Soft Development Agreement for IT Companies in Poland. Advises from IT lawyers

Earlier we wrote about what is a what a software development agreement is, what it is needed for, and what dangers you may face when you are not careful about it. Generally, contracts of one type are quite the same. At the same time, some analogical clauses can differ in jurisdictions all over the world. This should never be underestimate when choosing right to the contract as local ITlawyers know features of their local laws well.

So, what should be considered in case the right of your software development agreement is Polish?


1.     What is a software development agreement within the meaning of Polish law?


In the law of the Republic of Poland, a software development agreement is a type of a contract on a defined work (in Polish – umowa o dzieło) and is governed by Section 15 of Book 3 of the Civil Code. Most of the terms of the contract are similar in any jurisdiction. However, some special features are there, too.

Important it is that the contract on a defined work (and in our case, the software development agreement) does not have a clear sign of an employment contract. Instead, we shall make sure it is characterized with:

  • lack of a clearly defined place of task performance;
  • the freedom to choose a specific time to complete tasks (however, within the period specified in the agreement);
  • lack of subordination of the contractor to the customer.


2.     Definitions


The very first moment to pay attention to while drafting a contract is making sure the concepts used in the contract are being understood in the same way. Definitions are often underestimated and overlooked, because, at first glance, they seem not very necessary. However, often meanings of concepts are interpreted differently by individuals, and language differences only make it worse. In order to prevent potential problems that can arise from interpretation issues, explain the key words to the contract. The trick is simple, but using it, you can save yourself from many misunderstandings in the future. Also important it is to be disciplined when drafting the contract and its annexes and use the definitions you have created.

3.     Subject to the contract


The subject of a software development agreement will look quite the same in different jurisdictions. Polish law, however, is not so much about the subject to the contract itself, but the process of its conciliation by parties.

Any contract under Polish law requires the so-called cooperation between the parties as an important point. “Cooperation” means that you and your counterparty, while concluding the contract, have to understand its purpose clearly and equally. The absence of such cooperation (which makes it impossible to achieve a concerted result) in accordance with Polish civil law (Article 640 of the Polish Civil Code), is the reason for the contractor to refuse fulfilling his obligations under the contract (the contractor sets a period, within which the customer shall adjust the situation; and only after the unproductive expiration of this period the contractor does have the right to terminate the contract). Therefore, it would be good for both parties to make an analysis of the customer’s needs before signing the software development agreement, which would include a specification of the software requirements, i.e. a description of its functionality, technical and functional solutions of the program, user requirements, etc.

Also it is important to remember that under the contract, the contractor can additionally, for example, teach the customer to use it. Even if such things seem to be self-evident, the contract shall tell the parties about them. Otherwise the contractor has the right to refuse to provide them if the contract does not contain them.


4.     Schedule


The schedule of software creation is usually a set of deadlines for individual stages. The stage of work performance is a separate step, which provides performance of certain tasks that must be completed within this amount of time. Dividing work into stages, customer can easier control the implementation process, which is important for large-scale projects. This is makes a lot of sense if the contractor is so late that that he is unlikely to complete the work by the agreed date. In this case, the customer may not take risks and wait, but withdraw from the contract, without setting an additional period.


5.     Payment


Payment under a Polish-law contract is quite usual – it can be fixed (for the entire program in full or hourly), and pre-calculated (in case the entire scope of work cannot be known in advance).

Not only the amount of remuneration (in Polish “wynagrodzenie”) the contract should specify, but also the time of its payment. This may be the time of transfer of deliverables; and for large projects, with the remuneration separately for each stage, the time of completion of such a separate stage.

Usually, the customer has an agreed contractual period for payment after the contractor completes the work, but this condition is implemented only at the request of the parties.

It is also necessary to agree on how the remuneration is going to be determined – whether it will be fixed or paid according to the hourly rate (“time and material”), etc.


6.     Intellectual property rights


It is a common practice for computer program authors to provide their programs under license. This why the use of their programs is sometimes repeated. Versatility of some programs gives their authors an opportunity, making appropriate modifications, to adapt such a program to the needs of different users. By making the program available under the license, the licensor retains all rights to the program and its documentation, and therefore may further modify, improve or use certain components of such program to create a qualitatively new software.

The most important types of licenses are exclusive (the licensor licenses only one person), non-exclusive (the licensor may license an unlimited number of persons) and sublicense (the licensee may license the sublicensees).

An exclusive license is the rarest in use. It can be used to create “individual” software, for example, for a bank. The idea of ​​such a license is that it can be used only by those who order the program. A licensor may not grant a license to another. Non-exclusive licenses are most often used for software.

The parties may also agree that contractor may transfer to customer the full copyright for the computer program. Although such a solution is not beneficial for the contractor (because they are often interested in further development of the software and providing third parties with access to it), it is often used in practice. It relates, for example, to the know-how. The customer, having some technical knowledge of a confidential nature, instructs to create software and therefore seeks to have full property rights to the created program. For this case, the contract shall contain the relevant provisions on the transfer of copyright to the customer.


7.     Guarantees


Guarantees on performance shall at the first place protect the customer. It is important to include a clause that the software created by the contractor shall have no shortcomings or defects. In case it contains any defects, the customer has the right to demand a reduction in the cost of work, or the contractor shall correct them within the period specified in the contract, otherwise the customer has the right to withdraw from the contract. It is also important that the contractor may exclude or limit this type of liability to the contract.

Any software under the SDA should not be encumbered by the rights of third parties. As defects can affect separate modules or smaller units of program code, and because the contractor may work on it with, the ownership of part of the computer program will happen to belong to the subcontractor if the contractor does not ensure the proper transfer of copyright. If the customer wants to be absolutely sure that nothing of such kind will happen, it should be stipulated in the contract that the contractor undertakes to perform the work independently with no third party.


8.     Additional conditions


Software development agreements often contain provisions for software updates, maintenance, user support for such software, and so on. You simply have to explain your needs to your ITlawyer.

First of all, the software update provisions can determine how often the update is to be performed. In case it leads to significant changes in the software, additional training for the user (customer) should be also provided. Keep in mind that a new version of the software is usually a new work in the sense of copyright, so when using the software under a license, it is necessary to specify the scope of the license, plus provide that the license also shall include the use of new updated versions of the software.

Regulating the issue of software maintenance shall guarantee continuous and quite uninterrupted use of the software, as well as quick elimination of defects. Therefore, the maintenance terms of the agreement should specify the time of rectifying the defects and restoring the normal operation of the program. Also necessary it is to classify the defects, indicating which of them will completely prevent the use of software, and which are less significant.

    Your question to IT lawyers