Website development agreements – consider the content of your contract as well as the content on your site

20 November 2018

A strong online presence is often a crucial component of a business’ marketing strategy. If your business doesn’t have sufficient resources to develop its website in-house, it will need to engage a website developer. It is imperative to enter into a carefully drafted legally binding contract with your website developer from the outset of the project in order to protect your business interests and minimise the risk of any future disputes.

A well drafted website development agreement should deal with a number of key issues including:

(i) a project plan setting out the development deliverables and a timescale relating to the same;

(ii) ownership of the intellectual property rights (IPRs) in the site;

(iii) acceptance testing procedures; and

(iv) to the extent that personal data is processed by the website developer, inclusion of terms which are compliant with the General Data Protection Regulation (GDPR).

Website developers are likely to contract with their clients on the basis of their standard terms and conditions. Such terms are unlikely to be appropriate for every project and should therefore be reviewed and, where necessary, negotiated. If your website developer doesn’t have a contract, you should look to put a written agreement in place which deals with the key points mentioned above. 

Intellectual property rights

When a third party designs and/or develops your website, they will own the copyright in the text, artwork, designs, underlying software and all other content that they develop independently, unless the IPRs are assigned to you. IPRs can only be legally assigned to you if you enter into a written agreement with the website developer. This is why it is imperative to enter into an agreement at the outset of their involvement. A website development agreement should ideally provide for the assignment to your business of all the IPRs created by the developer.

Where a website developer uses certain IPRs for multiple clients (e.g. code in the underlying software used to operate the websites), it will need to maintain its ownership of such rights. In such circumstances, the development agreement should ideally provide the client with a perpetual licence which permits use of the developer’s IPRs in relation to the website.

Irrespective of whether the IPRs created by the website developer are assigned or licensed to the client, it would be prudent to ensure that the website developer provides an indemnity against any claims the client receives on the basis that their website infringes the IPRs of a third party. 

Project plan

A website development agreement should also set out clearly and in sufficient detail the website’s design, functionality and performance specifications. This information should be recorded in a project plan. The project plan breaks down the project into phases and sets out the steps the developer will take in order to produce the website in accordance with the agreed specifications. Ideally, the website developer should be committed to completing each defined phase within an agreed timescale and development costs could be broken down into a series of interim payments to be made on completion of corresponding development milestones.

Acceptance testing

Inclusion of an acceptance testing procedure is a critical aspect of a website development agreement. It is the means by which the parties ascertain whether the development milestones set out in the project plan have been achieved, and whether they are in accordance with the agreed specifications. Typically, the form and nature of the acceptance tests should be mutually agreed and documented by the parties. These may take the form of user tests or technical tests to be performed by the developer.

If an acceptance test is failed, it’s common to allow the developer an opportunity to remediate the problem and for a re-test to take place. If all allowable re-tests are failed, the website development agreement should allow for the agreement to be terminated and for the client to be refunded any amounts paid upfront in relation to the failed phase. It is also prudent to include an escalation/alternative dispute resolution procedure to deal with disputes between the parties relating to whether acceptance tests have been passed (which would typically involve referring technical issues to independent third party experts to resolve).  

Data protection

Your business’ proposed website may incorporate large amounts of personal data e.g. the inclusion of a detailed staff directory. In such circumstances, it is likely that the website developer will process personal data on behalf of your organisation as a data processor. If so, the website development agreement must contain certain mandatory terms in order to comply with the GDPR. Details of the specific requirements are set out in our blog on this topic.

Once the website development agreement is finalised and signed, you should consider who will host the website once it goes live. Will it be hosted from your own servers or will you need to engage a third party (perhaps the website developer) to provide a server to host the site? If the latter, you will need to enter into a website hosting agreement with your chosen provider to document hosting fees, the server specification, technical support services, uptime requirements and security specifications etc.

Our Corporate and Commercial team can assist with drafting, reviewing, amending and advising on website development agreements. If you require such assistance, or you would like to enquire about how else the team could help with your company’s affairs, please contact a member of our technology law team.

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We welcome views and opinions about the issues raised in this blog. Should you require specific advice in relation to personal circumstances, please use the form on the contact page.

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