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Website development agreement: How-to guide

Customers using online platforms to find services and products are on the rise. Developing and maintaining an active web presence is beneficial and essential in today's digital marketplace. 

Why do organizations need a website development agreement?

Organizations with rudimentary or confusing websites stand to lose potential customers and, consequently, thousands of dollars in sales to competitors with more polished and professional online platforms. Here, the expertise of a web developer and their development services become crucial.

Companies intending to hire professionals such as website developers or designers, must have a well-drafted website development agreement to safeguard against significant financial pitfalls.

Why is a website development agreement beneficial?

Free website development agreement template by LegalZoom. Create and download agreements for free!

Both the company and the developer stand to gain from an agreement that protects them from potential liabilities associated with creating a website. Such a document provides:

  • Security and delineates each party's development, performance, ownership, and service expectations.
  • Clarify processes from the outset
  • Instill confidence in both parties, fostering a mutually beneficial relationship.

The website development agreement template provided on this page can be a good starting point for drafting an agreement to cover the development of a company's website. It can help safeguard the parties' rights during the agreement's term. You may revise or restructure specific provisions to fit your organizational goals.

What are the key factors to consider in a website development agreement?

Mitigating Scope Creep

A common issue in website development is what is known as "scope creep." This occurs when the initial work parameters slowly expand, leading to an extensive project with extended deadlines and higher costs than initially agreed upon. Although even a well-crafted agreement can only partially prevent this, it can help the parties involved define the consequences of such expansion. For example, instead of setting fixed deadlines in the agreement, it may be more effective to tie payments to specific project goals.

Reading the agreement carefully

Many website developers have agreement forms that they would use to govern an agreement about website construction.

These agreements are largely developer-friendly. Most significantly, the forms often provide that the developer will own the website's intellectual property rights and copyrightable elements. It's possible that the developer could make a website for your direct competition with similar business plans resembling in design and functionality. The developer can also insist that the website owners will be using it only under a worldwide license granted to them.

If a developer is insistent on using their forms and you are committed to using their services, read the agreement carefully to ensure you know your long-term rights are protected.

Deciding on the goals

Understand your goals. Ensure that it has the following apart from any other agreed-on terms:

  • A description of the specific development tasks
  • The amount to be paid
  • The terms of payment
  • Deadlines for completion
  • The implementation plan
  • Installation and acceptance tests
  • The specific end products expected (if any)

Clarify the terms and conditions of your agreement before memorializing them in writing.

Discussing the anticipated functionality and technological requirements

Discuss with the other party the anticipated functionality and technological requirements of the website. Consider, among other things, the following:

  • Developer's use of the most current technology
  • Maximum download times (inclusion of a low-graphics option)
  • Compatibility with browser software
  • The number of users who will be able to access the site at a time
  • Security safeguards
  • Integration with the company's intranet

Including the descriptions

For a comprehensive agreement, you may include descriptions of the website's purpose and goals, text content, graphic content, main page, subpage, navigation and organizational scheme, headers and footers, and features/functions/scripts.

Reviewing the document

Allow each party to review the agreement. Each party should get sufficient time to understand the terms or how those might affect the agreement.

Review the completed agreement to ensure that all relevant points have been included. To avoid misunderstandings, it is essential to state all expectations and terms explicitly in the document.

Review your state's laws for independent contractors.

Maintaining the status

A written agreement is the first step in establishing an individual's independent contractor status. Once signed, both parties must follow its terms to maintain status.

Signing the agreement

Once the agreement is drafted, the parties must sign two copies, one for each partner.

Engaging a witness or notary (if required)

Depending on the nature of its terms, decide to have your agreement witnessed or notarized. This can limit later challenges to the validity of a party's signature.

Contacting an attorney

If your agreement involves significant risks and complex terms, contact an attorney to help draft a document that meets your requirements.

Understanding the clauses of the website development agreement

An image of a software engineer developing a website in the office.

The provisions below will guide you through the terms of website development agreements, section by section, to help you understand the process better.

Introduction

In this section, mention the relevant details of the involved parties and, if applicable, what type of organization(s) they are (e.g., individual, corporation, partnership). The hiring party (who hires the website developer) shall be addressed as the "company," and the website developer (the party who is creating the website) is called the "developer."

Recitals

Briefly describe the company's business here. Additionally, you must provide the date the agreement will become effective (often when signed).

Purpose

Here, you explain why the parties are entering the agreement. This section confirms the parties' agreement that the developer will create the company's website.

Compensation

This section explains the promise that the company will pay for the developer's services, including website development.

Term

Indicates that the agreement will last until termination of this agreement by either party or until the agreed-on services are completed.

Termination

This section outlines the specific circumstances that would result in the termination of the agreement, such as providing written notice or committing a material breach (before the services required are completed as per the agreement). Mention the notice period a party must give for an earlier termination or to notify the other party of a breach.

The parties can terminate the website development agreement if the other party breaches an obligation and does not fix this breach. In both cases, the party seeking to terminate the agreement must give prompt written notice. Mention the duration of the notice period.

After termination, the company must pay for the services provided or completed by the developer, and the developer must return the company's intellectual property. Enter the amount of time that the developer has to return those items.

Responsibilities

This section lists each party's responsibilities under the agreement. The developer agrees to create the website and the related services with adequate attention and care to make it successful and timely. The company agrees to test and provide regular feedback about the website as it is being constructed (at the developer's request). You can also mention any additional obligations here.

Maintenance

This section clarifies that the agreement is for development purposes only and that the developer will not do any long-term maintenance on the site. However, the developer will be obliged to perform routine website maintenance for a certain period following the development. The company may specify the period for which the developer must conduct routine maintenance work.

If the company needs the developer for long-term maintenance, a separate agreement to govern each party's rights and responsibilities related to that work can be entered into by them.

Confidential information

This section defines confidential information for purposes of the agreement and explains how the developer will treat that information.

  • The developer can use the information only for purposes intended by the agreement (e.g. if the company disclosed the information to help the developer complete its services, the developer can use it only for that purpose) and not for any unauthorized use.
  • The developer can only discuss the information with specific individuals in the company.

Representations and warranties

This section mentions the parties' promises under the agreement, which means that the parties agree to enter the deal based on the conditions listed in this section. Primarily, these terms relate to each party having the legal right and ability to complete their obligations.

Warranty period duration

This section assures that the website will be defects-free for a certain agreed-upon period. However, due to the ever-changing nature of the internet and technology, the developer can only be held responsible for some website problems within this warranty period. Additionally, this section prevents the developer from concealing any hidden flaws in the website that would later require the company to rehire the developer to fix them. Both parties can agree on the duration of this warranty period.

Timing and delays

This section emphasizes the importance of adhering to the delivery schedule and completing work under the agreement by the due dates. It also mentions the consequences of failing to meet the delivery date and other deadlines.

Nature of the relationship

This section explains the relationship of the developer with the company. The relationship clause is a critical distinction for legal reasons, including requirements for health insurance coverage, liability, and taxes. The agreement clarifies the importance of maintaining a clear distinction between independent contractors and employees. It's a good idea to review the laws in your state regarding independent contractors.

No Conflict of interest

This section elaborates on the additional actions taken by the developer. The developer assures that they are not involved in any work with another company or product currently competing with the company. However, this section does not entirely prohibit the developer from engaging in other business activities. The developer can perform tasks for other companies if they do not harm the trade secret of the company or its interests.

Return of property

This section mentions that the developer must return the property once the agreement ends. It also reinforces that the documents and property given to the developer under this agreement continue to be the company's property.

Indemnification

This section outlines each party's responsibilities in case of issues arising in the future and protects them from any adverse consequences arising from the other party's negligence or intentional misconduct.

Intellectual property

This section mentions each party's promise that their property and work don't infringe on any third party's intellectual property rights. It also states that the developer will not misuse the company's trademarks or acquire a trademark that is similar to the company's. This section provides that the developer may not continue to use the company's trademarks after the agreement terminates.

Authorship credit

This optional section allows the developer to insert its name onto the website as evidence of its creation unless otherwise prohibited. Specify which party has the right to demand the removal of the name from the website.

Laws affecting electronic commerce

This optional section explains that the company will be solely responsible for any commercial taxes levied against the website. However, this is not applicable if the company doesn't sell any products on the website or has a different agreement with the developer.

Amendments

This section states that any changes to the agreement are only effective if such changes are made in writing.

Assignment

This section states that neither party may assign obligations and interests under the agreement without the other party's written consent.

Successors and assigns

This section states that the parties' rights and obligations will be passed on to heirs or, in the case of companies, successor organizations, or organizations to which rights and obligations under this agreement have been permissibly assigned.

Force majeure

This section releases a party from its obligations if its performance is made impossible by an event beyond its control despite its reasonable efforts (e.g., flood, earthquake, and more). This release is effective only if circumstances prevent that party from completing its tasks.

No implied waiver

This section states that if one party permits the other to disregard an obligation under the agreement, it doesn't waive any future rights of the other party to fulfill those or any other obligations.

Notice

This section mentions the addresses to which all official or legal correspondence should be delivered. Write the mailing address for both the company and the developer.

Governing law

This section allows the parties to choose the governing laws of the state to interpret the document.

Counterparts; electronic signatures

This clause states that regardless of where the parties sign the agreement or how they transmit signatures (via electronic devices such as computers or fax machines), all the separate pieces will be considered part of the same agreement. This provision is beneficial today, where signing parties are often located in different cities and can't be physically present in the same room. It ensures that business can be conducted efficiently without compromising the validity of the agreement.

Severability

This protects the terms of the agreement as a whole, even if one part is later invalidated. For example, if a state law is passed prohibiting choice-of-law clauses, it will not undo the entire document. Only the section of the agreement regarding choice of law would be nullified, while the rest remains enforceable.

Entire agreement

This section confirms the parties' agreement that the document they're signing is "the agreement" about the issues involved. This provision won't prevent a party from arguing that other enforceable promises exist but will protect them from these claims.

Headings

This section explains that the headings at the beginning of each section are meant to organize the document and should not be considered operational parts of the website development agreement.

Frequently asked questions

What's a website development agreement?

Whether you aren't online, your presence could be more professional, or your site needs another update, you've made a wise decision by hiring a developer. Before they start building your new website, it's crucial to establish clear expectations regarding who will provide what, when, and for how long. Developing an agreement before developing a site can give a sense of security and peace, helping to avoid disagreements later.

What information is needed to complete a website development agreement?

Here's the information you'll need to complete a website development agreement:

  • Who the developer is: Have their name and contact information ready
  • Who the website owner is: Have their name and contact information ready
  • What the developer will do: Know what the developer promises to deliver and when
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