Sample Agreement for Software Development

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					                         Sample Agreement for Software Development1

DATE: [date]2

PARTIES:3

(1)       [COMPANY NAME], a company incorporated in [England and Wales]
          (registration number [number]) having its registered office at [address] (the
          “Developer”); and

(2)       [COMPANY NAME], a company incorporated in [England and Wales]
          (registration number [number]) having its registered office at [address] (the
          “Customer”).

BACKGROUND:

(A)       [Insert explanation of the background to this Agreement.]

(B)       [For example, “The Developer has expertise in the development of software, and
          the Customer has appointed the Developer to develop certain software, and to
          licence that software to the Customer, on the terms of this Agreement”.]

AGREEMENT:

1.        Definitions and interpretation

1.1       In this Agreement:

          “Acceptance Criteria” means those criteria for acceptance of the Software
          identified in Clause [6.1];4

1    This detailed Software Development Agreement includes provisions covering the development of the
     Software, acceptance testing by the Customer and the licensing and/or assignment of intellectual property
     rights in the Software to the Customer.

     The template includes optional provisions relating to different licensing models. The software licence may
     be limited to particular users, particular premises, a particular number of concurrent users, a particular
     number of installations, or a particular computer system.

     In addition to the provisions in the "standard" version of this document, this "premium" version includes
     provisions relating to: project management, software integration, developer testing, moral rights, data
     protection, confidentiality, publicity, third party co-operation, indemnities, non-solicitation of personnel and
     change control.

     This template includes an optional reference to an end user licence agreement (but does not include the
     end user licence agreement itself).

     Because of the diversity of software licensing models, this template includes lots of optional provisions. You
     should therefore take care to ensure that your edited agreement is internally consistent. (If you simply
     included all of the optional provisions in this document, the end result would not be consistent.)

2    The date should be the date of signature; if the parties sign on different dates, it should be the date of the
     last signature.

3    Where a party to the contract is a sole trader or partnership rather than a company, the following party
     descriptions may be used:

     sole trader: “[INDIVIDUAL NAME] trading as [business name], which has its principal place of business at
     [address] (the “[Developer/Customer]”)”

     partnership: “[PARTNERSHIP NAME], a partnership established under [English] law having its principal
     place of business at [address] (the “[Developer/Customer]”)”

4    The Developer undertakes to deliver to the Customer Software that meets the Acceptance Criteria. See
         “Acceptance Period” means the period of [number] Business Days following the
         date of [delivery of the Software to the Customer / notice of completion of the
         integration of the Software in the Environment];5

         “Affiliate” means an entity that Controls, is Controlled by, or is under common
         Control with the relevant entity;

         “Agreement” means this software development agreement (including the
         Schedules) and any amendments to it from time to time;

         “Business Day” means any week day, other than a bank or public holiday in
         [England];6

         “Business Hours” means between [09:00] and [17:30] [London time] on a
         Business Day;

         “CCN” means a change control notice issued in accordance with Clause [11],
         which may be in the form specified in Schedule [4];

         “CCN Consideration Period” means the period of [number] Business Days
         following the receipt of a CCN sent by the other party;

         “Change” means [any change to the terms of this Agreement (including for the
         avoidance of doubt any change to Software specification in Schedule [1])]; 7

         “Charges” means the amounts payable by the Customer to the Developer under
         or in relation to this Agreement (as set out in Schedule [3]);

         “Confidential Information” means the Customer Confidential Information and
         the Developer Confidential Information;

         “Control” means the legal power to control (directly or indirectly) the
         management of an entity (and “Controlled” will be construed accordingly);

         “Customer Confidential Information” means

         (a)       any information disclosed (whether disclosed in writing, orally or
                   otherwise) by the Customer to the Developer [during the Term] that is
                   marked as “confidential”, described as “confidential” or should have been
                   understood by the Developer at the time of disclosure to be confidential;

         (b)       the [financial] terms and conditions of this Agreement; and

         (c)       [other confidential information];8

         "Customer Indemnity Event" has the meaning given to it in Clause [16.1];


    Clause 6 for details.

5   This is the period during which the Customer must conduct any acceptance tests in relation to the Software.

6   If a party is based outside the UK, you should consider whether to amend this.

7   Should all changes to the Agreement be subject to the Change control procedure?

8   It may be useful to specify more precisely the information that is to be treated as Confidential Information,
    so there is no room for argument.
         "Customer Representatives" means the person or persons identified as such in
         Schedule [2];

         “Customer Works” means the works and materials provided to the Developer by
         the Customer, or by any third party acting for or on behalf of the Customer, for
         incorporation into the Software;

         “Custom Software” means [those elements of the Software identified as such in
         Schedule [1] / all elements of the Software, excluding the Third Party Works and
         Customer Works, created by or on behalf of the Developer on or after the
         Effective Date] in executable format only;

         “Defect” means a defect, error or bug having [an / a material] adverse effect on
         the appearance, operation or functionality of the Software[, but excluding any
         defect, error or bug caused by or arising as a result of:

         (a)     an act or omission of the Customer, or an act or omission of one of the
                 Customer's employees, officers, agents, suppliers or sub-contractors; or

         (b)     an incompatibility between the Software and any other system,
                 application, program or software not forming part of the Environment or
                 otherwise specified as compatible in Schedule [1]];

         “Developer Confidential Information” means:

         (a)     any information disclosed (whether disclosed in writing, orally or
                 otherwise) by the Developer to the Customer [during the Term] that is
                 marked as “confidential”, described as “confidential” or should have been
                 understood by the Customer at the time of disclosure to be confidential;

         (b)     [the Source Code;]

         (c)     the [financial] terms and conditions of this Agreement; and

         (d)     [other confidential information];

         "Developer Indemnity Event" has the meaning given to it in Clause [16.3];

         "Developer Representatives" means the person or persons identified as such in
         Schedule [2];

         "Developer Software" means the Standard Software and the Custom Software;

         “Effective Date” means the date of execution of this Agreement;

         “Environment” means the computer hardware and software environment for use
         in which the Software will be designed, the requirements for which are set out in
         Schedule [1];

         "Escrow Agent" has the meaning given to it in Clause [14.1];9


9   If the source code for the Software is not being provided to the Customer, the Customer may want to enter
    into a separate escrow agreement in relation to such source code. Under a typical escrow agreement, a
    third party escrow agent will hold an (up-to-date) copy of the source code, and will release that code to
    customers if the Developer becomes insolvent or in other specified circumstances. See Clauses 12 and 14.
“Force Majeure Event” means an event, or a series of related events, that is
outside the reasonable control of the party affected (including [failures of or
problems with the internet or a part of the internet, hacker attacks, virus or other
malicious software attacks or infections,] power failures, industrial disputes
affecting any third party, changes to the law, disasters, explosions, fires, floods,
riots, terrorist attacks and wars);

“Intellectual Property Rights” means all intellectual property rights wherever
in the world, whether registered or unregistered, including any application or
right of application for such rights (and the “intellectual property rights” referred
to above include copyright and related rights, database rights, confidential
information, trade secrets, know-how, business names, trade names, trade
marks, service marks, passing off rights, unfair competition rights, patents, petty
patents, utility models, semi-conductor topography rights and rights in designs);

“Milestone” means a specific milestone, achievement, notification, action or
other event identified as a milestone in Schedule [2];

“Personal Data” has the meaning given to it in the Data Protection Act 1998;

“Representatives” means the Customer Representatives and the Developer
Representatives;

“Schedule” means a schedule attached to this Agreement;

“Services” means all the services provided or to be provided by the Developer to
the Customer under this Agreement, including those services described in Clause
[3.1];

“Software” means the software to be developed and delivered under this
Agreement, including:

(a)    the Developer Software;

(b)    the Third Party Works; and

(c)    the Customer Works,

[and including where the context permits any authorised derivatives of the
Software];

["Source Code" means the source code of the [Standard Software / Developer
Software][, together with all other technical information reasonably required to
enable the maintenance, updating and modification of the [Standard Software /
Developer Software][, and including where the context permits any authorised
derivatives of the source code];]

“Standard Software” means [those elements of the Software identified as such
in Schedule [1] / the Software excluding the Custom Software, the Customer
Works and the Third Party Works / all elements of the Software, excluding the
Third Party Works and the Customer Works, created before the Effective Date] in
executable format only;

“Target Delivery Date” means the target date for [delivery of the Software /
completion of the integration of the Software in the Environment] specified in
Schedule [2];
        “Third Party Works” means:

        (a)      the works and materials identified as such in Schedule [1]; and

        (b)      any other works and materials that the parties agree [in writing] will be
                 incorporated into the Software as Third Party Works; and

        “Term” means the term of this Agreement.

1.2     In this Agreement, a reference to a statute or statutory provision includes a
        reference to:

        (a)      that statute or statutory provision as modified, consolidated and/or re-
                 enacted from time to time; and

        (b)      any subordinate legislation made under that statute or statutory provision.

1.3     The Clause headings do not affect the interpretation of this Agreement.

1.4     The ejusdem generis rule is not intended to be used in the interpretation of this
        Agreement.10

2.      Term

        This Agreement will come into force on the Effective Date and will continue in
        force [until [date or event], upon which it will terminate automatically /
        indefinitely], unless terminated [earlier] in accordance with Clause [20].11

3.      Services overview

3.1     The Developer will design and develop the Custom Software and integrate the
        Custom Software with the Standard Software, the Third Party Works and the
        Customer Works, in accordance with the terms of this Agreement.

[3.2    The Developer may sub-contract the provision of any of the Services without
        obtaining the consent of the Customer.

        OR

3.2     The Developer must not sub-contract the provision of any Services without
        obtaining the prior written consent of the Customer.]

        ...


                      This document contains the first few sections of a
                   premium SEQ Legal template available for download from:
                             http://www.website-contracts.co.uk




10 Where the ejusdem generis rule applies, the meaning of a general provision may be restricted by the listing
   of particular examples. This is usually undesirable.

11 This agreement has been drafted on the basis that the licences of software will terminate upon the
   termination of the agreement. So, in almost all cases, the agreement should not terminate upon the
   completion of the development services.