As Jeremy Redfern, Partner and commercial contracts lawyer with QualitySolicitors Parkinson Wright explains ‘This does not have to be an overly lengthy or complicated document, but it must cover key issues like the scope and functionality, cost and time frame, intellectual property ownership, key protections to safeguard your interests, and how any dispute should be addressed and resolved.’
Failing to get a professionally drafted contract prepared can expose you to all sorts of potential (but entirely avoidable) pitfalls, which could see your software project derailed and which could also have a costly and destabilizing effect on your business.
In this article, we highlight just four of the potential pitfalls you need to watch out for.
Pitfall 1 – lack of clarity over what you want
It may sound obvious, but before you commit to a bespoke software contract you need to have absolute clarity over what it is that you are asking the developer to create and the criteria that will be used to assess whether or not they have delivered what you have commissioned.
While part of this process will involve compiling a list of the functions that you want the software to be able to perform, it will also involve you thinking more broadly about whether the new software will need to integrate with any existing systems or databases you have in place, the look and feel it should have, the navigation tools required, the user experience you want to create, security and privacy requirements, as well as corporate colours and branding.
You also need to be alive to the possibility that your wish list of requirements may change or evolve as the project progresses, and you will therefore need to have a procedure in place for dealing with the incorporation of any modifications that you may deem necessary or desirable.
Failing to be clear about what you want, and your right to refine this if necessary, could leave you exposed to the risk of a disagreement arising with your developer over the scope of the specification and project agreed, which in turn could result in you being asked to pay extra fees.
Pitfall 2 – failure to break the project down into stages
Given the tendency for software specifications to be tweaked, at least during the early stages, it is important that you agree on a development process that is sufficiently flexible and agile.
One of the easiest ways to do this is to provide for the project to be broken down into distinct stages, and for each stage to include a testing and acceptance process to ensure that the software is being built to deliver what you need and to take account of any required changes.
Not breaking the project down into stages leaves you at risk of finding out too late that a problem exists, and then having an argument with the developer about whose fault this is.
Pitfall 3 – no discussion about intellectual property rights
It goes without saying that if you are commissioning bespoke software, you need to ensure that your developer understands and agrees that any intellectual property rights that exist in the resultant product will belong to you. This includes the all-important source code, which it will be vital for you to own if you want to further develop or adapt the software at some point down the line or if you want to explore the possibility of licensing the software to other organisations.
In addition, thought will need to be given to whether any components used to build your software may be subject to intellectual property rights owned by anyone else. If so, does your developer have the necessary licences or permissions needed to utilise those components? Are there any steps you need to take to ensure those authorisations extend to cover you?
You will need to think separately about the bespoke software itself and any pre-existing or open-source software that has been incorporated as an essential building block.
Failing to address the issue of intellectual property could leave you exposed to the risk of the developer trying to claim rights of ownership that should properly belong to you. It also puts you at risk of being accused of intellectual property rights infringement where you are found to be using a software component that was developed by someone else and for which you do not have the correct licences or permissions in place.
Pitfall 4 – forgetting about post-delivery issues
It is all very well and good getting your bespoke software built, but who is going to train your users and what happens if the software develops a glitch or needs to be updated?
While most software development companies will offer a post-delivery service that is designed to ensure that your software continues to work for you, you should not take it for granted that this will automatically be the case. Instead you should insist on the inclusion of appropriate post-delivery and maintenance obligations, the cost of which cannot be increased above a set amount or percentage point. You should also turn your mind to what you would want to happen if your software developer suddenly decided to shut up shop or if they happened to go bust.
Failing to think about these issues could leave you with a product that develops problems which you have to get someone else to address, at great cost, and could also expose you to the risk of having to go back through the development process again with another supplier.
How we can help
The main attraction of going down the bespoke route, as opposed to simply buying an off-the-shelf software-as-a-service (SaaS) solution, is that you can obtain a solution that is tailored to the needs of your business. You can also negotiate personalised terms rather than being forced to agree to standardised contract conditions that will undoubtedly be weighted in favour of the supplier.
By seeking legal advice at an early stage, you can ensure that the contract you negotiate works in your favour and it will adequately protect your interests.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.