Differences in the expectations of suppliers and customers
regarding the development of bespoke software, frequently lead to
disputes regarding development timeframes, scope, cost, and
intellectual property ownership. It is not uncommon for software
development projects to be delivered late, over budget, and without
all of the expected functionality.
In order to ensure that both suppliers and customers have their
expectations met, various practical matters should be considered
from the outset of a software development project, with the view of
being dealt with expressly in the agreement. Considering and
addressing those matters will reduce the chances of encountering
costly delays and legal problems down the track.
The following is a brief summary of some limitations in software
development agreements which may arise from overlooking the
Failing to clearly define and describe the software which is
being developed and failing to link the software to the functional
requirements. Having a detailed set of the main functional
requirements prior to any development is crucial. Ultimately all
the functional specifications should be incorporated into the
agreement so that the scope and functionality of the software
required to be delivered by the supplier is clearly set out.
Failing to clearly express a timeframe for the various stages
of the software development, including failing to stipulate the
consequences of those milestones not being met. Which failures
should allow the customer to terminate and which should merely
entitle the customer to a pre-agreed sum of liquidated
Failing to adequately deal with intellectual property issues,
not addressing who is to own the intellectual property rights
in the software and any updates and new releases of the software;
failing to obtain a warranty and indemnity from the supplier
that the software does not breach the intellectual property rights
of a third party.
Failing to clearly specify what acceptance tests are to be
performed in respect of the software, when those tests are to occur
and the consequences of a failure of the software to satisfy those
Failing to clearly deal with what (if any) support and training
services are to be provided.
The issue of recording telephone calls was recently considered in the Federal Court in Furnari v Ziegert  FCA 1080.
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