App Development Contracts – The Complete Guide For App Working Agreements
This guide will help you understand the ins and outs of app development contracts. If you are involved in the creation or planning of apps or software, this guide is perfect for you.
For a job involving the design and development of software, a developer probably realizes that there is a telling difference between being a professional developer and simply making applications for the fun of it. A career in app development will demand that they adopt professional best practices. This best begins with proper business contracts that capture all client and developer expectations in a robust manner.
This conversation is necessary because custom app development for businesses and individuals is experiencing similar growth explosion as eCommerce websites did during the dotcom boom. The barriers to entry are coming down at an accelerating pace as more freelance software developers are offering packaged development services.
Well-written contracts protect a developer and those they work with, ensuring the developer is paid for all work done. The developer is also protected from unnecessary painful and costly headaches.
It is of greatest necessity that developers appreciate and understand the importance of crafting concrete app development contracts before diving head-first into engaging clients. No developer really should entertain briefs before having the app development contract ready.
Businesses typically commission software application projects with at best, basic understanding of what it entails. They lack in-house technical expertise and the experience of handling software development contracts. It is the duty of the application developer to understand the intricacies of app development contracts, as many businesses will not have the experience to managed specialized contracts.
This guide will consider all essential aspects of app developments to meet legal and professional needs as the developer provides app development services to clients. Or in more simple terms, an app development contract guide
Before moving along with the developer and negotiating, the client should resolve a strong concept for their app and of what it is for.
App Development Contracts – Understand The Client-Developer Relationship
The basis of the client-developer relationship is the concept of the app and what the app is capable of doing. Creation of contracts must be preceded by a clear statement of the expected capabilities of the app.
Work-for-hire contracts often only cover the barest basics, but app development contracts should address the fact that app development often does not begin from the bottom. Most apps are not built from scratch. Therefore, the developer permits the client to use, distribute, and monetize the app. The client should also protect the developer from a client infringing on their intellectual property rights.
The owner of the intellectual property of an app is by default, the developer. Although a client may assume a commissioned app, and its inherent code, is written from the bottom up, this is hardly the case.
Developers are typically more likely to use generic code to build an app, eventually reusing the code in additional projects. This then implies that the developer retains all intellectual property, and the client licenses the app, or property, to satisfy their specific needs.
Why Is An App Development Contract Important?
The design of an app development contract protects both the client and the developer. The developer and the client need to list the scope and provisions of a licensing agreement. The contract should also guard the developer’s intellectual property of the code and guard against privacy issues that may emanate from the client’s access to the code. It is unrealistic and an unnecessary position to insist on full ownership.
Therefore, the transfer of rights to the client from the developer to the client should be measurably outlined.
To illustrate, common questions can be outlined. Will the client have the right to have the app maintained and further? Does the contract contain restrictions stopping the developer from creating the same software for the client’s competition? Such contractual elements should be addressed frontally and thoroughly. It is important to engage a professional to draft these points into an agreement.
This protects the developer from avoidable legal worries and expense if questions arise (as they often will) around overall transfer of rights, licensing provisions, and intellectual property.
Essential Elements of App Development
As with all contracts, app development contracts should address the expectations of both developer and client. This entails the developer providing the client with detailed written specifications along with a timeline for development. The developer should also include a mutually-agreed upon payment structure. Where possible, the client is advised to do adequate preparatory work with the developer to determine the specification. The client should not commit to a full development process until the specification has been agreed.
These contract elements often depend on what happens between app development and the acceptance of the application deliverables by the client.
It is important to clarify the process to test that the application conforms to the specification. This is because once the application is accepted, the developer’s right to the main staged payment due upon completion is activated and diminishes any rights to reject the software. The client is only left with the possibility to make a case for damages.
In the same vein, the client should realize that acceptance testing is so important and should not be unduly prolonged as a way to delay processing the supplier’s payment.
Acceptance testing defines key milestones to give a timeline for a developer’s payment, while ensuring the client’s specifications are met. Acceptance testing guards the client from elements of the software that might be non-conforming to prior expectations. A robust acceptance testing procedure should specify what the developer will be required to do to fix any non-conforming elements of the app.
Acceptance testing also protects the developer’s from outright rejection after completion. By including specifications in the contract about the contract’s dependence on acceptance testing, both parties are guaranteed extra protection.
Types of App Development Contracts
Numerous types of app development contracts. There are also numerous elements of app development contracts. Typical examples of these include non-disclosure agreements (NDAs), privacy policies, and work-for-hire agreements. The latter is especially important if you are outsourcing portions of app development to a third party.
There are two important contract types every developer should become familiar with. These are the technology assignment agreement and the license agreement.
Technology assignment agreement
The technology assignment agreement basically covers essential copyright law. It specifies that the developer owns the code once it is “fixed in tangible form.” The goal is to ensure the developer also owns all the intellectual property of the application.
This is also known as the service agreement. It defines the provisions of the licensing to the client. Some of the details it considers include:
- time period
- geographical area
- other elements of the licensing scope
Therefore, whereas the technology assignment agreement works for the developer, the license agreement specifies the rights of the client.
Freelance app developers need a professional hand to create a suitable app development contract. This is the first vital step in forming an agreement that satisfies the client, without compromising on securing intellectual property.
Understanding the intricacies and nuances of app development contracts is what separates an app maker and a true software development professional. Knowing the legal language and professional significance of contract construction, talented developers, can advance their career in the growing demand for app development.
Transfer of Copyright Ownership
If there are several salient functions of a software development contract, establishing who really owns the intellectual property rights to the software is one of them. Developer-client relationships often turn sour when this potential deal-breaker is discussed.
As mentioned previously, the developer owns the copyright to software unless the developer is the client’s express employee. Another possible scenario is where the software is part of a much bigger work made for hire under a written agreement. In order to gain ownership of software copyright, the client must include in the agreement, a clause that transfers ownership of the software from the developer to the client.
There are several available ownership options. These include sole ownership by the client to ownership by the developer with the client only holding a license to use the software. These are the two possible extremes for copyright ownership of software. There is a whole gamut of possible alternatives in between. The amount of money paid to the developer is also often an influence in how satisfactory any of these options can be.
Ownership of Underlying Technology
A software developer will typically have various development tools, functions, classes, routines, sub-routines, and other self-contained programs. They may also use data and several materials that they use for the job, and that ends up in the final product. Think of code used for forms, displaying menus, printing, and storing data. These tools may be called “background technology.”
A client may end up holding ownership of this background technology if the developer transfers ownership of the software to them. It is wise for developers to avoid this by ensuring the development agreement enables the developer to fully retain all ownership rights in this material.
However, where this happens, the agreement should give the client a nonexclusive license to use the background permission to use the background technology the developer includes in the application.
A promise from the seller that a product will do exactly what it should do for a specific or reasonable period is all a warranty essentially is. It also specifies that the seller will fix or replace it if it does not.
With respect to app development contracts, warranty provisions are a standard inclusion. The provisions may, however, vary considerably, since there is often intense bargaining between developer and client.
Warranty of app performance
Warranties of software performance are a staple of many contracts, where the developer promises that the software will perform exactly as the developer has promised and will fix it free of any cost to the client. Warranties typically span a time period of 90 days to one full year after the software is delivered.
In light of this, developers should refrain from making promises that their software will work indefinitely, or for several years, as the ongoing advancements in technology make such commitments hard to keep.
It is necessary to note that there are other warranties. These include warranties of:
- Title: This implies the client will get good title to the software.
- Non-infringement: This implies the software will not fall foul of copyright, trade secret, patent, or other intellectual property rights regulations.
Robust app development contracts contain a clear procedure for resolving disputes. It is preferable to settle disputes without going to court, either by arbitration or mediation. A court process often proves to be highly expensive and time-consuming.
Arbitration involves one individual or panel considering the merits of the issues and rendering a decision. Their decision may or may not be binding, depending on the language of the arbitration agreement.
A number of high-profile commercial contracts today include a binding arbitration provision. By agreeing to binding arbitration, a developer may be giving up their right to approach the courts to enforce the contract.
Mediation is cheaper, less rigorous, and less formal than arbitration. Its nature means it is never binding. A mediator either gets the parties to sit so they can see the objective view of the mediator, or shuttles between both parties to communicate the burning opinions of each side.
App or software development contracts are not simply legalese. Developers should seek as much protection as possible while working for clients. In the same manner, clients must also seek to ensure that on every possible point, the developer is stretching their technical edge to avoid doing what is expected of them or claim what possibly belongs to the client.
Every app development contract should involve ample input from both parties. It should be in as clear language as possible, and understood by. A robust dispute resolution mechanism within the contract will help in moving past sore points that might grind the project to a halt if one were not present.
With growing experience, developers will be able to determine what is a necessary inclusion in an app development contract. Key determinants include project scope, project timeline, fees, payment structure, and so forth. A contract places mutual boundaries that propel the project forward.
If you need help getting started on your contract agreements, our Simple Starter package is meant to give clarity for app projects by creating a blueprint for development.
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