Software development contract: the essential clauses to include in the contract

A software development contract is often seen as a simple legal wrapper around a technical project.
In practice, poorly drafted contracts quickly become a source of friction: disputed deliverables, uncontrolled delays, intellectual property conflicts, and billing disputes.

These issues rarely come from the project itself. They almost always stem from an incomplete or imprecise contract.

The purpose of this article is straightforward: to provide a clear checklist of essential clauses, with practical explanations, to help avoid the most common mistakes.

Clearly defining the project scope

A development contract cannot rely on a vague description of the project.

It must clearly specify:

• the exact nature of the software to be developed,
• its functional purpose,
• its initial scope.

This description can be included directly in the contract or set out in an attached document. Without it, it becomes nearly impossible to assess whether the developer has properly performed its obligations.

An unclear scope is the leading cause of disputes in software projects.

Specifications: the cornerstone of the contract

Specifications are not an ancillary document. They are the central reference point of the project.

They should describe:

• the expected functionalities,
• technical constraints,
• the execution environment,
• client-side prerequisites,
• explicit exclusions.

A best practice is to state clearly that:

• any functionality not included in the specifications will require a separate quotation,
• any change to the scope must be approved in writing.

Without this framework, scope creep becomes inevitable.

Detailing the expected deliverables

A development contract is not limited to source code.

The deliverables must be clearly listed, for example:

• source code,
• technical documentation,
• user documentation,
• configuration files,
• deployment scripts,
• access to repositories (Git, etc.).

Each deliverable should be tied to:

• a specific format,
• an expected level of completeness,
• a delivery date or milestone.

This level of precision prevents later disputes over what was — or was not — included in the delivery.

Acceptance testing: objectively validating the work

Acceptance testing is the phase during which the client verifies that the deliverables comply with the contract.

The contract should define:

• a clear acceptance period,
• objective acceptance criteria,
• the process for reporting defects,
• the distinction between blocking and minor issues.

It is strongly recommended to specify that:

• the absence of objections within the acceptance period constitutes acceptance,
• corrections related to out-of-scope requests will be subject to additional fees.

Without an acceptance clause, a project is never truly completed.

Payment terms and milestones

Billing should reflect the actual progress of the project.

The contract must specify:

• the total price or pricing method,
• payment milestones,
• the conditions triggering each invoice.

Typical milestones include:

• contract signature,
• delivery of an intermediate version,
• acceptance validation,
• production deployment.

It is also advisable to include:

• the consequences of delays attributable to the client,
• the right to suspend work in the event of non-payment.

Poorly structured payment terms can unbalance the relationship from the outset.

Intellectual property transfer: a critical clause

Under French law, source code belongs to the developer by default, unless expressly transferred.

If the client is meant to own the software, the contract must include a compliant intellectual property assignment clause with all mandatory details.

The clause must specify:

• the rights assigned (reproduction, modification, adaptation, etc.),
• the territory,
• the duration,
• the permitted uses,
• the price of the assignment (either separate or included in the total fee).

An incomplete assignment clause is legally invalid.
This is one of the most common and costly mistakes in development contracts.

Managing open-source components

Open-source usage is frequently overlooked.

The contract should clearly address:

• whether open-source components are permitted,
• under which licenses,
• the resulting obligations for the client.

A sound approach is to require:

• a list of open-source dependencies,
• clear disclosure of applicable licenses.

This avoids unpleasant surprises when the software is commercially exploited.

Liability and limitation of responsibility

A developer is not subject to an absolute obligation of result.

The contract should define:

• the nature of the obligation (best efforts or result),
• exclusions of liability,
• a financial liability cap.

The cap is typically set at:

• the total amount paid under the contract, or
• a multiple of that amount.

Without a limitation, the financial risk may become disproportionate, especially for independent developers.

Deadlines, delays, and client cooperation

Software projects often depend on inputs from the client.

The contract should clearly state that:

• the client has a duty to cooperate,
• deadlines are suspended in the event of delays attributable to the client.

It is also useful to provide:

• an escalation or alert mechanism in case of blocking issues,
• a procedure for adjusting the schedule when necessary.

This prevents the developer from bearing sole responsibility for delays beyond their control.

Maintenance and post-delivery changes

Initial development does not automatically include maintenance.

The contract must clarify:

• whether maintenance is included,
• its scope,
• its pricing terms.

Failing this, any subsequent request will require renegotiation, often leading to avoidable tension.

Termination and project exit

Finally, the contract should anticipate exit scenarios.

It is advisable to define:

• the grounds for early termination,
• the financial consequences,
• the handover of deliverables and existing code.

This clause protects both parties if the project fails or must be stopped prematurely.

Conclusion

A software development contract does not need to be complex.
It must be precise, structured, and aligned with the practical realities of the project.

A well-drafted contract will not prevent every issue, but it will allow them to be managed calmly and efficiently.

I can assist you in drafting or reviewing such contracts to ensure they are both legally sound and operationally effective.

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