For free initial consultation, call (858) 674-6177.
Mr. Himelstein is a San Diego attorney who helps clients to provide
legal protection for their intellectual property associated with the
internet and computer software and hardware and assists them in
general business matters.
The following are some issues involved in web site and software contracts.
There is a variety of types of web site and software contracts, each frequently having many issues in common with other web site and software contract types. For example, there are Full Site/System Procurement Contracts, Web Site/Software Development Contracts, Software Marketing and Distribution Contracts, Sales Contracts, Site/Software Licensing Contracts, Site/Software Maintenance Contracts, Site/Software Service Contracts, and others, plus contracts which are some combination of the above. Each type of contract has its own peculiarities. This document will concentrate on Site/Software Development Contracts, as being somewhat representative.
Web Site/Software Development Contracts are often complex and time consuming to create and to complete. Even if a project is relatively simple it is important to have a written contract so each party knows what to expect.
First to be discussed are some general issues. Then specific terms are described or listed, followed by some important legal terms.
Fixed Price versus Time and Materials Contracts. Typically, web site and software development contracts are performed on a fixed price basis or on a time and materials basis (hourly). In general the time and materials contract places the financial risk entirely in the hands of the purchaser, since the developer will be paid for each hour worked. The developer has no direct financial incentive to complete the project within some time period. In contrast the fixed price contract places the financial risk in the hands of the developer. Developers are, of course, unwilling to assume the financial risk, unless it is clear how extensive and complex the development will be. If the purchaser possesses a definition of the site or system required which is sufficiently complete and specific to limit the scope of the development, then developers can be found who will provide a fixed price quote. With such a complete system definition it is entirely appropriate for the developer to assume the risk, since the developer holds himself/herself out to be the technical experts. If the purchaser does not have such a complete definition, one can hardly expect the developer to assume the financial risk, unless other factors apply. On developments which are small and simple it is typical to contract on a time and materials basis since it may not be economically justified to create a complete definition. Even so a written contract is strongly recommended. Working only with an oral contract is not recommended; it is usually difficult to prove the existence and the terms of an oral contract.
Sometimes a developer and a software purchaser make other arrangements to induce the developer to assume more risk, e.g. offering royalties or an equity position.
Some specific terms which are typically needed in a web site or software development contract are described or listed below.
The legal information contained above is informational in nature and cannot be considered legal advice. Every situation has its own factual context and cannot be judged without that context.
For free initial consultation call (858) 674-6177.
This web site is a work in progress. Some parts are knowingly incomplete; other parts are known to need revisions. Certainly, the future will reveal the need for further additions and revisions.
Last update of this sub-page May 3, 2006 by David B. Himelstein.
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