Types Of Software Contracts

There are several types of software contracts and lots of ways to arrive at a software contract agreement between seller and buyer. While some of these types of software contracts are proposals made by the contracting vendors, others are negotiated contracts. The following are therefore the different types of software contracts made in the IT industry:

1. Product contracts

These types of software contracts are made between the buyer of a particular product and the maker of that product. A very good example of this type of contract is software license agreement or hardware warranty. A licensed agreement has to do with the authorization or the giving of consent to the buyer to make use of the product. This agreement is very important because it is only the vendor that has the intellectual right and any usage by another party has to be from the authorization of the vendor. The buyer has to seek the consent of the vendor before making use of the software in order to avoid getting sued for copyright infringement. On the other hand, Warranties are made to the buyer of the product stating that when the product fails to meet its promised usability, the creator of the product will take steps to solve the issue.

2. Contracts undertaken for product supplies

These types of software contracts are undertaken between the distributor or seller and the buyer. In this type of contract, the vendor must not necessarily be involved unless in a situation where he is the sole seller of the product. But in most case, product supply contract is between a distributor and buyer. In this agreement, the prices, scheduled delivery date, and terms of payment are generally specified.

The terms of license agreements and warranties are not covered in these types of software contracts because it is left for the software vendor and the buyer. The distributor or reseller is the middleman that enables the software products reach the buyers and end users. These contracts can either be custom drafted contracts or standard contracts.

3. Contracts for the rendering of service

These types of software contracts are normally proposed by the software vendor in respect to RFP/RFQ. After the acceptance of the contract by the buyer, the contract becomes legally binding. Service contracts can come in different forms, including:

i. deployment services: In this case, the software vendor installs the software and configures them in the office or company of the software buyer.

i. Training services: Here, the vendor proposes to train the staff for the effective use of the software installed in the company. This training might be customize3d training or a product standard training depending on what have been agreed on the contract.

iii. Managed services: A service contract can include the management and maintenance of software infrastructure installed in an organization.

4. Software contracts for the development of custom applications

Companies need to have custom software applications which will help them properly manage their business processes. These types of software contracts are undertaken by the software vendor and the buyer to provide customized software applications for the buyer for more efficient use of the application.