Software Development Agreement Template
SOFTWARE DEVELOPMENT AGREEMENT
This Software Development Agreement (the "Agreement") is made and entered into as of [Effective Date] (the "Effective Date"), by and between [Client Legal Name], a [State of Incorporation] [entity type] with its principal place of business located at [Client Address] (hereinafter referred to as the "Client"), and [Developer Legal Name], a [State of Incorporation] [entity type] with its principal place of business located at [Developer Address] (hereinafter referred to as the "Developer"). The Client and the Developer may hereinafter be referred to individually as a "Party" and collectively as the "Parties".
WHEREAS, the Client desires to engage the Developer to design, develop, and deliver certain custom software, together with related services, as more particularly described herein;
WHEREAS, the Developer is engaged in the business of designing and developing custom software applications and represents that it possesses the requisite expertise, personnel, equipment, and resources necessary to perform such services in a professional and workmanlike manner;
WHEREAS, the Parties desire to set forth the terms and conditions upon which the Developer shall provide such services to the Client, including, without limitation, the scope of work, development milestones, acceptance procedures, compensation, allocation of intellectual property rights, warranties, and the respective rights and obligations of the Parties;
NOW, THEREFORE, in consideration of the mutual covenants, promises, and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows.
Definitions and Interpretation
In this Agreement, the following capitalized terms shall have the meanings ascribed to them below, unless the context otherwise requires.
"Acceptance" shall mean the Client's written confirmation that a given Deliverable or Milestone has successfully satisfied the Acceptance Criteria set forth in the Specifications, or the deemed acceptance thereof pursuant to the provisions of this Agreement, whichever first occurs. Acceptance shall not constitute a waiver of any warranty, indemnity, or other right or remedy available to the Client under this Agreement or at law or in equity.
"Acceptance Criteria" shall mean the objective, measurable technical and functional criteria set forth in the Specifications against which each Deliverable or Milestone shall be tested and evaluated for conformance, together with any additional criteria mutually agreed upon by the Parties in writing.
"Confidential Information" shall mean any and all non-public information, in whatever form or medium, disclosed by one Party (the "Disclosing Party") to the other Party (the "Receiving Party") in connection with this Agreement, including, without limitation, technical data, source code, business plans, financial information, customer lists, trade secrets, know-how, product designs, and any information marked or identified as confidential or that a reasonable person would understand to be confidential given the nature of the information and the circumstances of disclosure.
"Deliverables" shall mean all software, source code, object code, documentation, designs, specifications, data, and other materials and work product created, developed, produced, or delivered by the Developer to the Client pursuant to this Agreement, excluding Developer Tools and Pre-Existing Materials.
"Developer Tools" shall mean any tools, utilities, libraries, frameworks, templates, modules, methodologies, know-how, and other materials owned or licensed by the Developer and existing prior to or developed independently of this Agreement, which the Developer may incorporate into or utilize in the performance of the Services.
"Milestone" shall mean each discrete development phase, task, or deliverable identified in the Specifications and this Agreement, together with its associated Acceptance Criteria, timeline, and payment amount.
"Services" shall mean the software development, consulting, testing, delivery, support, and all other services to be performed by the Developer for the Client pursuant to this Agreement.
"Software" shall mean the custom-developed software application to be designed, developed, and delivered by the Developer to the Client pursuant to this Agreement, including all source code, object code, interfaces, scripts, configurations, and documentation thereof, as more particularly described in the Specifications.
"Specifications" shall mean the technical, functional, and performance requirements, descriptions, and design documents for the Software, as initially set forth in [reference to specifications document or description] and as may be amended from time to time pursuant to the Change Request Procedure.
Headings in this Agreement are inserted for convenience only and shall not affect the construction or interpretation of any provision. Words importing the singular shall include the plural and vice versa, and words importing one gender shall include all genders. The words "including," "includes," and "include" shall be deemed to be followed by the phrase "without limitation."
Scope of Services and Specifications
The Developer shall design, develop, test, deliver, and install the Software and perform the related Services in accordance with the Specifications and the terms and conditions of this Agreement. The scope of the Services shall include, without limitation, requirements analysis, system architecture, coding, unit and integration testing, documentation, and delivery of the Software to the Client.
The Specifications shall comprise a detailed description of the functional requirements, non-functional requirements, user interfaces, system architecture, data models, third-party integrations, performance requirements, security requirements, and any other technical requirements applicable to the Software, as set forth in [description or reference to Specifications]. The Specifications are hereby incorporated by reference into, and made an integral part of, this Agreement.
The Developer shall perform the Services with the degree of skill, care, and diligence ordinarily exercised by competent professionals in the software development industry, utilizing qualified personnel possessing the requisite expertise and experience. The Developer shall at all times comply with all applicable laws, regulations, and industry standards in the performance of the Services.
The Services shall be performed remotely from the Developer's facilities located at [Developer Location], unless otherwise agreed in writing by the Parties. The Developer shall furnish, at its own expense, all equipment, software tools, workspace, and resources necessary for the performance of the Services, except to the extent expressly set forth herein as the Client's responsibility.
The Client shall provide the Developer, in a timely manner, with such access to information, materials, personnel, and systems as the Developer may reasonably require for the performance of the Services, including, without limitation, access to subject matter experts, business requirements documentation, test environments, and any Client-provided materials specified in the Specifications. Any delay in the Client's provision of such cooperation shall entitle the Developer to a reasonable extension of the applicable timeline, provided that the Developer has given the Client prompt written notice of such delay.
The Developer shall designate a project manager who shall serve as the primary point of contact for the Client and shall be responsible for the day-to-day management of the Services. The Client shall likewise designate a project representative with authority to make decisions on behalf of the Client with respect to the Services. Either Party may replace its designated representative upon prior written notice to the other Party.
Any services, deliverables, features, functions, or requirements not expressly set forth in the Specifications or this Agreement shall be deemed outside the scope of the Services and shall be addressed, if at all, solely pursuant to the Change Request Procedure set forth herein.
Development Milestones and Timeline
The Developer shall perform the Services and deliver the Deliverables in accordance with the development milestones, timeline, and schedule set forth in [description of Milestones, including Milestone number, description, deliverables, estimated completion date, and payment amount]. Each Milestone shall have associated Acceptance Criteria and a target completion date (each, a "Target Date").
The Developer shall use commercially reasonable efforts to achieve each Milestone on or before its Target Date. Time shall not be of the essence with respect to the Target Dates, provided, however, that the Developer shall promptly notify the Client in writing of any anticipated delay, the cause thereof, and the Developer's proposed plan to mitigate such delay.
If the Developer fails to achieve a Milestone within [number] days after the applicable Target Date due to causes attributable to the Developer, the Client shall be entitled to require the Developer to prepare and implement, at the Developer's expense, a corrective action plan to bring the project back on schedule. The Parties shall cooperate in good faith to adjust the project timeline as reasonably necessary.
Delays caused by the Client, by third parties for whom the Developer is not responsible, by changes implemented pursuant to the Change Request Procedure, or by events of Force Majeure shall result in an equitable adjustment to the affected Target Dates and, where applicable, to the fees payable hereunder, as mutually agreed by the Parties in writing.
The Developer shall provide the Client with periodic status reports, no less frequently than [weekly/biweekly/monthly], detailing the progress of the Services, the status of each Milestone, any issues or risks identified, and such other information as the Client may reasonably request. The Parties shall hold regular project meetings at a mutually agreeable cadence to review such reports and discuss project matters.
The Parties acknowledge that the development timeline is based on the Specifications and assumptions in effect as of the Effective Date, and that modifications to the Specifications, scope, or assumptions may necessitate adjustments to the timeline pursuant to the Change Request Procedure.
Change Request Procedure
Either Party may propose a change to the Specifications, scope of Services, Deliverables, Milestones, timeline, or fees (each, a "Change Request") by submitting a written notice to the other Party describing in reasonable detail the proposed change and the reasons therefor.
Within [number] business days following receipt of a Change Request, the Developer shall provide the Client with a written response (a "Change Order Proposal") setting forth: (i) a description of the proposed change; (ii) any resulting modifications to the Specifications, Deliverables, or Services; (iii) the impact, if any, on the development timeline, Milestones, and Target Dates; (iv) the impact on the fees payable hereunder, including any additional charges; and (v) any other terms and conditions applicable to the proposed change.
The Client shall review the Change Order Proposal and, within [number] business days following receipt, shall either accept the Change Order Proposal in writing, reject it, or request further discussion or modification. No Change Request shall be binding upon the Parties unless and until a written Change Order Proposal has been executed by authorized representatives of both Parties (an "Approved Change Order").
Upon execution of an Approved Change Order, the Specifications, Deliverables, timeline, fees, and other affected terms of this Agreement shall be deemed amended accordingly, and the Parties shall perform their respective obligations in accordance with such amendment.
The Developer shall continue to perform the Services in accordance with the then-current Specifications and timeline pending agreement upon any Change Request, and shall not implement any proposed change prior to execution of an Approved Change Order, except in the case of urgent corrective action necessary to prevent material harm.
The Developer shall be entitled to charge for time reasonably expended in the preparation of Change Order Proposals that involve substantial analysis or investigation, provided that the Developer notifies the Client in advance of such anticipated charges and the Client approves the same in writing.
Oral discussions, informal communications, or email correspondence shall not constitute a modification of this Agreement or the Specifications, and no such communication shall be relied upon by either Party in the absence of an Approved Change Order.
Acceptance Testing
Upon the Developer's completion of each Milestone, the Developer shall deliver the applicable Deliverables to the Client, together with a notice of completion and such supporting documentation and test results as may be reasonably required to enable the Client to conduct acceptance testing.
The Client shall have a period of [number] business days following receipt of the Deliverables and notice of completion (the "Acceptance Period") within which to test and evaluate the Deliverables against the applicable Acceptance Criteria set forth in the Specifications.
If the Deliverables conform in all material respects to the Acceptance Criteria, the Client shall provide the Developer with a written notice of Acceptance within the Acceptance Period. If the Deliverables fail to conform in any material respect to the Acceptance Criteria, the Client shall provide the Developer with a written notice of rejection (a "Rejection Notice") within the Acceptance Period, setting forth in reasonable detail the respects in which the Deliverables fail to conform.
If the Client fails to provide either a notice of Acceptance or a Rejection Notice within the Acceptance Period, the applicable Deliverables shall be deemed accepted upon the expiration of such period, provided that the Developer has given the Client written notice of such impending deemed acceptance at least [number] business days prior to the expiration of the Acceptance Period.
Upon receipt of a Rejection Notice, the Developer shall, at no additional cost to the Client, use commercially reasonable efforts to correct the identified non-conformities and resubmit the corrected Deliverables to the Client for a further round of acceptance testing within [number] business days, or such other period as the Parties may mutually agree. The acceptance testing procedure set forth herein shall apply to each resubmission.
If, after [number] rounds of acceptance testing, the Deliverables continue to fail to conform in material respects to the Acceptance Criteria due to causes attributable to the Developer, the Client may, at its option: (i) grant the Developer additional time to correct the non-conformities; (ii) accept the Deliverables subject to an equitable reduction in fees; or (iii) terminate this Agreement, in whole or in part, in accordance with the termination provisions hereof.
Minor non-conformities that do not materially affect the functionality or usability of the Deliverables shall not constitute grounds for rejection, provided that the Developer agrees in writing to correct such minor non-conformities within a reasonable period following Acceptance.
Acceptance of any Deliverable or Milestone shall not relieve the Developer of its warranty obligations, indemnification obligations, or any other obligations under this Agreement, nor shall it constitute a waiver of any rights or remedies available to the Client.
Fees and Payment Terms
In consideration of the Services to be performed and the Deliverables to be provided by the Developer hereunder, the Client shall pay to the Developer a fixed fee per Milestone, in the aggregate amount of [Total Contract Price] (the "Total Fees"), allocated among the Milestones as follows: [description of Milestone fee breakdown].
The fees for each Milestone shall become due and payable upon Acceptance (or deemed Acceptance) of the applicable Milestone in accordance with the Acceptance procedures set forth herein. The Developer shall issue an invoice to the Client promptly following such Acceptance.
The Client shall pay each undisputed invoice within [number] days following receipt thereof, by wire transfer or such other means as the Parties may agree, in U.S. Dollars, to such account as the Developer may designate in writing from time to time.
If the Client in good faith disputes any portion of an invoice, the Client shall, within [number] days following receipt of the invoice, notify the Developer in writing of the disputed amount and the basis for the dispute. The Client shall timely pay all undisputed amounts, and the Parties shall work in good faith to resolve the disputed amount promptly.
Any undisputed amounts not paid when due shall bear interest at the rate of [one and one-half percent (1.5%)] per month, or the maximum rate permitted by applicable law, whichever is lower, from the due date until paid in full. The Developer shall also be entitled to recover reasonable costs of collection, including reasonable attorneys' fees, incurred in connection with the collection of past-due amounts.
Except as expressly provided herein, each Party shall bear its own costs and expenses incurred in the performance of this Agreement. The Developer shall not incur reimbursable expenses on behalf of the Client without the Client's prior written approval, and all such approved expenses shall be invoiced at cost without markup.
All fees are exclusive of applicable sales, use, value-added, and similar taxes, which shall be the responsibility of the Client, excluding taxes imposed on the Developer's net income, gross receipts, employment, or property.
If the Developer fails to achieve a Milestone, the Client shall have no obligation to pay the fees allocated to such Milestone until Acceptance thereof. Fees paid for prior Accepted Milestones shall not be refundable except as expressly provided in this Agreement.
Intellectual Property Rights
Subject to full and timely payment of all fees due hereunder, upon Acceptance of each Deliverable, the Developer hereby irrevocably assigns, transfers, and conveys to the Client all right, title, and interest in and to the Deliverables, including all intellectual property rights therein, including, without limitation, copyrights, patent rights, trade secret rights, and moral rights, throughout the world and in perpetuity (the "Assigned IP"). The Assigned IP shall exclude the Developer Tools and any Pre-Existing Materials, which are governed by the following section.
The Deliverables shall be deemed "works made for hire" to the fullest extent permitted by applicable law. To the extent that any portion of the Deliverables does not qualify as a "work made for hire," the Developer hereby assigns such portion to the Client pursuant to the preceding clause.
The Developer shall, at the Client's request and expense, execute such further documents and take such further actions as the Client may reasonably require to perfect, record, or enforce the Client's ownership of the Assigned IP, including, without limitation, assignments, declarations, and applications for registration of patents, copyrights, or trademarks.
The Developer shall deliver to the Client all source code, object code, documentation, build scripts, configuration files, and other materials comprising the Deliverables, in both human-readable and machine-readable form, upon Acceptance of the applicable Milestone or upon termination of this Agreement, whichever first occurs.
The Developer shall ensure that each of its employees, contractors, and agents involved in the performance of the Services has executed an agreement sufficient to vest in the Developer the rights necessary to grant the assignments and licenses set forth in this Agreement, and the Developer shall be responsible for any compensation owed to such persons in connection therewith.
The Client shall have the exclusive right, in its sole discretion, to use, reproduce, modify, distribute, sublicense, display, perform, create derivative works of, and otherwise exploit the Assigned IP for any purpose, without any obligation of accounting or payment to the Developer other than the fees expressly set forth herein.
Nothing herein shall be construed to grant the Developer any right to use the Assigned IP for any purpose other than as necessary to perform its obligations under this Agreement, including, without limitation, any warranty, support, or bug-fixing obligations.
Developer Tools and Pre-Existing Materials
The Parties acknowledge that the Developer owns or licenses certain Developer Tools and Pre-Existing Materials that may be incorporated into or used in connection with the Deliverables. "Pre-Existing Materials" shall mean any software, code, documentation, know-how, methodologies, templates, libraries, frameworks, utilities, or other materials owned or licensed by the Developer that existed prior to the Effective Date or that are developed independently of this Agreement and not specifically for the Client.
The Developer shall retain all right, title, and interest, including all intellectual property rights, in and to the Developer Tools and Pre-Existing Materials, and nothing in this Agreement shall be construed to transfer or assign any such rights to the Client.
To the extent that any Developer Tools or Pre-Existing Materials are incorporated into or necessary for the use, operation, modification, or maintenance of the Deliverables, the Developer hereby grants to the Client a perpetual, irrevocable, worldwide, non-exclusive, royalty-free, fully paid-up, sublicensable, transferable license to use, reproduce, modify, create derivative works of, distribute, display, and perform such Developer Tools and Pre-Existing Materials, solely as embedded within or in connection with the Deliverables and the Software.
The Developer shall identify in writing, prior to incorporation, all Developer Tools and Pre-Existing Materials that it proposes to incorporate into the Deliverables, together with a description of the applicable license terms. The Client shall have the right to approve or reject the incorporation of any such materials, such approval not to be unreasonably withheld.
The Developer shall not incorporate into the Deliverables any third-party software, open-source software, or other materials subject to license terms that would require the Client to disclose, license, or make available the source code of the Deliverables, or that would otherwise be inconsistent with the Client's ownership rights hereunder, without the Client's prior written consent.
The Developer warrants that it has, and shall maintain, all rights necessary to grant the license set forth in this section with respect to the Developer Tools and Pre-Existing Materials incorporated into the Deliverables.
Upon request by the Client, the Developer shall provide a complete and accurate list of all Developer Tools, Pre-Existing Materials, and third-party components incorporated into the Deliverables, together with applicable license information.
Representations and Warranties
Each Party represents and warrants to the other Party that: (i) it is a corporation or other entity duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation; (ii) it has full corporate power and authority to enter into this Agreement and to perform its obligations hereunder; (iii) the execution, delivery, and performance of this Agreement have been duly authorized by all necessary corporate action; and (iv) this Agreement, when executed, shall constitute a valid and binding obligation enforceable against it in accordance with its terms.
The Developer represents and warrants that the Services shall be performed in a professional and workmanlike manner, in accordance with industry standards, and by personnel possessing the requisite skills, qualifications, and experience to perform the Services competently.
The Developer represents and warrants that, for a period of ninety (90) days following Acceptance of each Deliverable (the "Warranty Period"), such Deliverable shall materially conform to the applicable Specifications and shall be free from material defects in design, materials, and workmanship.
The Developer represents and warrants that the Deliverables, when used by the Client in accordance with the Specifications and the documentation provided by the Developer, shall not infringe or misappropriate any patent, copyright, trademark, trade secret, or other intellectual property right of any third party.
The Developer represents and warrants that the Deliverables, as delivered, shall not contain any viruses, worms, Trojan horses, time bombs, back doors, or other disabling code, surveillance mechanisms, or malicious code intended to disable, damage, or disrupt the Deliverables or any system on which the Deliverables are installed.
The Developer represents and warrants that it shall comply with all applicable federal, state, and local laws, regulations, and ordinances in the performance of the Services, including, without limitation, those relating to labor, employment, taxation, data protection, and export control.
The Client represents and warrants that any materials, information, or data provided by the Client to the Developer for use in connection with the Services shall not infringe or misappropriate any intellectual property right of any third party, and that the Client has the right to provide such materials to the Developer for the purposes contemplated hereunder.
EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS AGREEMENT, EACH PARTY DISCLAIMS ALL OTHER WARRANTIES, WHETHER EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT, EXCEPT AS EXPRESSLY PROVIDED HEREIN.
Bug Fixing and Post-Acceptance Support
During the Warranty Period of ninety (90) days following Acceptance of each Deliverable, the Developer shall, at no additional cost to the Client, use commercially reasonable efforts to correct any defects, errors, or non-conformities in the Deliverables that are reported by the Client and that cause the Deliverables to fail to conform to the Specifications in any material respect.
The Client shall report defects to the Developer in writing, with reasonable detail sufficient to enable the Developer to reproduce and diagnose the defect, including, where applicable, screenshots, error messages, steps to reproduce, and the relevant operating environment.
The Developer shall acknowledge receipt of each defect report within [number] business days and shall use commercially reasonable efforts to diagnose and correct the defect within a timeframe commensurate with the severity of the defect, in accordance with the following severity levels: (a) Critical defects (rendering the Deliverables substantially unusable) shall be addressed with continuous effort until resolved; (b) High-severity defects (materially impairing functionality) shall be addressed within [number] business days; (c) Medium and low-severity defects shall be addressed within a reasonable period as mutually agreed.
The Developer's warranty obligations shall not apply to defects arising from: (i) modifications to the Deliverables made by the Client or any third party without the Developer's authorization; (ii) use of the Deliverables in a manner inconsistent with the Specifications or documentation; (iii) combination of the Deliverables with hardware, software, or data not provided or approved by the Developer; (iv) data entry errors or operational errors by the Client; or (v) events of Force Majeure.
If the Developer, after reasonable efforts, is unable to correct a material non-conformity within the Warranty Period, the Client's sole and exclusive remedy under the warranty shall be, at the Developer's option: (i) repair or replacement of the non-conforming Deliverable; or (ii) refund of the fees paid by the Client for the applicable non-conforming Deliverable, upon return or destruction of such Deliverable. The foregoing shall not limit any other right or remedy of the Client arising from the Developer's breach of this Agreement independent of the warranty.
Following expiration of the Warranty Period, any post-acceptance support, maintenance, or enhancement services shall be provided only pursuant to a separate written agreement between the Parties, upon such terms and at such rates as the Parties may mutually agree.
Confidentiality
Each Party shall hold in strict confidence all Confidential Information of the other Party and shall not use, disclose, or permit the use or disclosure of such Confidential Information except as expressly permitted by this Agreement or as necessary to perform its obligations hereunder.
The Receiving Party shall protect the Confidential Information of the Disclosing Party with the same degree of care that it uses to protect its own confidential information of similar importance, but in no event less than a reasonable degree of care.
The Receiving Party may disclose Confidential Information of the Disclosing Party only to those of its employees, officers, directors, contractors, agents, and professional advisors who have a bona fide need to know such information for purposes of this Agreement, provided that such persons are bound by confidentiality obligations no less restrictive than those set forth herein, and the Receiving Party shall be responsible for any breach of this section by such persons.
The obligations of confidentiality shall not apply to information that: (i) was known to the Receiving Party without restriction prior to disclosure by the Disclosing Party; (ii) is or becomes publicly available through no fault of the Receiving Party; (iii) is lawfully received by the Receiving Party from a third party not under an obligation of confidentiality; or (iv) is independently developed by the Receiving Party without reference to or use of the Disclosing Party's Confidential Information.
If the Receiving Party is required by law, court order, or governmental authority to disclose any Confidential Information of the Disclosing Party, the Receiving Party shall, to the extent legally permitted, provide the Disclosing Party with prompt written notice of such requirement so that the Disclosing Party may seek a protective order or other appropriate remedy, and shall disclose only such Confidential Information as is legally required.
The obligations of confidentiality set forth in this section shall survive the termination or expiration of this Agreement for a period of five (5) years, except with respect to Confidential Information constituting a trade secret, which shall remain protected for so long as it continues to qualify as a trade secret under applicable law.
Upon termination or expiration of this Agreement, or upon the Disclosing Party's written request, the Receiving Party shall promptly return or, at the Disclosing Party's option, destroy all Confidential Information of the Disclosing Party in its possession or control, and shall certify such return or destruction in writing, except that the Receiving Party may retain one archival copy solely for legal compliance purposes.
Each Party acknowledges that unauthorized disclosure or use of Confidential Information may cause irreparable harm to the Disclosing Party for which monetary damages would be an inadequate remedy, and that the Disclosing Party shall be entitled to seek injunctive relief and other equitable remedies in addition to any other rights and remedies available at law or in equity.
Indemnification
The Developer shall defend, indemnify, and hold harmless the Client, its affiliates, and their respective officers, directors, employees, and agents from and against any and all third-party claims, actions, suits, demands, losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees) (collectively, "Losses") arising out of or relating to any claim that the Deliverables, as delivered by the Developer and used by the Client in accordance with this Agreement, infringe or misappropriate any patent, copyright, trademark, trade secret, or other intellectual property right of any third party.
If the use of any Deliverable is enjoined or, in the Developer's reasonable judgment, is likely to become the subject of an infringement claim, the Developer shall, at its option and expense: (i) procure for the Client the right to continue using the affected Deliverable; (ii) replace or modify the affected Deliverable so that it becomes non-infringing while continuing to materially conform to the Specifications; or (iii) if neither of the foregoing is commercially reasonable, refund the fees paid by the Client for the affected Deliverable upon its return.
The Developer's indemnification obligations with respect to infringement shall not apply to the extent that such claim arises from: (i) modifications to the Deliverables made by the Client or any third party without the Developer's authorization; (ii) use of the Deliverables in combination with hardware, software, or data not provided or approved by the Developer, where the claim would not have arisen but for such combination; (iii) use of the Deliverables in a manner not contemplated by the Specifications; or (iv) materials, information, or specifications provided by the Client.
The Client shall defend, indemnify, and hold harmless the Developer, its affiliates, and their respective officers, directors, employees, and agents from and against any and all Losses arising out of or relating to: (i) any materials, information, or data provided by the Client to the Developer in connection with the Services, including any claim that such materials infringe or misappropriate the intellectual property rights of any third party; or (ii) the Client's use of the Deliverables in violation of this Agreement or applicable law.
The indemnified Party shall: (i) provide the indemnifying Party with prompt written notice of any claim for which indemnification is sought; (ii) grant the indemnifying Party sole control over the defense and settlement of such claim, provided that the indemnifying Party shall not settle any claim that imposes any obligation or liability on the indemnified Party without the indemnified Party's prior written consent; and (iii) provide reasonable cooperation in the defense of such claim, at the indemnifying Party's expense.
The indemnified Party shall have the right to participate in the defense of any claim at its own expense through counsel of its own choosing. Any failure of the indemnified Party to provide prompt notice shall not relieve the indemnifying Party of its obligations hereunder except to the extent such failure materially prejudices the defense of the claim.
Limitation of Liability
EXCEPT WITH RESPECT TO (I) BREACHES OF CONFIDENTIALITY, (II) INDEMNIFICATION OBLIGATIONS, (III) INFRINGEMENT OR MISAPPROPRIATION OF INTELLECTUAL PROPERTY, (IV) A PARTY'S GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR FRAUD, AND (V) THE CLIENT'S PAYMENT OBLIGATIONS, IN NO EVENT SHALL EITHER PARTY'S AGGREGATE LIABILITY ARISING OUT OF OR RELATING TO THIS AGREEMENT EXCEED THE TOTAL FEES PAID OR PAYABLE BY THE CLIENT TO THE DEVELOPER UNDER THIS AGREEMENT DURING THE TWELVE (12) MONTHS IMMEDIATELY PRECEDING THE EVENT GIVING RISE TO THE LIABILITY.
IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY, OR PUNITIVE DAMAGES, INCLUDING, WITHOUT LIMITATION, LOSS OF PROFITS, LOSS OF REVENUE, LOSS OF BUSINESS OPPORTUNITY, LOSS OF GOODWILL, OR LOSS OF DATA, WHETHER ARISING IN CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, OR OTHERWISE, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
THE EXCLUSIONS AND LIMITATIONS OF LIABILITY SET FORTH IN THIS SECTION SHALL NOT APPLY TO THE EXTENT PROHIBITED BY APPLICABLE LAW. NOTHING IN THIS AGREEMENT SHALL LIMIT OR EXCLUDE LIABILITY FOR DEATH OR PERSONAL INJURY CAUSED BY NEGLIGENCE, OR FOR ANY OTHER LIABILITY WHICH CANNOT BE LAWFULLY LIMITED OR EXCLUDED.
The Parties acknowledge and agree that the limitations and exclusions of liability set forth in this section are fundamental elements of the bargain between the Parties, that the fees payable by the Client reflect such allocation of risk, and that this Agreement would not be entered into without such limitations.
The limitations of liability set forth herein shall apply regardless of whether the asserted liability or damages are based upon breach of contract, breach of warranty, tort (including negligence), strict liability, statute, or any other legal or equitable theory, and shall apply even if a limited remedy fails of its essential purpose.
Each Party shall have a duty to mitigate its damages arising out of or relating to this Agreement, and no Party shall be entitled to recover damages that could have been avoided through the exercise of reasonable efforts.
Term and Termination
This Agreement shall commence on the Effective Date and shall continue in full force and effect until the completion and Acceptance of all Deliverables and the performance of all obligations hereunder, unless earlier terminated in accordance with the provisions of this Agreement.
Either Party may terminate this Agreement for cause by providing written notice to the other Party if the other Party materially breaches this Agreement and fails to cure such breach within thirty (30) days following receipt of written notice specifying the breach in reasonable detail; provided, however, that no cure period shall be required for breaches of confidentiality or intellectual property obligations.
Either Party may terminate this Agreement immediately upon written notice to the other Party if the other Party: (i) becomes insolvent or admits in writing its inability to pay its debts as they become due; (ii) files or has filed against it a petition in bankruptcy that is not dismissed within sixty (60) days; (iii) makes an assignment for the benefit of creditors; or (iv) ceases to carry on business in the ordinary course.
The Client may terminate this Agreement for convenience, in whole or in part, upon [number] days' prior written notice to the Developer. In the event of such termination for convenience, the Client shall pay the Developer: (i) all fees for Milestones Accepted prior to the effective date of termination; and (ii) a pro rata portion of the fees for any Milestone in progress, based on the percentage of work completed as of the effective date of termination, as reasonably determined by the Parties.
Upon any termination or expiration of this Agreement: (i) each Party shall promptly return or destroy the other Party's Confidential Information in accordance with the confidentiality provisions hereof; (ii) the Developer shall deliver to the Client all work in progress, Deliverables (whether or not Accepted), source code, and other materials created or developed in connection with the Services; and (iii) the Client shall pay the Developer all undisputed amounts due for Services performed up to the effective date of termination.
Termination of this Agreement shall not affect any rights or obligations of the Parties that have accrued prior to the effective date of termination, and shall be without prejudice to any other rights or remedies available to the terminating Party.
The provisions of this Agreement that by their nature are intended to survive termination or expiration, including, without limitation, provisions relating to intellectual property, confidentiality, representations and warranties made as of the Effective Date, indemnification, limitation of liability, governing law and dispute resolution, and miscellaneous provisions, shall survive the termination or expiration of this Agreement.
Force Majeure
Neither Party shall be liable for any failure or delay in the performance of its obligations under this Agreement (other than payment obligations) to the extent such failure or delay is caused by circumstances beyond its reasonable control, including, without limitation, acts of God, natural disasters, fires, floods, earthquakes, pandemics, epidemics, acts of war, terrorism, civil unrest, governmental actions, labor disputes, strikes, failures of telecommunications or internet infrastructure, or utility outages (each, a "Force Majeure Event").
The Party affected by a Force Majeure Event shall promptly notify the other Party in writing of the occurrence of such event, the anticipated duration thereof, and the obligations affected, and shall use commercially reasonable efforts to mitigate the impact of the Force Majeure Event and to resume performance as soon as reasonably practicable.
During the continuance of a Force Majeure Event, the obligations of the affected Party (other than payment obligations) shall be suspended to the extent affected, and the timeline for performance shall be equitably extended by a period equal to the duration of the Force Majeure Event, plus such additional time as may be reasonably necessary to resume performance.
If a Force Majeure Event continues for a period in excess of sixty (60) consecutive days, either Party may terminate this Agreement upon written notice to the other Party, without liability except for obligations accrued prior to such termination.
The Party claiming Force Majeure shall bear the burden of demonstrating that the alleged event qualifies as a Force Majeure Event and that it has used commercially reasonable efforts to mitigate the impact thereof.
A Force Majeure Event shall not excuse the Client from its obligation to pay fees that have become due and payable prior to the occurrence of the Force Majeure Event.
Governing Law and Dispute Resolution
This Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of [State], United States of America, without regard to its conflict of laws principles. The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement.
The Parties shall attempt in good faith to resolve any dispute, controversy, or claim arising out of or relating to this Agreement (each, a "Dispute") through informal negotiation between senior executives of each Party, who shall meet (in person, by telephone, or by video conference) within fifteen (15) business days following written notice from either Party invoking this provision.
If the Dispute is not resolved through negotiation within thirty (30) days following such notice, the Parties shall attempt to resolve the Dispute through confidential, non-binding mediation administered by a mutually agreed mediator or mediation service, with the costs of the mediator shared equally by the Parties.
If the Dispute is not resolved through mediation within sixty (60) days following the commencement of mediation, either Party may submit the Dispute to final and binding arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules then in effect. The arbitration shall be conducted by a single arbitrator in [City, State], and the arbitration proceedings shall be conducted in the English language. Judgment upon the award rendered by the arbitrator may be entered in any court of competent jurisdiction.
Notwithstanding the foregoing, either Party may seek injunctive or other equitable relief in a court of competent jurisdiction to protect its intellectual property rights, Confidential Information, or to prevent irreparable harm, without first complying with the negotiation, mediation, and arbitration procedures set forth herein.
Each Party irrevocably consents to the exclusive jurisdiction of the state and federal courts located in [County, State], United States of America, for any action to compel arbitration, to enforce an arbitration award, or to seek the equitable relief described in the preceding clause, and waives any objection to such jurisdiction or venue based on forum non conveniens or otherwise.
The prevailing Party in any Dispute shall be entitled to recover its reasonable attorneys' fees, costs, and expenses incurred in connection with such Dispute, in addition to any other relief awarded.
Miscellaneous Provisions
This Agreement, together with any documents expressly incorporated herein by reference, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations, and communications, whether oral or written, between the Parties with respect to such subject matter.
No amendment, modification, or waiver of any provision of this Agreement shall be effective unless in writing and signed by authorized representatives of both Parties. No waiver of any breach or default hereunder shall constitute a waiver of any subsequent breach or default.
Neither Party may assign, transfer, or delegate this Agreement, in whole or in part, without the prior written consent of the other Party, except that either Party may assign this Agreement without such consent to a successor in interest in connection with a merger, acquisition, reorganization, or sale of substantially all of its assets, provided that the assignee assumes all obligations hereunder in writing. Any purported assignment in violation of this provision shall be void.
The relationship of the Parties is that of independent contractors. Nothing in this Agreement shall be construed to create a partnership, joint venture, agency, employment, or fiduciary relationship between the Parties. Neither Party shall have the authority to bind the other Party or to incur any obligation on the other Party's behalf.
All notices, requests, consents, and other communications required or permitted under this Agreement shall be in writing and shall be deemed given when: (i) delivered personally; (ii) sent by nationally recognized overnight courier with written confirmation of delivery; (iii) sent by certified or registered mail, return receipt requested; or (iv) sent by email with written confirmation of receipt, in each case to the addresses set forth below the signature block or to such other address as either Party may designate by written notice.
If any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such provision shall be modified to the minimum extent necessary to render it valid, legal, and enforceable, or if not possible, severed from this Agreement, and the remaining provisions shall continue in full force and effect.
Each Party shall bear its own costs and expenses incurred in connection with the negotiation and execution of this Agreement. Neither Party shall use the name, trademark, or logo of the other Party in any publicity, press release, marketing material, or public announcement without the prior written consent of such other Party, except as required by law.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Signatures delivered by facsimile, electronic mail (including PDF), or electronic signature service shall be deemed to have the same legal effect as original signatures.
Neither Party shall solicit for employment any employee of the other Party who is directly involved in the performance of this Agreement during the term of this Agreement and for a period of twelve (12) months thereafter, without the prior written consent of such other Party; provided, however, that general solicitations not specifically directed at such employees shall not constitute a violation of this provision.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives as of the Effective Date first written above.
CLIENT:
[Client Legal Name]
By: ____________________________
Name: [Printed Name]
Title: [Title]
Date: [Date]
Address for Notices:
[Client Address]
Attention: [Name/Title]
Email: [Email Address]
DEVELOPER:
[Developer Legal Name]
By: ____________________________
Name: [Printed Name]
Title: [Title]
Date: [Date]
Address for Notices:
[Developer Address]
Attention: [Name/Title]
Email: [Email Address]