An important first step for any web-based business is the creation of a website that looks good and is easy to use. Roadblocks to navigation and transaction must be avoided, but so must legal errors. This short article attempts to summarize several of the most important issues faced by a company seeking to establish a web presence, change its web site, and have its site hosted. Don't ignore these basic business and legal issues that must be dealt with when negotiating website development and hosting agreements.
Six Main Clauses Every Website Design Agreement Should Contain.
1. Look and Feel Clause. The agreement should include a detailed, written description of both what the web site will look like and how the web site will function and perform. Although this sounds simplistic, many of these relationships turn sour when multiple change orders and the related increases in development costs start flying back and forth between customer and developer. The further you digress from this approach, the more risk you assume in higher development costs and not getting a web site that accomplishes your objectives. Any changes to the description that occur during the development process should be put in writing.
2. Responsibilities Clause. The agreement should include a detailed description of each parties' responsibilities during the development process. The agreement should specify who will do what. What is left unsaid or unwritten can often cause disputes later on in the development process. The agreement should either state that the customer has no role in the development process or spell-out in detail what obligations the customer has in such regard.
3. Development Schedule. The agreement should contain a detailed development schedule tied to periodic payments for interim deliverables. The agreement should have a start date and an end date for the developer's work. An initial payment to cover development costs is typical, but the customer should retain at least 30% of the total development cost until it is determined that the entire website is complete and conforms to the description included as part of the agreement. This acceptance test by the customer is a critical part of the development process. The further you stray from this disciplined approach, the greater risk you assume that the website will not be completed on time and within budget.
4. Ownership Clause. The agreement must address the issue of who owns the finished website and its underlying work product. This issue raises a classic conflict between the customer's desire to preserve the uniqueness of its site and the developer's desire to recycle as much of the work product as possible for other customers. One approach is to protect the truly unique elements of the site by means such as (a) not allowing any reuse of such elements by the developer for any of its customers for a period of time or (b) prohibiting the developer from making these elements available to any competitor of the customer.
5. Intellectual Property Clause. The agreement should protect the customer from unauthorized uses of intellectual property by the developer. The developer must warrant that it either owns or is authorized to use the tools and technology it utilizes to create the website. This is increasingly important if the developer is providing any kind of content for the website. Furthermore, the developer should be required to indemnify and hold the customer harmless from any liability arising out of a breach of this warranty. Exposure for this risk should be shifted entirely to the developer to the fullest extent possible.
6. Developer's Post Completion Obligations. The agreement should describe any post- completion obligations of the developer. Provisions for on-going maintenance and support by the developer should be addressed. Similarly, the developer's obligation to provided enhancements to the site to address things like changes in browser technology should be addressed as well.
The above points are just a summary of some of the clauses that should be included in a website design and development agreement, and does not begin to touch upon some other issues that frequently arise. However, including the above-mentioned 6 points in the web site development agreement is a good first step and should reduce a significant portion of the risk in these transactions.