Do you want to become an businessman and have an idea of running an app or software and looking for software developer to help you to build the brick of your dreams then trust us in today’s time, engaging a software developer is seems like a cakewalk, if only, considered in broader concept, however the reality is far different where the cakewalk may turn into walking alongside dinosaurs as in a Jurassic park, where any time situations overturn leading into a grave uncertainty. well-executed contract is the need of an hour to get the complete control and ownership over the software, else, might be possible you will find yourself in a situation where you have spent lots of money on development of software and got nothing in return. Tough, there can’t be “One Size Fits All” kind of contract for software/ app development, but in this Article, we would emphasize our focus area to make Businessman understand the clauses and negotiation points to be discussed while taking services of software developer.

1. Software
Development
Agreement

2. INTRODUCTION
Do you want to become an businessman and have an idea of running an app or
software and looking for software developer to help you to build the brick of your
dreams then trust us in today’s time, engaging a software developer is seems like
a cakewalk, if only, considered in broader concept, however the reality is far
different where the cakewalk may turn into walking alongside dinosaurs as in a
Jurassic park, where any time situations overturn leading into a grave
uncertainty.
well-executed contract is the need of an hour to get the complete control and
ownership over the software, else, might be possible you will find yourself in a
situation where you have spent lots of money on development of software and got
nothing in return.
Tough, there can’t be “One Size Fits All” kind of contract for software/ app
development, but in this Article, we would emphasize our focus area to make
Businessman understand the clauses and negotiation points to be discussed
while taking services of software developer.
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3. IMPORTANT - T&S’c
1. Engagement & Scope of work: It is considerable that both the Parties have
agreed to work in good faith with complete free consent and presence of mind i.e.
without any kind of coercion, fraud, undue influence and misrepresentation.
Also when Businessman discuss with the software developer, it have to dealt with
an out of box thinking approach, as it play a key role in deliverables of the
software/ app to be developed. Its scope of work must be very exhaustive and
detailed one so that chances of dispute due to difference between the expected
work and actual work can be mitigated.
2. Change in Specification: As we discussed above, that scope of work must be
detailed one. But we all know that the imagination of final product looks different
from actual product. So what would be the scenario, when certain changes in the
specification of software / app as already mentioned in the contract need to be
modified and altered. It is certainly advisable to have discussion and clause
related to how the change in specification of deliverables going to be handled. Will
the same be done at extra cost of money and what would be the timeline for the
same.
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4. IMPORTANT - T&S’c
3. Commercials and applicability of Taxes etc.: Cost for development of software /
app needs to be clarified in order to remove ambiguity at later stage. It also needs
to be ensured that how the charges would be applicable like On basis of working
hours or one time charge
Also the stages of payment need to be disclosed upfront. Will the same be
charged after completion or before starting of work, or in instalments like after
achieving certain milestones which has to be clearly specified in the
contract/agreement
Its pertinent to mention in the contract/agreement that whether the aforesaid
cost would be inclusive of GST or exclusive of GST and the same would be subject
to deduction of TDS or not.
4. Out of Pocket Expense Reimbursement: For successful execution of contract
parties is supposed to meet frequently or they may also conduct any research for
completion of work. A contract should include a clause whereby it is clearly
mentioned as to how these out of pocket expenses like travel expense, research
work charge, meeting charges etc will be paid or reimbursed and in what manner.
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5. IMPORTANT - T&S’c
5. Fluctuation in Price: Developing an app like facebook, twitter, tiktok, google takes
lots of effort, time and manpower. Most of the time it is being seen that due to
extensive effort being put by the software developer and market conditions of the
material being purchased. Fluctuation in price of software/ app could come. So
how the same would be dealt with, will the same be included in professional
charges taken by the software developer or it would be paid extra.
6. Time Line and Extension thereof: It is important for businessman to launch the
software/app on its scheduled time to sustain the competition in the market
therefore it becomes necessary to specify the timeline required for the
development of software while entering into contract/agreement. However, often
deployment of software/app got delayed due to some unavoidable circumstances
and it becomes necessary to extend the timeline already agreed.
Agreement/contract should include clause that specifies those circumstance and
situation or upto what limit the timeline for software deployment would get
extended.
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6. IMPORTANT - T&S’c
7. Acceptance of Testing Software: Launching a software/ app, without geting the
same tested is like going on war without a weapon where you actually don’t know
when you will take your last breath. So it is considerable to mention and negotiate
specifically how the testing of software would be done and what would be the
timeline and support from the software developer side.
8. Training: Everyone is not well acquainted with operating the software/app,
therefore it is necessary to get basic training to operate the software. Prior hands
on the software before launching the same are beneficial for the services taker to
eliminate any technical issue on initial stage.
9. Post Support: when any software/ app go live for the usage of general public.
There would be so many issues which would come around where timely action will
be required. So it is very essential to ensure the post deliverable support to be
taken from the software developer at least for 4-6 months without any extra cost.
10. Term: what would be the term of the Agreement that has to be written down
specifically and how the same would be dealt in case of expiry of term of the
Agreement like will it be extended for a further period automatically or before
extending the same party has to discuss and propose accordingly.
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IMPORTANT - T&S’c
11. Duties of Software Developer: Whatever be the obligations of the Software
Developer that has to be stated clearly without any lacuna in the language. For
instance. Not to give any false statement, Assign the work to the experienced
personnel’s, the Timeline for work completion, work according to scope of work,
not to indulge in any wrong practice, post deliverable support etc.
12. Duties of Entrepreneur: Duties and role of businessman needs to be elaborated
as without the active support from the Entrepreneur side, the Software Developer
shall not be able to end up with the scope of work successfully. For Instance:
provide timely support and assistance, clear dues timely, don’t make false
commitment or statement etc.
13. Confidentiality: In order to keep the data, information or any document shared
with Software Developer by the businessman as secured and protected from un-
wanted disclosures, it is important to have detailed Confidential Information
clause in the Agreement between Software Developer and businessman. So
accordingly Parties needs to define what will amount to confidential and what will
not be considered as confidential and how the same would be dealt with.

8. IMPORTANT - T&S’c
14. Warranties and representation: Warranties and representation help out in
deciding the capability, experience, authorisation and other important things not
only at the initial stage of signing of an Agreement but throughout the period of
the Agreement. It helps a lot at the time of dispute to claim damages and recovery
of losses in the court of law. Some of the Instances of W&R Clauses are (1) Parties
has registration, license etc. and have all legal approvals as required for rendering
the software development services (2) Parties has power to enter into an
Agreement (3) Parties have been duly authorised to enter into an agreement.
15. Intellectual Property Right: As the work is being on done on “Work for hire basis”
so, all the Intellectual Property rights and related information and documents like
goodwill, data, content, coding, trade secrets, rights in relevant patent, trademark
copyright, shall be belongs to the businessman and the Software Developer is
entrusted to assign and transfer all the rights, if available, in favour of
businessman and Software Developer may be entitled to use the Deliverables, if
required, on the specific request made t to businessman.
16. Ownership of Software Developed: Businessman shall be the sole owner of the
Software/ app being developed. This would also include any records, documents,
data, content, paper, trade secret etc. shared with Software Developer and the
Software Developer shall not claim any ownership related to things belongs to
Entrepreneur and for which charges has been paid by the Entrepreneur.

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IMPORTANT - T&S’c
17. Indemnity: Term indemnity has been construed under the provision of section 124
of the Indian Contract Act, 1872 wherein it is stated that “A contract by which one
party promises to save the other from loss caused to him by the contract of the
promisor himself, or by the conduct of any other person, is called a "contract of
indemnity". It is to be specifically mentioned that in case either Party make and/ or
do anything due to which other Party had suffered losses then the party in wrong
would indemnify/ compensate the other Party at its own cost. So what would be
the case where compensation would be payable against the wrong doer , this has
to be captured in the agreement.
18. Limitation of Liability: under this clause Parties to the contract can restrict their
maximum liability in case of wrong doing. Normally parties mentioned specifically
in the contract that no party shall be liable for the indirect, special, punitive etc.
kind of losses of other Party in case of wrong doing.
19. Force Majeure: There are certain events which are beyond the control of Parties
to the Agreement which when occur, defeat the sole purpose of the Agreement,
so that has to be captured carefully. In some of the situation the same is governed
by section 32 and/ or section 56 of the Indian Contract Act, 1872.

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IMPORTANT - T&S’c
20. Termination: Cases when the Agreement can be terminated need to be
mentioned specifically. For Instances:
 Completion of Scope of work
 Expiry of Period of the Agreement
 Delay in performance of the either Party
 Breach of Terms and Conditions of the Agreement
 misuse of information and records
 Default in timely payment
Notice Period also need to be mentioned.
21. Miscellaneous General Clauses:
a. Bribery: No Bribe has been or shall be offered by the Software Developer
to get the assignment.
b. Relationship: Relationship between both the Parties to be defined whether
it would be Employee and Employer or Principal to Principal etc.
c. Notice: Where the Notice/ Communication shall be made by the Parties
meaning thereby details of party i.e. name, address, email id etc to be
mentioned.

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IMPORTANT - T&S’c
d. Severability: It is to be mentioned specifically that in case any provision of
the Agreement is not enforceable under the court of law, then the entire
agreement shall not be neglected but only that portion shall be removed
and remaining agreement shall be survive with full effect.
e. Time is Essence: Time is Essence means that the work has to be
completed within the given time period to complete the scope of work in
timely manner without any delay.
f. Assignment: Whether the work, benefit, etc. can be assigned to any third
party or not? If yes, then will there be any prior approval for the same.
e. Modification: The Software Development Agreement shall be modified
only with the mutual consent of the Parties.
f. Original Content: Service Provider to use original content, and data while
developing software.
22. Arbitration: In the event of any dispute, how the same would be resolved, so
Arbitration clause to be mentioned which shall be govern by the provision of
Arbitration and Conciliation Act, 1996 and amendment therein from time to time.
23. Jurisdiction: Court of law which shall have the right to entertain the dispute.

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