Ready-made software solutions no longer cut it in many businesses whose needs require dedicated software. In this context, attention needs to be paid to how the project contract is drafted.

A lot of business sectors require the use of specially developed software that is tailored in detail to individual requirements. We at the commercial law firm MTR Rechtsanwälte note that in order to avoid legal disputes between the developer and the contractor at a later date, it is crucial to precisely define in a project contract the performance requirements as well as the rights and obligations of the client and the contractor.

Essential points that ought to be regulated in a project contract are a precise performance specification, the timeframe, the costs, and, of course, the rights of use.

In many instances, only a brief outline is provided of the requirements that need to be met by the software. A vague description is in practice not enough, especially if problems with technical implementation or delays arise. That is why the performance expected of the developer should be precisely defined from the outset. One possibility to this end is to create a functional specification and product requirement document, which then forms an integral part of the contractual agreement.

One obvious requirement is the provision of a timetable setting out when each stage of development is reached and when the software is ready to be accepted by the client.

Delays typically go hand in hand with additional costs, and these must be agreed upon in the project agreement as well. It needs to be clarified what budget is available, whether there is any financial leeway, whether calculations are made according to effort or a fixed price is agreed upon, and whether provision is made for installments. The issue of whether subsequent remedial work is included in the price should also be clarified in advance.

Another important aspect is rights of use. Software developments and computer programming are protected by copyright. Generally speaking, the client does not obtain the copyright but instead merely a right of use. The scope of this right of use should equally be clearly defined in the contract.

Standard-form contracts are normally not sufficient when dealing with such complex issues. It is therefore advisable to draft detailed project contracts. Lawyers with experience in the field of IT law can offer advice.