A software development agreement is a contract between a software developer or designer and a customer for the production of bespoke software for the customer. When a developer creates bespoke software for a customer, it is essential to have a software development agreement. The agreement will generally include:

• The specifications of the software and its functionality
• Delivery times
• Acceptance testing
• Price and payment terms
• Limitations of liability
• Ownership of the software
• Provisions for the support and maintenance of the software after delivery

This last issue is absolutely vital. In the absence of an express agreement to the contrary, the rights in the software will usually remain with the developer. The customer would have an implied licence to use the software, but this puts the parties in an uncertain position as to their future rights. It is therefore important to provide in the development agreement either that the developer will retain the rights of ownership, and will grant the customer a licence to use it and on what terms, or that the developer will not have any rights in the software, which will belong to the customer after the project is complete.

By dealing with ownership of the software in the development agreement, the following issues can be addressed:

• Whether the developer can use the software as a base for products for other customers (or even sell it outright to other customers)
• Whether the customer can adapt the software
• Whether the customer can resell the software
• The ownership of vital software can affect the value of a company

Healys has extensive experience and expertise in advising on, drafting and negotiating software development agreements. We take a realistic and commercial approach to a client's needs, and ensure that we understand the commercial imperative behind the proposed e-commerce venture, in order to properly tailor documents to the client's requirements.