Software Development Agreement

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Party 1

Name / Company
Individual / Company
Address 1
Address 2
City
State/Province
Zip

Party 2

Name / Company
Individual / Company
Address 1
Address 2
City
State/Province
Zip
What is the effective date for this contract?
"Services" are acts that a party is performing under an agreement for payment. "Services" are not goods or deliverables, which are the tangible results of the services. For example, if a consultant is engaged to meet with and better understand a customer's manufacturing system and then provide a written report summarizing how to improve the system, the meeting and understanding would be the services, while the report itself would be a deliverable.

Party 1:
Party 2:
SERVICES - (Party-1 Buys) - What are the Services that Party-2 will provide to Party-1?
A "Background Check" requires a party to perform a thorough review of its personnel's past experiences and activities to ensure that there is nothing in their background that would make it difficult for them to comply with the Agreement.

Party 1:
Party 2:
PERSONNEL - BACKGROUND CHECK (Party-1 Buys) - Should there be a background check?
Which party (or parties) should perform background checks?
"Key Personnel" are individuals employed by the vendor who are essential in providing the Services. Each party may also indicate a project manager for this Agreement.

Party 1:
Party 2:
PERSONNEL - KEY PERSONNEL AND PROJECT MANAGERS (Party-1 Buys) - Are there any Key Personnel? Who are the project managers?
Please state the names of the Key Personnel.
Party-1
Who is Party-1's project manager?
Party-2
Who is Party-2's project manager?
"Deliverables" are the tangible goods or intellectual property provided under an agreement for payment. "Services" are not goods or deliverables, which are the tangible results of the services. For example, if a consultant is engaged to meet with and better understand a customer's manufacturing system and then provide a written report summarizing how to improve the system, the meeting and understanding would be the services, while the report itself would be a deliverable.

Party 1:
Party 2:
DELIVERABLES (Party-1 Buys) - What are the Deliverables Party-2 will provide to Party-1 pursuant to this Agreement?
A "Deadline" is a requirement that the services, goods or deliverables required under the Agreement must be provided within a definite time frame.

Party 1:
Party 2:
DEADLINE (Services and Deliverables) - When will all Services and Deliverables be provided?
Please describe the deadline(s):
Type number of days.
A "Deadline" is a requirement that the services, goods or deliverables required under the Agreement must be provided within a definite time frame. "Assumptions" refer to certain requirements the customer must meet so that the vendor can calculate how much work is involved, when the work can be completed, and how much the fee should be.

Party 1:
Party 2:
DEADLINE - ASSUMPTIONS (Party-1 Buys) - Does Party-1 have to do anything in advance so that Party-2 can meet the deadline?
What must Party-1 do?
Once a customer takes ownership and title to goods, if the goods are damaged or lost, then that becomes the customer's responsibility. Because of these consequences, the parties usually discuss and agree on the point where ownership, title and risk of loss are transferred to the customer. "Acceptance" is the point after the customer receives the Deliverables and has concluded that the Deliverables comply with the Agreement's requirements.

Party 1:
Party 2:
OWNERSHIP, TITLE AND RISK OF LOSS (Deliverables) (Party-1 Buys) - At what point does ownership, title and risk of loss transfer to the customer?
A fee in this context can take many forms, including a flat fee, the total of the hours/days incurred times the hourly/daily rates, a guaranteed maximum fee, a per Service/Deliverable fee, a per milestone fee, or other arrangement.

Party 1:
Party 2:
FEE (Services/Deliverables) (Party-1 Buys) - What are the fees?
What is the flat fee?
What is the hourly rate for each member of Party-2's personnel?
What is the daily rate for each member of Party-2's personnel?
What is the maximum flat fee?
Hourly rate fee or daily rate fee?
What is the hourly rate for each member of Party-2's personnel?
What is the daily rate for each member of Party-2's personnel?
Please list each Service/Deliverable and fee.
Please list each milestone and fee.
Please list each fee.
"Payment Schedule" means when the vendor will bill the customer. The customer may prefer not to be billed until after acceptance, which is a legal concept that gives the customer a short testing period after receiving goods or services to determine whether or not they are satisfactory. The vendor instead prefers to invoice the customer upon receipt of goods or services, so that the vendor can recognize its revenue sooner.

Party 1:
Party 2:
FEE - PAYMENT SCHEDULE (Party-1 Buys) - What is the payment schedule?
Please specify the percentages and dates/milestones.
Please specify each milestone and the fee amount to be invoiced.
Please specify each fee payment schedule.
"Affiliates" means a party's parent, subsidiary, or related business associations that, in future purchases, could receive the same pricing under this contract.
"Most Favored Customer Status" means that a customer is receiving a deal from a vendor which is just as good or better than any other deal the vendor has with any other customer.
"Assumptions" means requirements a customer must meet or the vendor will have to perform extra work and as a result will need to increase the fees.

Party 1:
Party 2:
FEE - CONDITIONS (Party-1 Buys) - Do any assumptions, affiliate pricing, or most favored customer status conditions apply to the fee?
What must Party-1 do?
What are the fee increases?
A vendor may offer a discount off the invoice if the invoice is paid early so the vendor has its money sooner.

Party 1:
Party 2:
FEE - EARLY PAYMENT DISCOUNT (Party-1 Buys) - Does Party-1 receive an early payment discount for early payments?
To earn the discount, customer must pay the fee within how many days?
What is the discount percentage?
Expenses incurred by a vendor are sometimes reimbursed by a customer, and this cost is over and above the fees under the Agreement.

Party 1:
Party 2:
EXPENSES (Party-1 Reimburses) - Will Party-1 reimburse Party-2's expenses?
"Intellectual Property" means the nontangible goods provided by one party to the other, such as a report, software code, a process, a design, a work of authorship, an invention, a product or service name, or a secret with commercial value. In this case, an assignment means that a party assigns ownership of all rights in the intellectual property to the other party, while a license means that a party has a right to use the intellectual property but does not own it.

Party 1:
Party 2:
INTELLECTUAL PROPERTY - ASSIGNMENT/LICENSE (Party-1 Assignee) - Do I want Party-2 to assign or license the intellectual property rights in the Deliverables to Party-1?
What is the field of use?
What is the territory?
What is the territory?
What is the territory?
"Intellectual Property" means the nontangible goods provided by one party to the other, such as a report, software code, a process, a design, a work of authorship, an invention, a product or service name, or a secret with commercial value. In this case, a sublicense means that a party has a right to authorize other third parties to use the intellectual property, such as agents or subcontractors.

Party 1:
Party 2:
INTELLECTUAL PROPERTY - THIRD PARTY CONTRACTORS SUBLICENSE (Party-1 Sublicenses) - Can Party-1 sublicense its Deliverables license to third party contractors for Party-1's internal business purposes?
The "Warranty Length" refers to how long the Services and/or Deliverables will perform as expected.

Party 1:
Party 2:
WARRANTY LENGTH (Services and Deliverables) - How long should the warranty last?
"Limitation of Liability" is a provision used to limit the kinds of damages a company could be liable for if sued. Parties often want to limit their liability for "Consequential Damages" - these damages can be quite large, might greatly exceed the money actually owed under the contract, and include lost profits and punitive damages. Parties may also want to impose a hard cap on their liability. For instance, a party could state that it won't be liable for more than $10,000, or for more than the fees under the contract.

Party 1:
Party 2:
LIMITATION OF LIABILITY - CONSEQUENTIAL DAMAGES - For consequential damages, do I want to limit liability for both parties or just for Party-1?
For certain egregious acts, you may not want the parties' liability limited. Which of the below acts do you want excluded from the limitation of liability?
For certain egregious acts, you may not want this party's liability limited. Which of the below acts do you want excluded from the limitation of liability?
"Limitation of Liability" is a provision used to limit the kinds of damages a company could be liable for if sued. Parties often want to limit their liability for "Consequential Damages" - these damages can be quite large, might greatly exceed the money actually owed under the contract, and include lost profits and punitive damages. Parties may also want to impose a hard cap on their liability. For instance, a party could state that it won't be liable for more than $10,000, or for more than the fees under the contract.

Party 1:
Party 2:
LIMITATION OF LIABILITY - HARD CAP - Do I want to impose a hard cap on liability for both parties or just Party-1?
Do I want to choose one of the options below, choose a multiple of the contract value, or specify the hard cap myself?
Which option?
What should the multiple be?
How much?
Do I want to choose one of these options, choose a multiple of the contract value, or specify the hard cap myself?
What should the multiple be?
How much?
"Indemnification" and "Limitation of Liability" both focus on parties' responsibilities in disputes. "Limitation of Liability" covers disputes between the parties who sign the agreement. "Indemnification" focuses on a dispute where a third party sues a party who signed the agreement, and the suit was caused by the other signing party's conduct. If this other signing party is required to "indemnify" the first signing party, that means the second signing party will generally pay the legal fees and any damages awarded or settlement amounts. "Claim Elimination" deals with the situation where a third party demands that a customer no longer use a service, deliverable or product because it violates that third party's rights. Under this provision, a vendor is required to eliminate that claim or take other steps.

Party 1:
Party 2:
INDEMNIFICATION (Services and Deliverables) (Party-2 Indemnifies/Sells) - What do I want Party-2 to indemnify Party-1 for?
"Indemnification" and "Limitation of Liability" both focus on parties' responsibilities in disputes. "Limitation of Liability" covers disputes between the parties who sign the agreement. "Indemnification" focuses on a dispute where a third party sues a party who signed the agreement, and the suit was caused by the other signing party's conduct. If this other signing party is required to "indemnify" the first signing party, that means the second signing party will generally pay the legal fees and any damages awarded or settlement amounts.

Party 1:
Party 2:
INDEMNIFICATION (Services and Deliverables) (Party-1 Indemnifies/Buys) - What do I want Party-1 to indemnify Party-2 for?
The "Term" means how long the contract will be in force.

Party 1:
Party 2:
TERM - LENGTH - How long is the term of the agreement?
How many years do I want?
How long?
An "Evergreen" term - also referred to as an "Automatic Renewal" - means that once the term comes to a certain date in the future, it automatically extends for an additional time period or repeated additional time periods until either party sends notice that the term does not renew anymore.

Party 1:
Party 2:
TERM - EVERGREEN - Will the agreement automatically renew or not?
"Termination for Convenience" means a party's right to terminate the agreement at any time for any reason at all (or even no reason), and is usually accompanied by advance written notice.

Party 1:
Party 2:
TERMINATION FOR CONVENIENCE - Do I want to terminate the agreement at any time for any reason or no reason with thirty (30) days prior notice?
A "Subcontractor" is a third party who one of the signing parties wants to perform some of its responsibilities under the Agreement, such as providing a Service or Deliverable.

Party 1:
Party 2:
SUBCONTRACTORS - Can one or both of the parties subcontract any responsibilities?
The "Governing Law" is the particular state or country's laws that you choose to apply to this contract. Often times, the governing law is the state or country within which one or both of the parties have a main office, or where they are conducting business under the contract.

Party 1:
Party 2:
GENERAL - GOVERNING LAW - Which state or country's laws govern this contract?
"Forum", "Venue" or "Jurisdiction" refers to where disputes between the parties must be litigated. Often the parties will still be free to seek injunctions or other temporary relief outside of the forum as they see fit.

Party 1:
Party 2:
GENERAL - FORUM - Which state or country is the forum for this contract?
"Assignment" means the right to transfer the contract, or a right or obligation under the contract, to a third party. Usually, this is prohibited or limited to a third party buying the shares or assets of a party to the contract.

Party 1:
Party 2:
GENERAL - ASSIGNMENT - Do I want both parties to be able to assign this Agreement, just Party-1, or not allow any assignments?

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Complete Description. This Software Development Agreement covers customers buying software that is custom developed for the customer’s needs, and explains services, personnel, key man requirements, deliverables, source code, technical documentation, deadlines, ownership, title, risk of loss, acceptance, fees, invoices and taxes, records and audits, intellectual property rights, warranties, disclaimers, limitation of liability, indemnification, term and termination, force majeure, publicity, and general boilerplate for a Software Development Agreement.