Agreements  ›  Software Development Agreement

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A software development agreement governs a custom development engagement — who owns the source code, what milestones trigger payment, what acceptance criteria define "done," and what warranty coverage applies after launch. It is the foundational contract for any bespoke software project.

Who uses it

Freelance developers, development agencies, software studios, and technical contractors hired to build custom software, applications, APIs, or integrations for a client.

When to use it

Before a single line of code is written. Source code ownership, payment milestones, and acceptance criteria must be agreed in writing before development begins — changing them mid-project creates conflict.

When not to use it

Not appropriate for staff augmentation (use an IC agreement) or for SaaS subscriptions where no custom code is written. Designed for bespoke development with defined deliverables.

Eight questions. Then a draft.

1

Parties

Developer and client names, entity types, states.

2

Project description

What is being built — platform, language, key functionality.

3

Milestones

Development phases, delivery dates, and payment triggered by each milestone.

4

Acceptance criteria

Functional requirements that define acceptance. Test environment, testing period.

5

Source-code ownership

Work-for-hire or license. Third-party libraries and open-source components disclosed.

6

Warranty period

Post-launch bug-fix warranty duration and what it covers.

7

Change requests

How changes to requirements are handled, priced, and approved.

8

Jurisdiction

Governing state and dispute resolution method.

A complete dev agreement. Every clause that matters.

Plain-English, technically aware, ready to send. The sections that prevent disputes over "is it done?" and "who owns the code?"

Milestone and payment schedule

Named development phases with dates, deliverables for each phase, and payment triggered by milestone acceptance — not calendar date.

Acceptance testing procedure

Defined testing period, bug severity classification, what constitutes acceptance, and deemed-accepted language when the client doesn't test within the window.

Source-code ownership and delivery

Full IP assignment to client on final payment. Third-party libraries and open-source components disclosed. Developer's background tools and frameworks retained.

Post-launch warranty

Defined warranty period (typically 30–90 days), scope of warranty coverage (bugs vs. enhancements), response and resolution SLAs.

Change-request process

Formal change-request workflow with written approval before new scope begins. Timeline impact assessment requirement for each change.

Limitation of liability

Liability cap at project fee. Exclusion of consequential damages including lost profits from software defects. Client responsible for backups.

Where dev contracts break down.

The most common ways software projects turn into disputes.

Mistake

No acceptance criteria

"Working software" is not a deliverable. Define what tests must pass, what performance benchmarks must be met, and who signs off. Without this, "done" is a moving target.

Mistake

Open-source not disclosed

Software built on GPL or other copyleft licenses may impose restrictions on how the client can use or distribute the product. Disclose all third-party components upfront.

Mistake

IP assignment contingent on nothing

IP should transfer on final payment — not on delivery, not on acceptance. Transfer conditioned on payment preserves your leverage to collect.

Mistake

Warranty scope undefined

A warranty without a defined scope means every "this isn't how I imagined it" complaint is a warranty claim. Define bugs vs. enhancements. Bugs are fixed free; enhancements are not.

How it looks in practice.

Example input

"Dev agency building a React/Node SaaS MVP. $45,000 fixed price. 3 milestones: spec/design ($10k), backend ($20k), frontend/launch ($15k). Client owns all code. 60-day post-launch bug warranty. 14-day acceptance window per milestone. Florida law."

Output preview

A 13-section dev agreement, Florida-governed. Three milestones with dates and payment triggers. 14-day acceptance window with deemed-accepted language. Full IP assignment on final payment, React/Node background tools retained. 60-day bug warranty (bugs only, not enhancements). Change-request process with written approval.

Download options

Word (.docx) for editing in any tool. PDF for sending out as-is. Both formats, no watermark, no account needed.

Where AI ends, counsel begins.

BizDraft is a drafting tool. It is not a substitute for a lawyer who knows your specific situation. Reach for one when:

Mission-critical software

Medical devices, financial systems, safety-critical infrastructure — software failures in these domains can create significant liability requiring specific indemnification and insurance provisions.

Large project value

Projects over $100,000 warrant attorney review on both sides — particularly on IP, liability caps, and escrow provisions for source code.

Equity or revenue-share compensation

When any part of the developer's compensation involves equity or revenue sharing, securities and tax counsel should be involved before signing.

Software development agreement questions.

Who owns the source code by default if there is no agreement?

The developer. Without a written work-for-hire agreement or IP assignment, the person who wrote the code is the copyright owner. Clients get a license at best. This is why a signed agreement before work starts is essential for any client who wants to own what they paid for.

What should a software warranty cover?

Bugs — defects that cause the software to not conform to its documented specifications. A warranty should not cover feature requests, changes in requirements, or problems caused by the client's environment or third-party services outside the developer's control.

What happens if the client keeps changing requirements?

Each requirement change is handled through the change-request process — a formal written request, a quoted price and timeline impact, and mutual written approval before any extra work begins. This is how you avoid scope creep destroying a fixed-price project.

Should milestone payments be tied to calendar dates or acceptance?

Acceptance — or a deemed-accepted trigger if the client doesn't test within the window. Calendar-date payments leave you chasing invoices even when the milestone isn't complete. Acceptance-based payments tie your revenue to your actual delivery.

Is it really free?

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⚠ Legal disclaimer: Agreements generated by BizDraft are AI-produced for informational purposes only. They do not constitute legal advice and do not create an attorney-client relationship. For any agreement of significant legal or financial importance, consult a qualified attorney before signing.