What should you consider when entering into a custom software development contract?
This is a common scenario. The issue is so widespread that we have decided to explore it in a series of articles.
Let us examine the typical case: a company engages a custom software development service, and the developer sends you a quote with a partially defined service and payment method.
What problems can arise in software contracts?
- The scope is not clearly defined; that is, what is included in the project and what is not. When we want to make any changes, we are charged for each adjustment.
- The project deliverables specify one format in the scope, but there are no details about additional formats. For example, if we contract the development of a website, the design or adaptation to corporate branding may not be mentioned. Similarly, there may be no reference to the creation of a landing page or an app or ensuring that the website adheres to responsive design standards.
- One issue is that the project’s execution time has not been defined, and there is no clarity regarding what happens if this time limit is not met. Is there a penalty for delays?
- The contract does not specify what actions will be taken if the developed solution is flawed or fails to meet the requested requirements.
- The ownership of the intellectual property rights for the developed solution or platform has not been defined. Did you know that, in many cases, you only have the right to use the tool, with no other rights transferred to you?
- There is no indication of what will happen once the project has been developed. For example, is there any guarantee, maintenance, or updates?
- There is no clear definition of what will happen in the event of a breach of contract (often because no formal contract exists), either by one party or the other.
What if you are the supplier?
As the supplier, you should address these concerns in your software development contract, detailing all the particularities. This will safeguard your position in case of disputes.
Data protection and compliance with e-commerce regulations
Linked to this is the issue of data protection and compliance with e-commerce regulations. Solutions of this nature often collect personal data. Therefore, it is necessary to anticipate, from the design and conceptualisation of the project, the type of data to be collected, the methods for doing so, and how users or customers will be informed about the processing of the data and the functioning of the solution.
You may be interested: Tips to minimise Data Protection risks
Legal texts and applicable regulations
If developers or designers offer you legal texts or standard or copied terms and conditions (copy-pasting is trendy), be cautious, as they may not comply with the regulatory requirements. On one hand, the Spanish Data Protection Agency (AEPD) may investigate a possible infringement (with the corresponding risk of a fine). On the other hand, a customer with an issue regarding the contracting of your services via web or application could make a claim against you.
Storage, processing of information, and security measures
It is crucial that, whether you are a customer or a provider of development services, you know how information is stored and processed, and that applicable security measures are defined. If you, as a provider, do not offer these services, it is important to specify them. Customers should also know which security measures to apply and what to request from their technology service providers.
Legal support
In all these matters, whether you are a client or a developer, AGM Abogados provides exceptional legal solutions tailored to your needs.
