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Software Development Agreement

Covers custom software development projects from spec to delivery.

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What's included

Scope of Development Services

Defines the software features, technical deliverables, specifications, assumptions, exclusions, and responsibilities of each party to reduce scope creep and implementation disputes.

Acceptance Criteria and Testing Process

Establishes the review period, testing standard, defect reporting requirements, deemed acceptance rules, and the process for correcting nonconforming deliverables.

Fees, Invoicing, and Payment Terms

Sets out the payment model, invoice timing, milestone payments, late payment consequences, reimbursable expenses, and any dependency between payment and continued work.

Intellectual Property and Third-Party Components

Allocates ownership of custom code, pre-existing developer materials, open-source libraries, third-party software, documentation, and license rights after payment or delivery.

Confidentiality and Data Security

Requires both parties to protect confidential business, technical, customer, and security information and to use reasonable safeguards when handling project data.

Bug Fix Warranty and Support Limits

Provides a limited post-delivery warranty for reproducible defects while excluding new features, misuse, third-party failures, environmental changes, and unsupported modifications.

Termination and Effect of Termination

Explains when either party may terminate, required notice, payment for completed work, return of materials, transition obligations, and survival of key legal protections.

Liability Limits and Dispute Resolution

Limits recoverable damages where appropriate, excludes certain indirect losses, addresses responsibility for client-provided materials, and sets a process for resolving disputes.

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Frequently asked questions

What should a software development agreement include?
It should identify the parties, describe the project scope, list deliverables, set milestones and payment terms, define acceptance testing, allocate intellectual property rights, address confidentiality, and explain termination, warranties, liability limits, and dispute resolution.
Who owns the code after a custom software project?
Ownership depends on the agreement. Many contracts provide that the client owns newly created custom code after full payment, while the developer retains ownership of pre-existing tools, reusable libraries, frameworks, and third-party components subject to applicable licenses.
Why are acceptance criteria important?
Acceptance criteria create an objective process for testing deliverables and determining whether the software meets the agreed specifications. They help avoid disputes by setting a review period, defect reporting requirements, and rules for deemed acceptance.
Does a bug fix warranty cover new features or ongoing support?
Usually no. A bug fix warranty typically covers reproducible defects in accepted deliverables for a limited period and excludes new features, enhancements, misuse, third-party failures, client modifications, and ongoing maintenance unless separately agreed.

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Templates/Software Development Agreement