Outsourced and Custom Development Agreement

What Is Outsourced and Custom Development Agreement?

Outsourced and Custom Development Agreement is drafted when one party plans on outsourcing the software or application development job to an agency or individual. This software development outsourcing contract works as evidence of the deal between the outsourcing party and the outsourced agency. It specifies all the terms and conditions, including copyright of the code, payment, Term of the agreement, development of custom software, and more.

When Do You Need the Outsourced and Custom Development Agreement?

Usually, the code developer is considered the owner of the software or application. However, the status of ownership can be changed through this software development outsourcing agreement. This contract is used to transfer the ownership or copyrights to the recruiting company. The agreement is drafted when a company needs to get ownership of the custom software app code.

Inclusions in the Outsourced and Custom Development Agreement

A standard software development outsourcing contract template contains the following terms:

The legal name of the parties signing the agreement
Compensation promised to the custom software developer (either in hourly rates or fixed price)
Intellectual property rights ownership — whether the property would only be an assignment or transfer of ownership
Change in specifications
Fixing remuneration for changes and changes for which no remuneration would be charged
Time for each element of the project and the cost of the entire project
Acceptance testing process
Responsibility of the cost of obsolescence
Responsibility for the increased cost of infrastructure at various points in the project
Confidentiality clause
Software developer warranties
Applicable law
Indemnification clause
Tenure of the contract
Waiver of any future claims from the software
Complete and unconditional assignment of the software to the client
Use of brand or copyright for any marketing purposes
Termination of the contract

How to Draft Outsourced and Custom Development Agreement?

This agreement must be drafted, read, and signed before a deal is settled. Both parties can seek a professional attorney’s help to ensure that the contract is in compliance with the state laws.

Here is how to draft a precise Outsourced and Custom Development Agreement:

Start with the introduction, i.e., legal names, addresses, and contact details of the recruiter and custom app or software developer
List the developer’s duties and the company’s expectations
Mention the delivery date as well as the Term of the contract
Add the confidentiality clause to ensure that all the details are kept confidential until and after the termination of the contract
Add the copyright clause to transfer the ownership of the code and software to the company
Read the agreement thoroughly
Sign the contract

A software development outsourcing agreement sample would indicate the following important details

Duties of the developer
The delivery details of the software and the timelines
Intellectual property rights and assignments in the software
Developer warranties
Applicable laws
Whether modifications can be made orally or in writing only.

Benefits of Outsourced and Custom Development Agreement

This agreement ensures that the contract abides by the state laws.
The contract transfers intellectual property rights to the company. It guarantees that the developers won’t claim the ownership rights before, during, or after the delivery of the application.
The development of the contract could be done at a cheaper price increasing the profits for the company
The developer can generate revenue through his customized software development
If the software is only an assignment and a transfer, then the ownership still vests with the developer
The software can be customized according to the client’s needs to develop an edge over their client.

Key Terms in Outsourced and Custom Development Agreement

The terms include

Confidentiality
Indemnification
Intellectual Property Rights
Compensation
developer’s duties
Delivery of the product
Term of the contract

What Happens in Case of Violation?

In case of violation, the defaulting party will be subject to Compensation or penalty (as mentioned in the agreement). Each party is supposed to read the contract and sign it only if they are satisfied with the mentioned clauses. Should any term be violated, the contract will be terminated. Parties may decide to extend the contract if the default is merely time delay. However, if time is of essence, a breach of contract would attract punitive damages. The parties may even approach a court of law in case there is a major breach of contract

Through an agreement, you can embark on new projects. However, before you sign the first line of code is written, there is one more important step to be made – signing this agreement.