A ready-to-edit software development contract template for a client hiring a developer or agency to build software. Covers scope and specifications, milestones and deliverables, acceptance testing, milestone-based payment, intellectual property ownership, an AI-generated-code disclosure clause, warranties and a bug-fix period, confidentiality, change requests, termination, and limitation of liability.
Who needs this
Any small business paying a freelance developer, development shop, or agency to build a website, app, integration, or custom internal software. If you're relying on emailed quotes or a one-page Statement of Work, you probably haven't settled who owns the finished code, what 'done' means, what happens when a milestone slips — or whether AI coding assistants were used and whether that code is safe and license-clean.
What's inside
- Scope of work that points to a detailed specification / SOW exhibit
- A development-milestone and deliverable schedule
- Acceptance-testing criteria and a defined approval window
- A payment schedule tied to accepted milestones (table you fill in)
- Intellectual property ownership — client owns delivered code on final payment, with background-IP and open-source carve-outs
- An AI-generated-code disclosure clause for developers using AI coding assistants
- Warranties, a bug-fix / warranty period, and confidentiality terms
- Change-request, termination, and limitation-of-liability clauses
- A two-party signature block for Client and Developer
Preview
Software Development Agreement
Effective date: [DATE] · Version 1.0 · Between [CLIENT NAME] (Client) and [DEVELOPER NAME] (Developer)
1. Scope of Work and Specifications
The Developer will provide the software development services and produce the deliverables described in the Statement of Work attached as Exhibit A (the "SOW"). The SOW sets out the features, functionality, technical specifications, platforms, and any third-party services or integrations that make up the Project. Exhibit A is incorporated into and forms part of this Agreement.
The Developer will perform the services in a professional and workmanlike manner, consistent with generally accepted industry standards, and will supply all skill, labor, tools, and equipment reasonably required to complete the Project, except for any items the SOW states the Client will provide (such as hosting, licenses, accounts, content, or credentials).
Anything not expressly described in the SOW or this Agreement is outside the scope of the Project. New or changed work is handled under Section 9 (Change Requests).
2. Development Milestones and Deliverables
The Developer will complete the Project in the milestones set out in the schedule below. Each milestone has one or more deliverables and a target due date. Dates are estimates that assume the Client meets its own responsibilities on time (for example, providing content, feedback, access, and approvals). If a Client delay pushes a milestone, the affected due dates shift by a reasonable, equivalent period.
Milestone and Payment Schedule (complete for your Project):
| Milestone | Deliverable | Payment | Due |
|---|---|---|---|
| 1 — Kickoff & Design | Signed SOW, technical design/architecture, project plan | [e.g. 20%] | [DATE] |
| 2 — Development Build | Working build of core features per Exhibit A | [e.g. 30%] | [DATE] |
The full template continues with 13 sections. Grab the editable Word file using the form, then customize the bracketed [PLACEHOLDERS] for your business.
How to use it
- Download the editable Word file and fill in the party names, project name, effective date, and governing-law state.
- Attach your specification or Statement of Work as Exhibit A and complete the milestone / payment schedule table.
- Set the acceptance-testing window and warranty period to match the size of the project.
- Confirm the AI-generated-code disclosure clause fits how your developer works, then have both parties sign and keep a countersigned copy.
Frequently asked questions
- Under this template, the client owns the custom code and other deliverables built specifically for the project — but only once the client has paid in full. Until final payment, the developer keeps ownership and the client only has a license to test the work. Two things stay with the developer: its pre-existing 'background' tools and reusable components (which you get a broad license to use inside your software), and disclosed third-party or open-source components (which come with their own licenses). Spelling this out is the single most important reason to sign a contract before work starts.
- At a minimum: a clear scope of work tied to a detailed specification or SOW, a milestone and deliverable schedule, acceptance-testing criteria so 'done' is defined, a payment schedule tied to accepted milestones, intellectual-property ownership terms, warranties and a bug-fix period, confidentiality, a change-request process, termination rights, and limitation of liability. Given how common AI coding assistants now are, a modern contract should also include an AI-generated-code disclosure clause. This template covers all of these.
- Most developers now use AI coding assistants like GitHub Copilot, Cursor, or Claude at least some of the time. That is fine, but it raises real questions: was the AI-generated code reviewed by a human, is it license-clean and non-infringing, and were the dependencies it suggested checked for security issues? The disclosure clause requires the developer to tell you when AI was used and to warrant that the AI-assisted code meets the same standards — and is owned by you — as everything else they deliver.
- It becomes a binding contract once both parties complete the blanks, attach the SOW, and sign it. Because contract, employment, and intellectual-property law vary by state and situation, have counsel review it before you rely on it — especially the IP assignment, limitation of liability, and governing-law sections. This template is a strong, thorough starting point, not a substitute for legal advice.
This template is provided by Layer3 Labs for general informational purposes only and does not constitute legal advice. Laws and regulations vary by jurisdiction and industry, and the right terms depend on your specific project and relationship. Have this agreement reviewed and adapted by qualified legal counsel before signing it.