10 Software Services Agreement Tips – Introduction
If your team creates software solutions, the following service agreement tips should provide some of the key issues to cover in your initial discussions with a potential client.
Statement of Work
The agreement should include a statement of work, which identifies the project’s scope and the respective responsibilities of you and your client. Oftentimes, if conflict arises, it’s because the scope wasn’t properly defined, which led you and your client to interpret the extent of each party’s obligations differently.
While creating the work as the service provider, you may create new generic elements that you want the right to use for future client work. Therefore, ensure these generic elements (and third-party software) are distinguished from the code that will be owned by your client. Review the agreement sections detailing ownership of the Intellectual Property so that you and your client are clear on who will own and have the right to use elements of the work created.
How and when is the work being delivered? Ensure the answers are clearly outlined and are attainable.
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Clarify what you are being paid and when. It can’t hurt to clarify that HST, if applicable, will be added. Regarding the payment schedule, one option is that a portion is paid when the agreement is signed, and the rest is paid on milestones associated with deliverables. Consider your cash flow before agreeing to a schedule that seems too delivery-focused. Also, you can leverage Intellectual Property to ensure payment by making sure that the full rights to use the deliverables don’t transfer to the client until payment is received in full.
Plans change over time, and the scope of your arrangement may need to be amended at some point along the way. To plan for this, there should be a process set out in the agreement to account for change orders. The process should require changes orders be made clearly and in writing, and that changes in fees and schedule are spelled out and agreed.
Warranty versus Maintenance and Support Services
Are maintenance and support services included in your fee? If so, to what extent will these services be provided before you start charging extra? Also, how will both parties deal with any defects in the deliverables? Do you provide a period of warranty to cover your client for a certain amount of time, or indefinitely, to fix bugs?
What situations should extend the deadlines? If your client is late on providing you assets or the collateral you need to finish the job, how should the deadlines be amended? Who will bear the cost resulting from delays?
Do you intend to showcase the client’s logo and a sample of the work you’ve done for the client on your web site? Be sure to get the go ahead in advance.
Among other protections, the agreement should provide that the client will cover you should the assets they provided (such as their artwork / logos) infringe the rights of others. Why should you be exposed? Make sure that risk stays with the client.
The Right Client
A well-drafted agreement can only go so far in helping you deal with a difficult client. If, during pre-agreement discussions, the client is being very difficult, demanding unrealistic timeliness, and/or providing insufficient financial incentives, they may not be the right client for you. While it’s easier to say no to a potential client when you have other opportunities available, not having other business might not be a good enough reason to do business with a client that isn’t a good fit.
10 Software Services Agreement Tips – Conclusion
This blog merely scratches the surface of considerations to keep in mind when working with service agreements. If you are a software service provider or potential client, and have questions about service agreements, we encourage you to speak with Edwards Creative Law or another entertainment lawyer.
For information about other instances of gathering and waiving rights in agreements, we encourage you to visit our blog entitled Gathering and Waiving Rights – Ask An Entertainment Lawyer.
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Updated to March 24, 2022
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* This blog is for general informational purposes only and is not to be construed as legal advice. Please contact Edwards Creative Law or another lawyer, if you wish to apply these concepts to your specific circumstances.