Many websites are now developed using open source software, for example WordPress. This allows independent developers to create additional functionality such as website templates and plugins. Most of these are free to use but may have premium modules attached for extra functionality. Both customers and web designers need to determine what functionality is allowed free commercially and what’s not.
Web developer contracts are made up of three separate documents which you need to assemble carefully. Otherwise, you might find yourself being charged extra to update your website plus becoming liable for things you hadn’t even considered!
These are:
- A Form of Agreement;
- Terms of Business; and
- a Works Schedule which has job-specific details relating to the work.
In this article we set out the key elements in the web developer contract for your to consider plus some helpful tips…
Form of agreement
This is the document to be signed by both parties. In addition to filling in the full names and address of each party, the fees and estimated completion date also need to be completed. Clearly, the Form of Agreement needs to be tailored to your particular circumstances.
When it’s signed – and there should be two copies – one signed by each party – the Terms of Business and the Works Schedule with the job-specific details should be attached.
Terms of business
1. Definitions and Interpretation
This clause may contain a few defined terms which are used throughout the agreement. The description of the artwork to be provided is to be included in a separate schedule which will form part of the agreement.
2. Services of the Developer
This briefly describes the work of the developer. If there’s to be a deadline within which the design work is to be carried out, this can be inserted in the Schedule but our wording is designed to ensure that dates are estimated and not guaranteed.
Generally, it is sensible in a relationship such as this for the developer and client to have a clear understanding before any contract is signed regarding the scope of work that is required and the type of designs to be prepared. From the developer’s point of view, there will usually be a fixed fee and the designer doesn’t want to find that he/she is regularly being required to revise the designs to meet the client’s requirements. Equally, from the client’s perspective, he/she doesn’t know whether or not the designs will be suitable until an initial draft is produced, but he/she needs to be happy with the choice of the designer at the start of the contract.
The final paragraph 2.3 dealing with extra fees is meant to give the web developer some protection against major changes to the brief.
3. Fees and Payment
There will usually be a lump sum fee, but that isn’t always the case. Occasionally the fee will be related to the time spent on the project and sometimes there will be a mixture – e.g. a fixed sum plus £X per hour/day if more than a budgeted amount of work has to be performed.
Details relating to the fee will go into the Schedule. This section deals with the invoicing and payment terms.
If the designer is registered for VAT, then a VAT Invoice or VAT receipt will need to be issued in respect of each payment.
Under this section, the web developer is entitled to claim interest on late payment. The interest rate in this clause is, in fact, lower than the rate which would apply if the agreement is made in England: the “Interest on Late Payments Act” gives a party to a contract a right to claim interest at quite a high rate – currently 8% p.a. – even if there’s nothing in the contract to this effect. A slightly lower interest rate is usually more commercially acceptable and the fact that such a clause is incorporated gives greater weight to any claim by the designer for late payment.
The final paragraph 3.6 gives the developer the opportunity to charge for extra services. Where the designer has an hourly or daily rate, this will go into the Schedule. Otherwise, the designer should provide an estimate before starting on any extra work. Sometimes it could be worth having a statement in the Schedule to describe the expected time to be spent on the project by the designer – so any serious deviation from this caused by the client may trigger a claim for extra payment.
4. Cancellation
Designers may wish to delete this section altogether. However, it caters for the possibility of an initial design being prepared and the client then deciding not to proceed. In those circumstances, the cancellation clause will make it clear that the designer is entitled to be paid at least a portion of the original fee, even if the assignment doesn’t go through to completion.
Where a client does cancel, it’s sensible to require, as here, that the artwork already handed over should be returned and to make it clear that the client doesn’t have any right to use any of the designer’s work unless the full fee is paid.
5. Intellectual Property
There are two alternative sections – one of which should be deleted before these Terms are given to a client. Alternative A gives all ownership of copyright etc to the client, subject to him paying the fees due. Alternative B leaves the copyright with the designer and the client has a licence to use the artwork in his business.
Copyright
A designer will, in the absence of any agreement to the contrary, own the copyright in the artwork that he prepares. Where a design is being commissioned by a client for a particular purpose – e.g. the design of a logo for a company – the client will usually want to ensure that it owns the copyright and that the designer doesn’t have any residual rights to use those designs somewhere else. In order to achieve this, a clause such as Alternative A is needed, under which copyright and any other intellectual property rights in the design transfer to the client. However, this transfer (or “assignment”) will only take effect once the full price has been paid. This is clearly important from the designer’s point of view.
Occasionally, the designer will retain copyright in which case Alternative B should be used. An architect, for example, will usually want to retain copyright in his designs for a building and in that case the client will be given an irrevocable licence to use those designs for the purposes the building for which they were commissioned, but not for any other purpose.
Moral Rights
Under European law relating to intellectual property, the “author” – i.e. in this case, the designer – has a right to be named as the author in any document which contains that work. For reasons already discussed in relation to copyright, it’s usual for a client to have all rights in relation to the design without having to refer to the designer/developer, and in order to achieve this legally, appropriate wording is required in Alternative A.
In those circumstances where the designer/developer wishes to assert his/her moral rights, e.g. the designer of the dust-jacket of a book, would usually be identified in all published copies – the wording in Alternative B may be used. Sometimes a designer/developer may want to go further and say:
“The Client shall ensure that the following notice will appear on every document which includes the Artwork:
“The right of [name of designer/developer] to be identified as the author of [description of Artwork] has been asserted in accordance with the Copyright, Designs & Patents Act 1988“.
It is the responsibility of the Client to ensure that this obligation is imposed on any assignee or licensee of the Client.
6. Designer/Developer Warranties
It isn’t uncommon for a client to want a written assurance that the designs he is paying for are indeed the designs of the person selling them and not some third-party. This section is meant to achieve this and to give the client comfort that no third-party rights are being infringed.
7. Client Obligations
Under the first paragraph, the Client is required to respond promptly to requests from the designer/developer.
Under the next two paragraphs, whilst not always considered necessary, it’s no harm to establish the reasons why the designs are required and to obtain a provision that the client won’t use the artwork for some illegal or pornographic purpose (this clause would obviously not be appropriate if the designer/developer is preparing illustrations for a pornographic magazine!).
Where the copyright is transferred to the client, the designer/developer will no longer have any rights – hence the wording which reserves for the designer/developer the right to make use of the artwork in his publicity material.
8. Termination
If either party becomes insolvent or commits a material breach of the agreement then it’s sensible to give the other party the right to terminate.
9. Confidentiality
It is usual to have a confidentiality clause so that any trade secrets or confidential information which either party receives as a result of their dealings is kept confidential and not made available to anyone else.
10. Assignment
The issue of assignment of copyright has already been dealt with. This Clause concerns the right of either party to transfer/assign any rights or obligations under the agreement to someone else. Since a Design Agreement (Contract) trends to be somewhat personal in nature, assignment is prohibited by this clause.
11. Notices
It is usual to have a clause such as this, stating that notices must be given in writing and specifying the method of giving notice – in this case by hand, by fax or by.
12. Law and Disputes
Hopefully no disputes will arise, but it’s important to specify the courts and laws of the country which governs the agreement – usually that of the country which both parties are resident – and also to say how disputes will be resolved if they do arise. Remember that the United Kingdom has different legal systems: England and Wales, Scotland and Northern Ireland.
You might also wish to require the parties to try mediation in the event of a dispute, with recourse to the Court as the final option.
For more on mediation, visit CEDR
Works schedule
The Works Schedule should be written to suit the particular circumstances. In addition to the overall brief of the work to be done, the Works Schedule may contain dates for delivery, details of any expenses which can be reimbursed and hourly or daily rates that may apply.
General considerations
The documents should address the following issues:
(a) the agreed website specification (or a procedure to arrive at an agreed specification before development commences).
(b) the date by which the website must be delivered, together with key milestone dates that must be achieved in order to achieve that objective.
(c) the agreed fees for the design and/or development.
(d) the term of the contract
(e) there must be a written assignment of all copyright and other intellectual property in the website, including underlying software (or right to use a third party’s software) from the contractor to the organisation.
Ownership
You need to pay particular attention to ensure your company owns its own domain name and is the legal account holder for other online services, such as connectivity, hosting and security. You need to have control over access to these accounts.
Exclusivity and bargaining power
The web designer/developer will want to re-use some technical work from your website on websites for other customers. You should get as much exclusivity on their work as possible to give your business a competitive advantage.
The parties’ bargaining power, perception of the deal & the project’s price will contribute towards resolving any issues. The division of rights in a wholly bespoke, exclusive project may be very different from the division in one in which the customer is obtaining a customised version of a standard site.
Top 10 tips for project managers
Project managers with practical experience of web design and development have written our Top 10 Tips in this section. They should be considered by both designer/developer as well as the client.
1. Scope of Services
Start off with the most important aspect of the entire project. What exactly is the designer/developer going to do for the client? Write a general 3-5 sentence summary of the scope of service. Will the designer/developer be responsible for the design and programming? How will the website be updated? Who will be responsible for the marketing at the end of the project? Who will host the website when the project is done?
2. Price and Payments
This is the area where the designer/developer is upfront and states the exact price payment and terms of the payment is split up into installments. Is the project quoted at a fixed rate? Is it an hourly rate and how is this documented and tracked? Will the payments be made with a certain percentage up front as a down payment and then a monthly billing cycle, or is it a milestone related payment system?
3. Term and Termination
How long will this agreement contract be enforceable? If the client does not want to pursue the project ¾ of the way through the project how can he get out? What are the penalties and timeframe they can exit the contract? This is crucial especially to web development agreements with entrepreneurs and startups that many times have a great idea, some type of outline or business plan for what they wish to do, but for some reason never finish through with the project. The designer/developer must have certain rights. Do they keep all of the code that has been developed? Can they finish it and retain intellectual property to it? Many factors can go in this area, but it protects both the client and the developer in case a designer/developer is never able to complete a project or continues to be late on deliverables and the client wishes to terminate the relationship.
4. Ownership of Intellectual Property
One aspect that needs to be addressed is who will retain the intellectual property to the project? Typically the client retains all intellectual property. This area highlights all of the intellectual property covered such as the source code, all digital files, documentation, etc. Intellectual property is very important to any and all web design and development projects.
For further information visit Websites and Intellectual Property
5. Confidential Information
Many clients wish to keep all information that is exchanged within a project to the developer as highly confidential and cannot be disclosed whatsoever. The extent to which information can be disclosed must be addressed in the agreement. Can the designer/developer mention that they are working for the client during the course of the project to other prospects or potential clients? Many designers/developers use their portfolio of clients as sales tools for other clients. This area must represent exactly what is disclosed and for how long. What period of time is the information kept confidential? And so on.
6. Warranty and Disclaimer
Having a warranty on the work that is developed is standard in most web projects. Typically a 30-90 day warranty is given on all work to be functional and bug free. This is the area that small details such as the client having access to the server and by mistake entering the files and making changes that affect the functionality within the terms. Think of the label on products that the designer/developer purchases such as furniture and mattresses. It says that the warranty is void if you tear the label off. This is what the designer/developer can address in this area. They will provide warranty on certain terms and conditions with specific disclaimers as well.
7. Limitation of Liability
This is the area in which the designer/developer discloses that they are not liable for any losses of money for the developer or other economic losses directly or indirectly associated with the development of the website. Some less experiences clients will turn around to the designer/developer as the source of their website not succeeding online. Avoid issues in the future if something does not succeed that the client thought would, especially things that the designer/developer cannot control once the website is launched. Also, during the project itself, if for whatever reason there is a financial loss, it protects the designer/developer.
8. Relation of Parties
Make sure that the client and designer/developer understand what their relationship is. Is the relationship a development partnership? Is it strictly a work-for-hire type relationship? Is it a client and vendor relationship? This is the area where this needs to be highlighted to make sure the business relationship is understood.
9. Employee Solicitation / Hiring
Many designer/developers never think twice about this, but there have been cases where clients have lured employees or freelancers of the developer during or after the project was completed. Of course this has huge negative aspects associated to it if this happens. That is why this area is also extremely crucial to lay out the fact that the client can not solicited the developer’s employees in any way when it comes to potential hiring or additional perks. Specify a certain amount of time for this as well. Typically this time from is between 2-5 years.
10. Entire Agreement
This is the ending of the document that basically should say that the entire document and its attributes fall under the entire contract and that nothing will supersede it. Also, this is the area the will have the client and developers key representative who will sign it, date it, and post their roles within the company. Make sure that any and all modifications after signature are signed with initials of both parties next to the change.
E RADAR IT contract templates
You can purchase a selection of IT contract templates from E RADAR’s web shop. Members can download all the legal templates as part of their membership package.
What's in a web developer contract?
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