Software Development Agreement

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Form No. 3

This Agreement made at __________ this ______ day of __________

BETWEEN

M/S A.B.C. & Co. Ltd. a Public Company limited by shares registered

under the Companies Act, 1956 and having its registered office at .......

.................................. hereianafter referred to as ‘the Customer’ of the

One Part;

AND

M/S XYZ & Co. Ltd. a Public Company limited by shares registered

under the Companies Act 1956, and having its registered office at ........

................................... hereinafter referred to as ‘The Contractor’ of the

Other Part;

WHEREAS

(a) the Contractor has agreed to write certain Computer program for

the customer and to provide other services hereinafter mentioned

upon the terms and conditions hereinafter mentioned.

NOW IT IS AGREED BETWEEN THE PARTIES AS FOLLOWS:

(1) The Contractor agrees to design and write the software in the

programming language as per the specifications given in the Schedule

hereunder written and to deliver and install the software on the computer

hardware equipment of the Customer and which is installed at the office

viz.________ (hereinafter referred to as the Computer equipment). The

Contractor shall also supply the Documentation alongwith the software

and to render such other services as hereinafter mentioned.

(2) The Contractor admits that it has received all information about

the specifications above referred to and the said Computer Equipment

and the Contractor will not be entitled to raising any objection on the

ground of misinterpretation of any fact relating to the functions, facilities

and capabilities of the equipment or any part thereof.

(3) The Contractor agrees and undertakes to carry out the project

that is the Deliverables

to be supplied and all services to be provided by

the Contractor under this Agreement with reasonable care and skill with

the help of qualified and experienced personnel.

(4) Similarly the Customer will provide the Contractor with accurate

and complete information as will be necessary concerning the customers

operation and shall answer to queries, decisions and approvals reasonably

necessary for the Contractor to undertake the project.

(5) The Customer shall provide the Contractor and its personnel free

access to and the use of the said computer equipment, offer full help of

the Customer’s employees and shall provide electric power, lights, heating

and air conditioning facility at the site of the Computer Equipment and

1 Software means computer programme in object form only as described,

including any copies but excluding source code material and preparatory

design material.

2 Deliverables means the software and documentation.

THIS IS JUST A FORMAT.

Kindly take proper Legal Advise for Drafting Document as per your requirements.

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all other necessary facilities reasonably required for the working of the

Project.

(6) The Customer guarantees that the computer equipment and all

the software and other the deliverables, used in the said computer equip-

ment is the property of the Customer and the Contractor is permitted to

use the same.

(7) Each party hereto will appoint its qualified representatives who

will hold meetings between them from time to time to provide progress

reports and to discuss the same and other issues.

(8) The bespoke

software will be written with the use of the said

Computer equipment which will be maintained by the Customer and at

its own costs but solely for the purpose of the Project.

(9) The Customer will keep the said computer equipment validly in-

sured against all risks of loss or damage from any cause whatsoever for

the full replacement value thereof and will pay the premium thereof from

time to time regularly. The Customer shall not agree to sell, or mortgage

the said computer equipment during the subsistence of this agreement.

(10) The Contractor will be responsible for providing and installing

the software on the said computer equipment at the said site thereof. The

software so installed will consist of one copy of each class of software in

machine readable object code on the storage media specified in the speci-

fication and the Contractor will deliver the documentation in accordance

with the project specification. If the Customer desires the Contractor to

provide or procure the provision of software maintenance the same will

be done under a separate agreement to be entered into between the par-

ties hereto.

(11) At any time prior to the acceptance date hereinafter mentioned, the

Contractor may in writing recommend and the Customer may in writing

from time to time request change to any part of the project. The Contrac-

tor shall investigate such change, with the consent of the Customer and

if recommended it will be effected accordingly provided that the costs

incurred due to such change will be payable by the Customer.

(12) After the software is installed on the Computer equipment the

Customer will submit to the Contractor by the date specified in the Proj-

ect plan, for approval of the Contractor a test specification setting out

the criteria and procedures for the acceptance of the software which is

suitable to demonstrate that the software complies with and performs in

accordance with the specifications and the Contractor will be bound by

the acceptance specifications unless they are not in accordance with the

specifications. The Customer will undertake the acceptance test at the site

where the computer equipment is installed. The Customer will undertake

the acceptance test in accordance with the acceptance specifications dur-

ing the testing period using test data and expected results prepared by

the Customer and accepted by the Contractor. The testing will commence

within eight days after installation of the software.

(13) If any part of the software fails to pass the acceptance test, the

Contractor will be allowed to rectify such part of software until the same

complies with the tests.

3 Bespoke software as distinguished from package software, means a service and

more akin to consultancy.

SOFTWARE DEVELOPMENT AGREEMENT

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(14) If the software or any part thereof fails to pass the acceptance test

two times, then the Customer may give notice to the Contractor giving

him option either to provide at no extra charge such additional service

and replacement items as will enable the software or the part thereof to

pass the acceptance test within a period of ____ days after service of the

notice, or to accept the software or part with an abatment of the contract

price as reasonably suffered by the Customer after taking into account

the circumstances.

(15) If even after the procedure stated above the software fails to pass

the acceptance test or if the amount of abatement of price is not agreed

upon, then the Customer will be entitled to reject the software and termi-

nate this agreement giving written notice to the Contractor in that behalf.

(16) However, the Customer shall be deemed to have accepted the

software if the Customer signs an acceptance certificate after successful

completion of all stages of the acceptance tests or if the customer fails

to demonstrate to the Contractor within a period of _____ days that the

software has materially failed to pass the acceptance test in accordance

with the acceptance specifications or if the software or a substantial part

thereof is first put into operational use.

(17) The contract price for the Project payable by the Customer to

the Contractor and the mode of payment thereof will be as stated in the

schedule hereto. The said price will not include the charges for the addi-

tional services rendered by the Contractor and which are not provided in

this agreement as well as the charges for the computer facilities provided,

including storage media, data preparation, photocopying documentation,

printing and other material provided by the Contractor itself or through

a third party.

(18) If any instalment of the contract price or any other amount pay-

able by the Customer to the Contractor is not paid on the due date the

same will carry interest at the rate of ____ p.c. p.a. from the due date till

payment. This is without prejudice to the other rights of the Contractor

under this Agreement or in law.

(19) Until the acceptance of the software programme by the Customer

as aforesaid and the payment of the contract price agreed to be paid by

the Customer to the Contractor the copyright in the Computer programme,

documentation and other material developed by the Contractor under this

agreement will belong to the Contractor. On the acceptance of the programme

by the Customer and payment of the Contract price by the Customer to

the Contractor the copyright in the said program and the documentation

and all other rights will vest in and belong to the Customer.

(20) The Contractor warrants that it has ability to perform its obligations

under this agreement, that the design of the software will be suitable to

fulfil the specifications and the software will perform and in accordance

with the specifications and that the installation of the software will be free

from defects in workmanship.

(21) The Contractor further warrants and agrees that it will be respon-

sible to rectify within a reasonable time any defect which under proper

use, care, and maintenance appears in the software, provided the defect

is properly reported to the Contractor in writing within _____ weeks of the

Acceptance of the Software without any additional charge provided the de-

fect is not found cured due to any negligence on the part of the Customer

SOFTWARE DEVELOPMENT AGREEMENT

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or due to any modifications made by the Customer or any other person

without the consent of the Contractor.

(22) The Contractor agrees to indemnify and keep indemnified the Cus-

tomer against any loss or damages suffered or incurred by the Customer

on account of breach of any copyright or rights relating to any patent,

trade mark or design of any other person committed by a Contractor in

supplying the software program under this Agreement.

(23) The Customer assures the Contractor that any specifications,

decision or instruction given by it to the Contractor do not infringe any

intellectual property or other rights of any other person and the Customer

agrees to indemnify the Contractor against any loss or damage suffered

by the Contractor on account of such breach.

(24) All information, knowledge, whether commercial, financial, tech-

nical or otherwise received by one party from the other party hereto in

connection with the project and this agreement will be kept confidential

including the employees, or agent of the party and the auditors, profes-

sional advisers, and others having legal right or duty to have access to or

knowledge of the confidential information in connection with the business

of the party.

(25) Either party to this agreement may terminate this agreement by

giving to the other one months prior notice, in the event of breach of any

term or condition of this Agreement by the other or if the other party is

ordered to be wound up or goes into voluntary liquidation or if the party

closes its business.

(26) The purpose of this Agreement shall be carried out within a period

of ____ months from the date hereof failing which the agreement shall

stand terminated on the expiration of the said period unless the parties

agree to extend the term in writing in which case the clause will apply to

the extended period.

(27) On the termination of the agreement by efflux of time or otherwise

as aforesaid, the Contractor will be paid all moneys due to the Contractor

after taking into account the amounts previously paid together with the

total value of the project completed upto the date of termination, and the

cost of materials and goods ordered for the Project for which the Contrac-

tor has paid or is legally bound to pay. If the Contractor is paid till the

termination any amount in excess of what is due to it as aforesaid, the

excess will be refundable by the Contractor to the Customer.

(28) Termination of the agreement will not prejudice the rights of any

party accrued to it till the date of termination.

(29) Any notice required to be given by the party hereto to the other

under this agreement shall be given in writing and shall be served either

through post registered A.D. or by Fax or by personal delivery at the ad-

dress of the party hereinabove mentioned.

(30) This Agreement is the sole repository of the agreements and un-

derstandings arrived at between the parties and it supersedes all previous

correspondence, representations, communications or memorandum of

understanding.

(31) Any dispute or difference arising out of or in respect of this agree-

ment or any provision thereof will be referred to arbitration of one or two

arbitrators conversant with the subject matter of this Agreement and the

arbitration will be governed by the Arbitration and Conciliation Act, 1996.

SOFTWARE DEVELOPMENT AGREEMENT

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(32) This agreement will be governed by the Indian law and any compe-

tent Indian Court alone will have jurisdiction to entertain any legal action

taken by one party against the other.

THE SCHEDULE ABOVE REFERRED TO

CONSISTING OF

(1) Specifications (2) Documentation

(3) Computer equipment (4) Installation date

(5) Project Plan or program (6) Contract price and mode of payment .

(7) Project plan Training plan and personnal.

IN WITNESS WHEREOF the parties have put their seals hereunder the

day and year first hereinabove written.

Common seal of the ABC & Co. )

the withinnamed ‘Customer’ )

is affixed as per the Resolution )

of the Board of Directors in the )

presence of ... ... .. .. )

Common seal of the XYZ & Co. )

the withinnamed ‘Contractor’ )

is affixed as per the Resolution )

of the Board of Directors in the )

presence of ... ... ... .. )

__________

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Note: For Stamp Duty & Registration see respective paras of Preliminary Notes.

Stamp Duty, eStamping & Registration : See the Indian Stamp Act, 1899 (2 of

1899), Rates of Stamp Duty in various States, eStamping and Compulsorily & Option-

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websites, in respective later Part/Chapters on Stamp Duty, eStamping & Registration of

Deeds & Documents.

SOFTWARE DEVELOPMENT AGREEMENT