Look for 3 Things From Your Software Agreement

Any business contract can be unnerving to enter. Licensing agreements surrounding software development and who owns code can dictate long-term relationships and uncover costly surprises if not carefully examined. Here are three things to look for before signing on the dotted line.

Licensing Rights

Some agreements assign licensing rights to the developer. Engaging in this type of software agreement limits your negotiating rights as a customer. You may eventually face either (a) paying the software developer ongoing for the code’s usage, or (b) paying to reconstruct the code from scratch if you decide to take your business elsewhere. Reverse engineering proprietary code is a contractual no-no in these types of agreements, leaving some customers feeling held hostage.

On the other hand, a work for hire agreement means that code written for a customer belongs to that customer. At Small Footprint, we clearly lay out our work for hire statement in our master services agreement.


Another thing to look for is whether the software developer reuses code from a code base that is not proprietary to customers–whether that’s code that they’ve created or code from third parties. Reusing code accelerates the development process meaning less cost and wasted time so it’s always a good idea, as long as the licensing is reasonable in the overall picture.


Make sure that any reused code your company benefits from is free to use in perpetuity or that you understand clearly how you can use it and the long-term implications. Your agreement with your developers should ensure they take responsibility for any licensing concerns of their or third party code and they should make you aware of any issues that might be problematic.
Ultimately, follow your gut. Understanding licensing agreements is key no matter who you work with. But if conversations about licensing leave you feeling uneasy, take that as a warning signal and bring in a professional to help you navigate.

Originally posted on SmallFootprint.com.