# What is normally included in a contract with a software company? [Home](https://3bird.nl/)/What is normally included in a contract with a software company? # What is normally included in a contract with a software company? A contract with a software company typically includes agreements about the project scope, price and payment terms, ownership rights of the software, maintenance and support, and what happens if the project runs over or fails. The exact content varies by company and project, but a good contract always covers these five areas. Below, we answer the most frequently asked questions about software contracts, so you are well prepared when you sit down at the table. ## Which elements are required in a software development contract? A software development contract must contain at minimum the project scope, payment agreements, ownership rights, liability, and termination conditions. Without these elements, you as the client face significant risks, because ambiguities about responsibilities and rights can lead to conflicts later on. The **project scope** is the foundation of every good software contract. This is where you establish exactly what will be built, which functionalities are included, and what is explicitly outside the scope of the assignment. The more concrete the scope, the smaller the chance of disputes afterwards. In addition to the scope, the following elements are always present in a professional contract: - **Payment agreements:** when and how payment is made - **Ownership rights:** who owns the software after delivery - **Liability:** what the software company compensates in the event of errors or delays - **Confidentiality (NDA):** protection of your business information - **Termination conditions:** how and when both parties can end the collaboration - **Applicable law:** which country or legislation applies in the event of a dispute A good contract protects both parties. Always have it reviewed by a lawyer with experience in IT contracts before you sign. ## How are price and payment arranged in a software contract? In a software contract, the price is arranged via a fixed price, an hourly rate, or a combination of both. Payments are usually tied to milestones or fixed installments. Which model applies depends on the nature and complexity of the project. ### Fixed price versus hourly rate With a **fixed price**, you agree on a total amount upfront for the entire project. This provides certainty about costs, but requires a detailed scope. Once the scope changes, the price changes as well. With an **hourly rate**, you pay for the hours actually worked. This model is more flexible and better suited to projects where requirements may still change. ### Payment terms and milestones Payments in most contracts are tied to concrete milestones, such as the delivery of a prototype, a test version, or the final release. Commonly used structures are: - A deposit at the start (often 20 to 30 percent) - Interim payments upon reaching milestones - A final payment after definitive delivery and acceptance Also pay attention to the **payment term** (the number of days within which you pay an invoice) and any penalties for late payment. This is always explicitly stated in the contract. ## Who owns the software after delivery? After delivery, the client is generally the owner of the software, but this is only the case if the contract explicitly establishes this. Without a clear ownership clause, intellectual property rights can remain with the software company, even if you have paid the full development costs. There are two common situations: - **Full transfer:** the software company transfers all rights to you upon delivery and payment. You own the source code, the documentation, and all associated rights. - **License model:** the software company retains the ownership rights and grants you a usage license. This is more common with standard software or reusable components. Also check whether the contract says anything about **open source components**. If the software makes use of open source libraries, separate license conditions apply that may affect what you are allowed to do with the software. ## What does a software contract cover regarding maintenance and support? A software contract covers maintenance and support through a separate Service Level Agreement (SLA) or a maintenance clause. This specifies which services will be provided after delivery, within what response times, and at what cost. Without these agreements, you are on your own after delivery. A good maintenance clause contains at minimum: - The **warranty period** after delivery, during which bugs are resolved at no cost - The **response time** for outages or critical errors - What exactly falls under maintenance (bug fixes, security updates, minor adjustments) - The costs for ongoing maintenance after the warranty period Maintenance and support are two different things. **Maintenance** focuses on keeping the existing software stable. **Support** is about assistance with usage and questions from users. Make sure the contract clearly states which of the two you are purchasing, or both. ## What happens if the project runs over or fails? If a software project runs over or fails, the contract determines what happens. A good contract contains agreements about delays, liability, and the conditions under which the project can be terminated. Without these clauses, you are legally vulnerable if things go wrong. Relevant clauses to watch out for: - **Delay penalties:** some contracts include a penalty clause if the software company misses deadlines. This gives you as the client financial compensation in the event of a delay. - **Liability cap:** most software companies limit their liability to a certain amount, often the contract value. Check whether this is reasonable for your situation. - **Right of termination:** under what circumstances may you or the software company terminate the contract, and what are the financial consequences? - **Ownership upon early termination:** what happens to the software built up to that point if the project stops? Also agree on how disputes will be resolved. Many contracts refer to mediation or arbitration before a lawsuit is initiated. This saves time and costs in the event of a conflict. ## What should you pay extra attention to in a contract with a foreign software company? When entering into a contract with a foreign software company, you should pay extra attention to the applicable law, the language of the contract, privacy legislation, and the practical management of the team. International collaboration offers great advantages in terms of cost and capacity, but requires sharp contractual agreements. The most important points of attention are: - **Applicable law and jurisdiction:** which country’s laws apply in the event of a dispute? If you are based in the Netherlands, preferably choose Dutch law. - **Language of the contract:** make sure the contract is in a language you fully understand. An English-language contract with a foreign party is common, but always have it checked. - **GDPR compliance:** if the software processes personal data, the contract must contain a data processing agreement that complies with European privacy legislation. - **Communication and time zones:** establish how and when communication will take place, and who the point of contact is on both sides. - **Quality assurance:** who checks the quality of the work and how are reviews and approvals arranged? A local intermediary or fractional CTO who guides the collaboration significantly reduces the risks. That person speaks your language, knows the local working methods of the development team, and ensures that agreements are actually adhered to. ## How 3Bird helps with a transparent software development agreement At 3Bird, we understand that a good contract is the foundation of a successful collaboration. We offer [custom software development](https://3bird.nl/maatwerk-software-ontwikkeling) in which all contractual agreements are clear and fair, so you know exactly where you stand. What you can expect from us: - Contracts in Dutch, drawn up according to Dutch quality standards - Transparent rates from €25 to €30 per hour, with no hidden costs - A Dutch fractional CTO as a dedicated point of contact who guides the team and safeguards your interests - Clear agreements about ownership rights, milestones, and maintenance - Flexible contract structures that grow along with your project Whether you are a startup having your first application built, or a growing company looking to expand its development: we ensure that the collaboration is well arranged, from the first conversation to delivery and beyond. Get in touch via **contact@3bird.nl** or call us at **+(31)75-7993038** for a no-obligation conversation about your project and the associated contract structure. ## Ready to Get Started? Talk to us about your project and find the right 3Bird solution. [Contact Us Today](https://3bird.nl/contact/) --- Book a free 30-minute consultation: https://calendly.com/3-bird/3bird-oscar-30-minuten-meet Email: contact@3bird.nl | Phone: +31757993038