App Development Contracts

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The development of mobile applications for businesses is undergoing a substantial growth that is reminiscent of the spike in e-commerce development during the dot-com boom. It is vital developers understand the importance of outlining concrete app development contracts before entering this space. For many businesses, commissioning a mobile application may be the first experience outsourcing software development. It is the app developer’s responsibility to understand the ins and outs of app developments contracts, as many businesses will lack the experience managing this specialized type of contract.

Listed below are four crucial aspects of application development contracts to meet professional and legal criteria when providing your app development services for a client.

Understanding the Client/Developer Relationship

First and foremost, the client/developer relationship is based on the concept of the app and what the app is capable of doing. Before any contracts can be created, the expectations of the app’s capabilities must be perfectly clear. Unlike similar work-for-hire contracts, which may only need to cover basics, software development contracts need to address that the app development is rarely built from complete scratch. In other words, the developer allows the client to use, distribute, and monetize the app, but the contract should also protect the developer from a client infringing on its  intellectual property.

In a contract, the owner of the intellectual property of the app, by default, remains the developer. Although a client may assume a commissioned app, and its inherent code, is written from scratch, this is very rarely the case. In practice, developers typically use generic code to form the app, and the developer will need to reuse this code for additional projects. Since this is the case, developers retain the intellectual property, and the client licenses the property, or app, to satisfy their particular needs.

Importance of an App Development Contract

Creating an app development contract with a professional protects both the developer and the client. While the client and developer need to outline the scope and provisions of a licensing agreement, the contract should also protect the developer’s intellectual property of the code and protect against privacy issues that may arise from the client’s access to the code. In other words, the transfer of rights from the developer to the client should be measurably outlined.

For example, will the client have the right to have the app maintained and further developed by a third-party? Does the contract restrict the developer from creating the same software for the client’s competition? Contractual elements, such as these, should be thoroughly addressed, discussed, and drafted into an agreement by a professional. By doing so, developers can save a lot of legal headache and expense if questions arise in the future concerning intellectual property, licensing provisions, and the overall transfer of rights.

Important Elements of App Development Contracts

As with any contract, an app development contract should address the expectations of both the client and the developer. To do so, developers should provide the client with detailed written specifications, along with a timetable for development and a payment structure agreed upon by both parties. Many times, these contract elements may rely on the process between the development of the app and the acceptance of the app by the client.

Acceptance testing, for instance, maps out certain milestones to provide a timeline for a developer’s payment, while ensuring the client’s specifications are continually met. Acceptance testing protects the client from non-conforming elements of the software and the developer from outright rejection upon completion. By including specifications in the contract concerning the contract’s reliance on acceptance testing, both parties are assured additional protection.

Types of App Development Contracts

Although there are many types, and elements, of app development contracts such as privacy policies, non-disclosure agreements, and work-for-hire agreements (if you are outsourcing parts of app development to a third-party), there are two important types of contracts every developer should know — the technology assignment agreement and the license agreement.

The technology assignment agreement essentially covers the basics of copyright law and states that the developer owns the code the moment it is “fixed in tangible form.” This ensures the developer also owns the intellectual property of the app. The license agreement, often referred to as the service agreement, outlines the provisions of the licensing to the client, such as its exclusivity, time period, geographical area, and other elements of the licensing scope. In essence, the technological assignment agreement protects the developer, while the license agreement outlines the rights of the client.

For freelance app developers, utilizing a professional to create an effective app development contract is the first step in forming an agreement that satisfies the client, while protecting their own intellectual property. Being well versed in app development contracts is also a major differentiator between someone who simply makes apps and someone who does so professionally. By understanding the legalese and professional importance of contract construction, talented developers can take advantage of the current growing demand for app development.

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