All About Website Contracts
It is vital to understand and have website contracts in place both for those creating websites and those commissioning them. It can be the difference between a business protecting its key assets and being able to enforce warranty claims or a freelancer being able to show that they had the right to use particular content and, in both cases, to enforce any payment obligations.
When agreeing terms with website developers, in addition to payment terms, there are key additional clauses which you should be looking to include. Typical clauses include clauses dealing with:
Of course, you never want to be in a potential dispute that would call for any of these clauses to be enforced, hence the preference for having clear contractual terms agreed at the outset. But it is worth understanding the key clauses and making sure they are sufficiently robust to deal with a dispute should any arise.
For example, how many times has a picture been found on a website which we like so much that we save it to our computer to use later? If the picture is owned by someone else and was included on a website without permission from that person, they may be able to pursue the unauthorised user directly in their own right. Website terms often include more precise provisions such as warranties or restrictions on how content may be used or passed on, particularly if the developer wants to be able to licence the same content to other customers or if the developer wants to avoid having the same content on a future website belonging to a competitor. Here , it is likely that the original photographer would have a claim against the website owner for infringing their copyright in the image, regardless of whether an express disclaimer had been included in the terms, but as the value of the claim is likely to be quite small and because of the cost of pursuing a claim, in practice this does not happen very much. Accordingly, the potential liabilities cannot be easily quantified and the consequences of getting it wrong can be significant.
Similarly, if content is used on a website without agreement (note that in some cases simply having a link to a site may be sufficient but in others it may not) and the website terms do not expressly restrict the use of the content, there may be a potential claim against the website owner by the original provider of the content.
Without a contract that sets out clearly the rights to the content, the potential legal claims involved or the scope of use, the user who comes up with a particular idea about how to use the content on their website (for example a particular overlay or another image on top) may find that the original content owner comes back to them demanding greater value for their idea than they had envisaged. In this case, the website user may be able to say that they had a right to use the content in the way that they did notwithstanding the original content owner’s insistence to the contrary but, depending on the wording of their terms, the website owner may not.
Key Parts of a Website Contract Template
A comprehensive website contract template should include the following critical components:
Scope of work. This section is crucial, as it will detail all of the specific services that the developer will provide, along with a timeline for the completion of these services. The client and developer should come to an agreement on the scope of work for the project, so that neither party ends up feeling misled or short-changed once the work is completed.
Payment terms and estimates. The contract should specify the total price of the project, and detail how it will be paid out (e.g., upfront payment, completion of the project, milestones and phases of the project, etc.) This applies to the base cost of the website as well as any additional services that may have been requested on top of the base project.
Intellectual property rights. This is a crucial aspect of a web contract template, as it will designate who ultimately owns the rights to the materials created as part of the website project. It should be established whether the developer cedes all rights to the materials once their compensation has been paid, or if they are negotiating ownership of all or some of the materials in exchange for a lower rate.
Confidentiality. It is common for website projects to require the sharing of sensitive information such as business plans, technical specs and other private information. A confidentiality or nondisclosure clause will protect you from having that confidential information disclosed to outside parties.
Advantages of Using a Contract Template
When you are hiring a web designer, developer, or other website professional, you will be asked to sign a contract. While some web companies may attempt to avoid contracts altogether, there are several crucial reasons for having a written contract and not relying on the old adage of ‘My word is my bond.’ When used properly, website contract templates can offer significant advantages to freelancers and complete web companies.
First, a professional contract saves time. A good template does not include all the clauses you will ever need, but it should have most of the common ones, with a clean structure that has logical paragraphs and sections. If you need to draft a new contract for each and every project rather than using a template, you will need to spend a significant amount of time making sure the artwork and content is copied correctly into the agreement, that word processor formatting is preserved when the file is converted to PDF, that the right parties are named, and many other small details. Most business owners have too much paperwork already, so a contract template that can be reused from project to project with only minor changes will save a lot of time.
Second, by crafting an agreement beforehand, you can ensure legal compliance. State and federal laws change frequently, and it is easy to overlook these amendments in standard contracts that you have been using for years. This also allows you to plan for new legal issues that may arise, such as online privacy issues and cloud storage agreements. When there is a new legal amendment contract, you can make the necessary adjustments.
Even when freelancers do use a contract, many of them will include all of their boilerplate clauses but make arbitrary changes to very important areas of the contract. For instance, an agreement may require a deposit in order to begin work, but other text will say that the project ru from start to finish. These sorts of important details can lead to huge budget and schedule overruns, and can lead to inconvenience and frustration.
Finally, using a contract template can help ensure a fair agreement. Instead of a contract written by the website company that is heavily in their favor, you can find a template that has equal protection for both parties.
Make Your Own Website Contract Template
Considerations for Customizing your Website Contract Template for Your Project and Client
When you’re selecting a website contract template for your business, you should ensure that the one you select will be customizable for your projects and customers. It’s a good idea to build some flexibility within your web design contract templates because very few designers will be performing the exact same services for every customer. You’ll likely find that you need to add additional clauses to your contract, or delete clauses which aren’t applicable. A well written template web site design contract, can be adjusted to meet your needs, while still covering your business in the event of a contract dispute.
For instance, when crafting your website contract template, you should consider defining what types of work you and your design/website development team will be performing. While some designers will offer full service packages ranging from initial planning, design and development to full e-commerce and on-going site management, many designers and developers will focus on specific services. Your template website design contract should reflect your business offering and the range of services you are prepared to deliver to a client. In this way, you can use that template contract within the confines of the contracted services, but if you want to engage in a different kind of work with the same customer, you can build on your base contract with additional services.
You may also want to consider customizing your website contract templates to address applicable state privacy laws as well. If your website design and development company is licensed in the state of California, many contracting companies should have a general understanding of the requirements under the California Online Privacy Protection Act of 2003 ("CalOPPA"). For instance, CalOPPA requires that all operators of commercial websites – including those with websites that are "collecting any type of ‘personally identifiable’ data" set out a privacy policy on their site. The privacy policy must "identify the categories of items collected, the purpose for collecting the requested items, and the third parties with whom the data may be shared with."
Other states also have adopted laws regulating privacy which your web design firm or website design company may be obligated to follow. Taking the time to understand both California laws, as well as other state’s laws governing website and online privacy, will empower your designers and contractors to best serve their clients, while protecting the business’s interests as well.
Common Errors of Contracts
Mistaking the specifics of a contract with the generalities of a template: When using a website contract template, it’s crucial to ensure that the agreement is specific to your business. Many make the error of using a generic contract template without modifying any of the terms, which can result in loopholes or aspects of the agreement that don’t protect your business. To avoid this mistake, you should take the time to customize the contract template so that it addresses the specific work to be performed, any special conditions that apply, and all relevant terms of the agreement.
Failing to seek legal advice: Whether or not you’re using a website contract template as the basis of your agreement, it’s always a wise idea to have an attorney review the document for omissions or to clarify any questions you may have regarding ambiguous terms . Many people also sign and return documents without reading them thoroughly first. It’s critical to read all terms, conditions, and clauses prior to signing in order to protect your own interests as well as the interests of your business.
Not having an attorney draft the original document: While using a contract template is a common practice among business owners, if a business has contract disputes on a regular basis or if they routinely perform a certain type of work that has a high financial stakes, the services performed generally warrant a customized contract. Your contract is intended to be a legally binding agreement that holds both parties accountable in the event of a contract dispute. It’s your primary means to protect your business, and on top of that, a poorly drafted contract can cause damage to your business and lead to future disputes.
Trustworthy Sources of Website Contract Templates
There are a variety of places to obtain reliable website contract templates, both paid and free. However, it is vital that you use contract templates obtained from reputable sources where the contracts have been drafted by experienced and qualified attorneys that are knowledgeable about internet law and technology.
One of the largest SaaS-oriented legal template resources, LegalZoom provides business and legal documents in many areas, including website contracts. Like many other online legal document resources, LegalZoom offers template contracts for download as well as attorney-reviewed contracts, or combinations of both. They do not provide free content.
Another large online legal resource is USLegalForms. Their website allows customers to search for website contracts fitting a wide variety of scenarios, many of which appear tailored to common situations that website developers, software companies, and web-based businesses face today. USLegalForms charges a small fee to access their materials, although there is the option to sign up for a monthly subscription.
Freelancer-resource site Freelance Folder offers free contract templates geared towards web developers and website designers. However, the site makes no claims as to the fitness of these contracts, and they should be reviewed by an attorney.
Another source of free contract templates for website design and programming issues can be found at Trial Lawyer Tips. Moderated by attorney Gordon Lighthart, the site is a respected resource for general contract forms and information about contracts used in web development.
Small Business Computing also offers free and paid legal document resources and articles in areas including web-based businesses and online business contracts.
Additionally, if you have a general contract template that can be tailored to your needs, they can be edited and changed in order to fit the situation. Many contracts contain sections that are optional and should be removed if not relevant, and can be altered and stricken out on a case-to-case basis.
Modify the Contract Template
It’s important to remember that you will need to review and update your template on a regular basis. The first reason you cannot simply set it and forget it, is that your own business will be evolving and changing. Perhaps you’ll eventually offer different services than you used to or you’ll change the way you bill for services or there may be new legal issues that arise within your industry. Then you’ll need to update the template accordingly.
The second reason to regularly review the template is that in addition to your own company evolving, the laws will also be evolving . For example, in the United States, the Federal Trade Commission has been taking a hard stance on website and technology companies and their use of customer data. Much of that depends on whether you are considered a business associate under HIPAA or not. You may find that your current contracts don’t account for the latest legal developments, and that may affect your compliance obligations.
Depending where your clients are located, this may also be an area on the international stage that requires some attention to insure that you are compliant with the applicable local laws, such as complying with GDPR requirements when working with companies outside of the US.