Web site contracts are important, intricate

June 27, 2008

Either you have a good Web site or you need one.  Unless your company is big enough to handle it in-house, an outside vendor is (or will be) your Web developer.  The best approach to the process for both the developer and the client includes a clearly written contract to guide the process, describe each side’s responsibilities, and set expectations.

A basic question that is often glossed over with assumptions is this:  When a business buys a Web site, what exactly is it buying?  The client perspective is most often “I paid for the site, so I own the whole thing.”  This is an accurate expectation only to a point.  The visible aspects of the site should be exclusively controlled by the client.  No site owner would want to have one of dozens of Web sites in their market with the same look and feel.  In many cases, the business’ own logo and trademarks are built into the site’s visual elements as well.

However, the underlying and invisible software that makes the Web site work is probably shared with the developer’s other sites.  That functional software may be based on open source software not original to the developer.  Such shared rights in the internal coding of a site make a project less expensive and shortens development time.  Unless a business runs mainly through its Web site and has a real need for custom software, most business owners have no desire to pay a premium for the internal workings of their site to be written from scratch.

It is helpful when retaining a Web developer to discuss what aspects of the resulting Web site will be exclusively the client’s, what aspects are software owned or licensed by the developer and licensed to the client as part of the development agreement, and what open source components are included.  Open source software can be used and improved upon by any developer, and can be included in a larger project such as a whole Web site.  The client would then have rights to use the open source components as part of the Web site.  Clients should bear in mind, however, that the site’s developer does not have exclusive rights in any open source components of the site.  Open source products commonly used by Web developers include content management systems such as Joomla! or Expression Engine.

Clients will do well to request a work-for-hire and assignment provision that gives them exclusive rights in the visible design work on their site as well as any site-specific text or images included in the design.  Such a contract provision will give the client full ownership of the visual aspects of the site.  If at the end of the site’s construction the client owns the rights to the visible design and identity aspects of the site, as well as the written and image content, the client will be able to enforce those rights against any third party that copies its design or content.  Likewise, if the developer later delivers the same site to another client, the work-for-hire and assignment provision will allow the client to remedy the situation.  For the non-visible and underlying functional aspects of the site, exclusive ownership by the client is not often necessary.  A license to use and update the site’s underlying software is usually sufficient for the client to do what it needs to do with the site after it is built and delivered.

Time and money

By the time many businesses realize they need a new Web site, set aside money to pay for it, and decide on a provider to do the work for them, they usually want the site delivered yesterday.  One of the benefits to a thoughtful written development contract is that it sets clear deadlines and timing expectations for both sides.  A client needs to know when to expect design proposals, draft versions of the site, and other progress benchmarks up to its completed site.  At the same time, the developer cannot proceed without client feedback on proposed designs or any client-provided content for the site.  The most helpful written agreements set deadlines reflecting the need for that back and forth rather than simply listing a set of specific dates that can quickly fall by the wayside.

Another area that can lead to tension between the client and the developer is changes in the direction and plans for the site.  This is fairly common, as the client sees early versions of a site, decides to add additional content, pages, or functions, or simply provides feedback to the developer’s proposal.  Problems can arise in identifying what changes are simple client feedback, within the original scope of the project and the agreed payments, and which changes increase the scope of the Web developer’s work and add to the price of the project. 

Clients may simply assume that the site is the site, and the project will always have the one overall price to which they agreed.  On the other hand, a developer can ill afford to stick to the initial price if the product and time commitment continue to grow.  For this reason, many development contracts contain change- in-scope wording that is not unlike the provisions for change orders in a building construction contract.  A clear, written agreement between the developer and the client, as well as ongoing communication, is helpful to avoid cost controversies.

Domain registration and control

Of course, before a Web site is publicly launched, it needs an address.  One of the first steps in creating a Web presence is to secure the domain name (the part that comes after the “www” and includes the “.com” or the “.net”).  Unless a client wants its Web developer to control, maintain, and be responsible for periodically renewing its domain name, it usually makes sense for the business itself to register the domain and control the registration.  If the relationship between the client and the Web developer sours, the business will want to preserve the option to use another vendor for Web services.  When the developer controls the domain name registration, the client’s ability to switch providers can be limited.

Payment and delivery

Most Web development contracts will require an upfront payment and progress payments for different stages of development — for example, upon completion and approval of the site’s visual design, upon completion and approval of the initial content, and upon the completion of the site.  When the site is completed and paid for, the data files and software that make up the site are typically moved from the developer’s computer server to the servers of the client’s chosen hosting company.  At that point, the site should be complete and the agreed rights will transfer.

Service after the sale is a matter of contract and depends on the client’s needs for hosting services, for help in updating the site’s content, and desire to add pages or functions to the site.  Updates are most often done on the basis of hourly fees, but many developers also offer maintenance contracts, so that the client commits to the original developer for future work on the site, in exchange for agreed rates from the provider most knowledgeable about the site.

As with most commercial contracts, as long as the relationship goes more or less according to each side’s expectations, the content of a written Web development agreement will not matter.  However, where costs exceed expectation, deadlines are missed, or the relationship otherwise goes sideways, a little time and attention paid to the agreement on the front end will pay large dividends.

Chris Gatewood practices law with Hirschler Fleischer in Richmond.

Written by Chris Gatewood  |  Filed Under Intellectual Property 

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