Brief Introduction About Software Consultant Agreement
Companies that need help with integrating technology with their business hire software consultants for the job. They engage their services by executing a software consultant agreement. It is a consulting services agreement between the consultant and the company (who becomes the consultant’s client). It lists the obligations which both parties have to meet during the time they work together. It also contains other terms relating to the payment of the consultant’s fees and ownership of intellectual property.
Who is a Software Consultant?
A software consultant provides expert knowledge in the software domain to its clients in exchange for a fee. They advise the client on large software applications, writing software code, and fixing bugs. They also help the client to make its computer systems more efficient using customized software systems. They are specialists who have not only technical expertise but also business expertise to advise management of the client organization.
Who Uses the software consultant agreement?
If you are a company that plans to engage software consultants for a project, you should have this agreement in place for a better professional relationship with the consultants. If you are a software consulting who is taking clients, you should get this agreement for yourself to protect your rights.
Purpose of a Software Consultant agreement
A software consulting agreement helps both the client and the software consultant to protect their respective legal rights. It minimizes the risk of miscommunications or misunderstandings surrounding their respective roles. This agreement helps define the responsibilities of the client and the consultant, along with their mutual expectations from each other. It lays down the details of the work to be performed, the site where the work is to be performed, the timelines for completing the work, the cost, and the ownership of the work after it is completed. It serves as a legal document in case any disputes arise between the client and the software consultant.
Key Terms of a Software Consultant Agreement
A software consulting contract template usually contains the following provisions:
- Names of the parties
- Scope of services: sometimes also titled as “Statement of Work.”
- Term and termination of the agreement
- Fees and expenses
- Obligations of the parties
- Intellectual property (IP) ownership
- Representation and warranties by the parties
- Independent contractor status
- Governing law
- Dispute settlement
- Signature of the parties
All these terms must comply with applicable federal and state laws.
How to Draft a Software Consultant Agreement?
When drafting this agreement, the following points should be noted:
- Under ‘scope of work,’ clearly identify the services that the software consultant is expected to perform and those that are not covered under the agreement.
- Mention the date when the services will begin and end. Also, state the conditions when the agreement may be otherwise terminated.
- Clearly, state the time-frame within which the consultant must perform a set of tasks/services.
- Software consultant rate: It is an important term that should be drafted precisely. It should state the amount that the client has to pay to the software consultant. The payment can either be according to ‘per hour,’ ‘per day,’ ‘in total,’ or ‘as per project milestones.’ It should also mention the manner of such payment. If the client agrees to reimburse certain expenses incurred by the consultant under this agreement, they should be mentioned in this clause.
- Clarify who will own the intellectual property created during the project. Normally, the client owns the right to any IP created under the agreement. But if the parties agree to an alternative, the relevant conditions should be written clearly.
- Confidentiality: The client and the consultant will exchange a lot of information. Confidentiality clause will prevent it from being passed to outsiders by either party.
- If the consultant is hired as an independent contractor, the agreement must state that there is no relationship of employer-employee or principal-agent between him and the client.
- Governing law: It is the law of the state where claims will be filed in case there is a dispute between the parties.
- If the parties have agreed to a specific method of settling disputes, such as arbitration, explain how it would work.
As a software consultant, you must be clear about your terms. It will help you negotiate your responsibilities, project milestones, and your fees. You can go through sample consulting agreements to get an idea. If you are a client, you must lay down that the consultant is not an employee. You have to negotiate the IP rights ownership for work created during the term of the agreement. If you intend to own them, you must tell the consultant that he will have to grant you all the rights associated with the IP that is created. Both parties should remember that the contract has to be fair to all.
Benefits and Drawbacks of Software Consultant Agreement
- It clearly defines the scope of services and identifies the expectations and responsibilities of both parties.
- Establishes a business relationship between the parties based on mutual trust.
- Usually, the client has ownership rights over all the IP created and developed by the software consultant during the term of this agreement. The consultant cannot monetize the IP for his own interest.
What Happens in Case of Violation?
If the agreement contains a provision that states the consequences of violating its conditions, then such a provision will be invoked. Usually, the defaulting party will be asked to pay compensation to the other party as per this provision. But if no such clause is mentioned, then it will be considered a breach of contract(1). The defaulting party can be sued in the local court.
A software consultant agreement is vital for both the consultant and the client as it establishes a business relationship between the two and clearly outlines the rights and obligations of each party. Thus, it protects the rights of both parties and prevents legal troubles.