I have to prepare a contract for an american client. It is a custom database application (Web application). I live in the province of Quebec (Canada). I’ve prepared in french but they were kind of homemade and I luckily never had to deal with disputes yet. I’m aware that I’ve been playing with fire… Anyway, I would like to do it the right way for the future and I’m looking for advices, templates and so on…. I like to know if I should spend $$$ on lawyer or notary services…
I also have technical/security interrogation about hosting. I expect my client to require that the database will be hosted on their servers. Where should I host the web application? What would be the best scenario?
If you think of anything important that I should know, feel free to put it here…
I would absolutely consult a qualified attorney and discuss your situation. There is general business insurance, errors and omissions insurance, lots of options to consider. But you have to keep it in perspective for the size of the sales, your actual liability, contract language, etc. That is primarily why the only way to know for any given individual’s needs is to sit down with a decent lawyer first.
Are you selling a use license? a subscription? or the software?
If the latter… it is up to the purchaser where/how any of it is hosted…
All is contingent upon what rights you are keeping, and what rights you are brokering to them.
At first we were going for a unique tool for this client. Now I’ve found 2 other companies interested in the general concept. They both asked for modifications. So I’d say that I’d sell the software… On the other hand I really like the subscription model for the regular income it provides. I’ve never sold licences…
Typically, you license the software. Selling the software indicates that you no longer have rights to it. If you have additional interested parties, you may need to negotiate with the current client, especially if they believe you’re writing the software for them and they will own it when you’re done.
To decide whether to work with a lawyer… Weigh your costs versus your return. If you’re talking $50K+ for this deal, yeah, chip off $3K to a lawyer to dot i’s, cross t’s, and look like you’re super serious. If this is much less, take account of what control you have if the deal goes really south. You probably have a lot.
Write down and agree in “plain English” (or French) what you expect in terms of payment, dates, and mechanisms (PayPal, bank transfer, check). Hold the customer to that. When they can’t make a payment, think carefully about whether you extend them credit. Because payment is your leverage. Have a spec they agree to of what they expect if it’s a custom job. If it’s a product you’re licensing to multiple customers, a data sheet is what they’ll want.
Reminds me of a contract I had YEARS ago (circa 1975ish).
My partner and I contracted (in writing) with a local real-estate agent to BUILD him a computer and to program it with software that met a set of written specifications. Build the computer as the IBM PC didn’t even exist yet.
I don’t remember the $$ amounts, but it was a 3 payments of 33% at 3 milestones in the project.
when the computer was built and working (our 25% was labor, he still bought the “parts”)
when then software was complete
90 days after payment #2
Well we build the computer (4mhz Z80 48k RAM 2 240k floppy disks), and demonstrated to the client that it worked. and he paid us the first 1/3. So I am standing in his office holding this check, and he says “I think the terms of our contract are excessive, so I will only be making one more payment”. Now here is this guy who is thinking he can intimidate two 19yo “kids”… So I looked him square in the eye and said “I’m going to ask you a yes or no question. Are you attempting to alter the terms of our contract, without our input, permission or consent”, to which he replied “Yes, that is EXACTLY what I am saying”… my reply “You have violated the terms of the contract as written and agreed, we do hereby consider the remainder of the contract null and void, have a nice day”… and raced to the bank to cash the check.
This left this guy with a $10,000 computer, no software other than the OS we put in it, and nobody to write any software for him (remember this was 1975… developers were not as numerous then)… Never heard from or saw him again. But I bet he honored all agreements he entered from that day forward.
During my career I have only had TWO incidents like this… the other was a few years later, and I actually made $20,000 for doing nothing on that one (the contract violation was between two other parties)
Thanks for sharing your experience! Milestones payments is also what we do actually and it’s been working well and appreciated by both parties. Something I find hard is to evaluate the value of the final product. I guess it becomes easier with time… It is always too expensive for the client… I think people hardly understand all the work involved in software development. When you sell a licence for a software, if you do, do your clients pay for that licence on a user/yearly basis?
for great article! I hope M. B. Keeny has a good sense of humour!