Entering into a software development contract is such a significant step in the life of a company that it can determine the success or failure of the entire project. And it doesn't matter whether it is a website with a presentation or an information system on which the whole company is based. Software development itself is a long and complex process, during which the customer and the supplier fine-tune all the details down to the last dot. In the beginning, the customer usually has only a rough idea of what he wants the software to do - how it should look, what functionalities and features it should have. The solution provider, on the other hand, cannot set a price and time estimate for the work without knowing all the key parameters. But there is a way out of the vicious circle.
Whether you are a developer or a paying customer, it is important to have all the details carefully thought out and, most importantly, correctly documented. Let's take a look at the key points not to forget in a software development and supply contract.
When entering into a software development contract, it is important to remember that each project is unique, and you cannot simply use a generic template downloaded from the internet. You'd probably end up failing with this approach and it would definitely hurt your bank account as well. Every software has its own specific aspects that need to be considered. Clearly defining the development process, completion criteria, and the handover method is just the beginning. So, what should you watch out for?
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Software development can take different approaches depending on the needs of the customer and the supplier's practices, which must be taken into account in the contract.
You will appreciate agile development when you are not entirely sure what you want at the beginning.This development is divided into shorter timeframes, is more flexible, and allows for quicker responses to changes. The idea of the final product takes shape gradually. Collaborations are usually billed at an hourly rate and reimbursement of actual costs (so-called Time & Material).
On the other hand, you can use Waterfall development when you already have a development specification written at the outset, for example in a thorough analysis. This method has a precise schedule and budget (so-called Fixed-Time & Fixed-Price) and the development is carried out all at once. Any changes to the requirements and their impact on the budget need to be carefully monitored, so you cannot avoid additional administrative work with contract amendments.
The pricing model (fixed price or hourly rate with an estimate) is often tied to whether you are developing using agile or waterfall. However, what is not standardized are the payment milestones.
Therefore, clarify whether you will pay the deposit upfront, the price in installments each time a milestone is reached, or perhaps only after the work is completed. The customer will likely want to agree to a retainer (perhaps 10% of the price), which they will hold and pay out only after all defects have been resolved.
Licensing arrangements are not the simplest part of a contract, but they are crucial for protecting both parties. Clarify whether the customer gets a non-exclusive license, an exclusive license, or even an assignment of the exercise of proprietary rights (the broadest form of IP transfer). Do not forget to address the ability to modify the code and the handover of the source code. Additionally, if you use third-party materials or materials provided by the customer during development, make sure to agree on how liability for these components will be handled.
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Software development is just the beginning. If the collaboration works well, you will want to address long-term support and software maintenance (perhaps even SLA). Therefore, it is important to establish whether a warranty will be provided for the software and how follow-up service will be handled. This provision will help you avoid misunderstandings and disputes in the future.
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What are the specifics of the three software development models we encounter in practice?
Entering into a software development contract is not a simple task, but with careful planning and proper setting of all terms, you can avoid many problems.
Are you a developer or a paying customer and want to make sure your software development contract is bulletproof? We will create it together with you. Let's set up a meeting ↗
Nejraději pomáhám těm, kdo potřebují skloubit právo s technologiemi. Ve světě IT a software se totiž cítím jako ryba ve vodě. Už od mala mě přitahovaly nové technologie a promítání science fiction do našeho světa. Až při studiu na vysoké škole jsem si však uvědomil, kolik etických a právních překážek je nutné překonat před jejich uvedením do reality.
