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Software Development Agreement Drafting: Key Terms, Drafting Tips, Types

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Quick Facts — Software Development Agreement Lawyers

What is Software Development Agreement Drafting?

A software development agreement is a contract signed by a client and software developer for software maintenance, development, and licensing. It covers a range of aspects governing their working relationship, such as project scope and payment terms.

By having a solid agreement in place, both parties reduce their risks and avoid uncertainty from misaligned expectations that can result in litigation.

Read the rest of this article to explore key terms in a software development agreement, tips for drafting it, and how a lawyer can assist you with it.

What Key Terms are in a Software Development Agreement?

A software development agreement typically includes key components, such as:

  • Work scope. This specifies what the developer will provide and list project milestones.
  • Pricing. The pricing structure can be a fixed-price or take the form of a time and materials structure. All payment terms must be included, such as how to invoice and what payments can be expected at certain milestones.
  • Intellectual property (IP). This agreement includes information about software ownership, which usually remains with the client.
  • Testing. The client will want to know how they can test the software and accept the final product.
  • Confidentiality. There should be provisions for protecting business data, IP, and trade secrets.
  • Termination. There are certain conditions that can trigger contract termination. These should be included, as well as clarification about how incomplete work is handled.
  • Changes. The software development agreement should include processes for how changes or modifications are handled. For example, written approval might be required to prevent miscommunication.

What are Common Mistakes to Avoid When Drafting a Software Development Agreement?

When drafting a software development agreement, there are some potential pitfalls to avoid. These include the following:

  • Not including a confidentiality agreement. This is because the agreement will give developers access to a range of confidential business information, which can be risky.
  • Not explaining all payment terms. Be as comprehensive as you can about the payment terms, such as development expenses and milestone payments. You should also include costs for scope changes and extra support that’s required.
  • Not including revisions. The client should outline reasons why the software might be rejected during the testing phase. It’s also important to specify what’s required of the developer, such as how much time they have to adjust it and resubmit it for client approval.

What are Drafting Tips for a Software Development Agreement?

There are important things to consider when writing a software development agreement, such as the following points.

Mention Liabilities

These are important to include in the agreement because they will assign responsibility for any losses or damage accurately. Liability clauses will also determine how the contract can be terminated, providing protection for parties.

Describe the Services

The work scope section of the agreement should be detailed, such as by providing information about project timelines, tools, and maintenance services. This ensures both parties are aligned with the project requirements.

Include a Software Warranty

It can be beneficial to include a software warranty in the agreement. This protects the client. If there is a software malfunction, the service provider will have the responsibility of fixing it.

Detail the Testing and Acceptance Process

For clarity, the agreement should explain various aspects of the testing and rejection/acceptance process, such as the review deadlines and what conditions will result in software acceptance or rejection. This serves to streamline the process.

Choose the Best Software Development Agreement Type

Generally, there are two main types of software development agreements. These are:

  • Waterfall agreement. This is a traditional software development agreement and includes detailed project specifications. Key roles of parties, project timelines, and acceptance criteria are some examples of sections that must be included.
  • Agile agreement. This is a more flexible contract that doesn’t need as much of a detailed scope. Parties focus on collaboration during the process, and they can change their goals as the project progresses. Regular feedback sessions are required to keep the software development process on the right track.

To choose the right type of agreement, consider how detailed your project is and how much flexibility you want throughout the process. If you don’t have all the details at the start of the project, an agile agreement is ideal, especially if you know what you want to achieve but you’re unsure of every requirement you need to complete it.

Why Should You Hire a Lawyer for Software Development Agreement Drafting?

It’s advisable to hire a lawyer to draft a software development agreement for you. They have the legal knowledge to include important terms that will protect you, such as regarding IP ownership. They’ll also ensure the entire contact is clear and simple, so that you avoid any uncertainties that can result in disputes.

Since software projects tend to have many technical details, you don’t want to make the mistake of missing out on anything important, such as milestone deliverables and rights of both parties.

A lawyer will assess your situation and requirements, protecting you with a customized agreement that’s detailed and comprehensive.

Where to Find a Lawyer for Software Development Agreement

If you need to hire a lawyer to draft your software development agreement, you might not know where to find one. You can locate a qualified lawyer on an online legal platform such as ContractsCounsel.

ContractsCounsel is one of the largest online legal marketplaces that gives you access to a curated network of vetted lawyers, right from the comfort of your home. The lawyers have the expertise required for drafting and reviewing contracts.

To request that a qualified lawyer on the ContractsCounsel platform draft your agreement, follow these easy steps.

1. Go to the ContractsCounsel marketplace and post your project for free. You can include some details of what you require, or your reason for requesting the drafting, so that you’re matched with the most suitable lawyers.

2. Wait for lawyer bids. You’ll receive multiple bids from lawyers directly on the platform.

3. Review the lawyers' profiles. The platform provides extensive lawyer data, such as location, client ratings, years of experience, field of expertise, and previous projects completed on the platform.

4. Connect with a lawyer who matches your legal requirements. Hire them to draft your software development agreement. You can also request an online legal chat should you have any queries.


ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.


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