance, scope of work, payment, warranty, intellectual property, liability, indemnity, termination, and representations, warranties and covenants.

A Software Development Agreement can include a number of other supporting clauses, including subcontractors, confidentiality, personal information, audit requirements, invoicing, and taxes.


Related Documents

Non-Disclosure Agreement (NDA)/Confidentiality Agreement – an agreement to protect confidential information

Terms of Use – a document that sets out the terms that deal with the use of a website

Privacy Policy – a document that sets out the policies of a website for use of private information

End User License Agreement – a document that licenses a service or product to the end user, often used on websites


–  –  –

This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.