Custom Software Development Agreement

Unlike buying an off-the-shelf software program, creating a custom software solution makes things complicated in the software industry.

When a company or individual hires a firm to develop a custom software solution, they usually enter a legal contract called a custom software development agreement.

For software development contracts to be beneficial, customers and software providers should know what sections to add. Using custom-built software agreement templates like Bonsai’s software development contract template, you can create your agreement by including the following in your software development contract.

1. Service to be provided

One of the most important clauses of a software development contract describes the development services you expect your software provider to provide. This section of your contract refers to the software specifications that are an integral part of it.

This section also incorporates development tools, specialized framework plans, framework required to finish project deadline, and strategy.

It should also include information about the support provided during the development and post-development phase and other services like hosting support, hardware support, and technical documentation.

2. Project’s time and cost

The next section of a software development agreement is fixing your project’s cost and time required for completion. It briefly describes your selected contract model, states the hourly rates, milestones, development phases, and project deadlines.

For creating a comprehensive agreement, it’s imperative to include sections about potential delays in a project. If both parties accept to share partial payments depending on the development progress, remember to mention that point.

Preparing a detailed and comprehensive software development agreement can prevent misunderstanding and ensure timely completion of work without overshooting your budget.

3. Acceptance criteria

Before entering into a custom software development agreement, a software provider and a customer compose acceptance criteria for the app or solution based on the customer’s requirement.

It’s the section that determines whether a service provider can provide software as initially requested by a customer. So, ensure that this section should be written in simple language to avoid misunderstandings.

Usually, a customer receives a ‘Certificate of Acceptance’ in fixed-price contracts when a project is nearing completion. This certificate serves as a proof that the developed app qualifies and meets all customer requirements. It’s proof that a customer agrees upon successful project completion.

4. Intellectual property rights

One of the most critical sections of a software development agreement is intellectual property rights. This section clearly defines that a customer is the sole owner of the developed software.

Custom Software Development Agreement


To prevent hefty lawsuits for breach of intellectual property rights, ensure you include the following:

  • Source code belongs to your customer.
  • In case of contract termination, the software provider company owns the code developed.
  • Materials like designs, plans, and wireframes created during development should be deleted or destroyed.

5. Confidentiality

This section prevents a customer and software provider from sharing sensitive or other information related to a developed product with third-party vendors.

Custom Software Development Agreement


The confidentiality section clearly defines the consequences and penalties of disclosing sensitive information.

6. Warranties

It includes various product and project-related obligations a software provider and customer undertakes. Warranties usually relate to the functional performance of a developed app. For instance, if software faces a certain glitch, the software provider can fix that issue.


A well-structured and comprehensive agreement helps software providers and their customers avoid unprecedented expenses and protect their rights.

When creating your contract, take help from software development contract templates. You can tailor these templates to your condition and ensure you include all relevant information.

How are you creating your custom software development agreement?

Do share your thoughts with us!

Author’s bio:

Custom Software Development Agreement

Priya Jain is a professional copywriter with 8 years of experience. She has an MBA and engineering degree. When she is not writing, you will find her teaching math, spending her day running behind her toddler, and trying new recipes. You can follow her on LinkedIn and Twitter



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