All You Need to Know About Software Development Agreement and Types of NDAs

Nowadays, everyone from small & medium-sized businesses to big firms relies on software development. The software applications have covered a lot of fields like customer services, marketing, business development, and more. To work comfortably with each other on the software development project, the software developers and clients need to have a well-thought agreement prepared.

The software development agreement will help to answer all the questions that arise during the software development procedure. It works as a shield to the conflicts. Here in this blog, we will look at the legal documents’ details and what it includes.

What is a Software Development Agreement?

The software development agreement is a bond between the software developers and the clients that describes details. The development team will create a software application for their client as per the specifications. There are chances that the design and development may vary, but that entirely depends on the project’s complexity.

A software development agreement is a guideline that prevents disputes. In some cases, if any problem arises, then this agreement can allow solving. Here are some of the essential aspects that are included in the software development agreement.


Every customer who hires a software development company to create their custom software desires to look at the product as each module is designed.

Therefore, creating regular milestones will break down the project into small deliverables, and clients will be able to see their software in small parts.

The developers will reach the work’s agreement stage at the end of each milestone and assume that the work is signed off.

2.Development Process

The software development process may differ depending on the complexity and nature of the project. But some of the common considerations while preparing for an agreement are –

  •   How involved will the clients be in the development process?
  •   What will be the specification agreement procedure?
  •   How much will the after charges be for any changes?


Testing software is actual work. The software development team gets the client’s approval about the details of the testing requirements and checks if the software is working correctly.

4.Intellectual Property

Intellectual property defines the ownership of the software source code. It specifies the details of who owns the copyright of the code. It is the nature that the software needs to be copied. Therefore, the developer will either grant the license to the customer or will provide intellectual rights.

5.Software Integration

Whether the software developer has to install the new software in the client’s working systems or integrate with another software that the client is currently using is specified in the software development agreement.


Support provision can be added to the software development agreement to have a clarification about the support service after software installation. The contract details can be about the support provided, the response time, and the kind of assistance that would incur additional charges.


As new technologies arise, the software changes. This means that you need to blend the software with other programs if needed. There are chances that the software needs to be upgraded to continue its use. The agreement should include details like – what type of upgrades are required? Who will apply for any enhancements?


Besides all the core software development services, the agreement should also include details about the consultancy and training. This can be itemized in the specification with other services that the client might require.

9.Source Code

The majority of the time, customers would become critical about their business’s success, and they would want to own the entire project once it is ready. Therefore, they would like to acknowledge the source code, eliminating the developer’s need if something happens.


Any party, the developer, or the client can terminate the software development agreement if there is any breach in terms of the contract or any other matter. A clause about the termination of the agreement must be added.


The aim of having an agreement for any software outsourcing company is to avoid disputes. If any disputes arise, then the contract can help out solve it and give a clear idea.

Standard Provisions in Software Development Agreement

The agreement for software development is a set of rules on which the developer sells the customized software to the customer. Then the client will incorporate this software into his services. The agreement varies according to the size and scope of the software, but the commonly included clauses are –

1.Engagement of Develo

2.Client Responsibilities

3.Acceptance of Software

4.Compensation & Payment



7.Property Rights


9.Limitation of Liability


After learning about software development agreements, let us understand what NDA is.

What is a Software Development Non-Disclosure Agreement (NDA)?

The NDA is a legal contract between the client and the software developers. It is an outline of the data that needs to be shared and kept confidential. Generally, NDA is required when two parties are entering a business like a software development project.

NDA is all about sharing confidential information to evaluate the business relationship. The non-disclosure agreement for the software development projects comes in the short and simple or long and full pattern. Despite the simplicity and complexities, NDA includes some of the common aspects like –

  1. Identification

The software development non-disclosure agreement identifies the two parties – recipients and disclosures.

  1. Definition

NDA defines the information that might be considered confidential for a software development project by both the clients and the software development company.

  1. Disclosure

The disclosure clause specifies how the information in the disclosed section may or may not be used.

  1. Time

The duration of the agreement is typically valid for 1 to 3 years. The parties can define their term of the period and also specify the requirement of the return.

Different Types of Software Development Non-Disclosure Agreement (NDA)

The primary purpose of the non-disclosure agreement is to prevent the business’s confidential information from becoming public. There are two different types of NDAs that the custom software development company can have for their clients.

  1. Mutual Non-Disclosure Agreement

When the companies are looking forward to a potential partnership like a merger or a collaboration, both parties need to share all the confidential and sensitive information to make a perfect decision about the partnership.

  1. Unilateral Non-Disclosure Agreement

The unilateral agreement is all about a contract that states that one party cannot reveal the information provided by another party.


Software development agreements are an essential part of the software development process. It specifies the clients’ rules and the software developers’ details to work as partners in creating an efficient software application. The contract provides legal backing to both the parties. So, if you are running a software development company, constructing a perfect software development agreement template is essential. And if you are a client, you need to thoroughly go through the contract and make sure it has all the required details.


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