You're ready to sign with a development partner. The contract lands in your inbox. It's dense, full of jargon, and you're tempted to just sign and get started.
Don't.
Here's what actually matters.
The Critical Sections
1. Intellectual Property Ownership
What to look for: Clear statement that you own everything created for you.
Red flags:
- "Work for hire" language that's ambiguous
- Developer retains rights to "underlying technology"
- Licensing language instead of ownership
- No mention of IP at all
What you want: Upon full payment, all code, designs, documentation, and deliverables become your property. The developer retains no rights except to show it in their portfolio (if you agree).
Exception: If they're using open-source components or their existing frameworks, that's normal. But custom work for you should be yours.
2. Scope of Work
What to look for: Detailed description of what's included and what's not.
Red flags:
- Vague language like "build a website" without specifics
- No mention of deliverables
- No acceptance criteria
- "Subject to change" without change control process
What you want: Specific features, functionality, and deliverables. Clear definition of what "done" looks like.
3. Timeline and Milestones
What to look for: Realistic schedule with checkpoints.
Red flags:
- Single delivery date with no milestones
- No consequences for missed deadlines
- Deadlines that seem too aggressive
What you want: Phased delivery with review points. Clear understanding of what happens if timelines slip (on either side).
4. Payment Terms
What to look for: Payment tied to deliverables, not just time.
Red flags:
- 100% upfront payment
- Time-based billing with no caps
- No connection between payment and delivery
- No clear invoicing process
Common structures:
- Fixed price: Set amount for defined scope
- Time and materials: Hourly/daily rate, often with a cap
- Milestone-based: Payments tied to deliverables
What you want: Payment schedule that protects both parties. Deposits are normal (25-50%), but large payments should follow delivery of something.
5. Change Control
What to look for: Process for handling scope changes.
Red flags:
- No mention of how changes are handled
- Changes automatically extend timeline without limits
- No approval process for additional costs
What you want: Clear process: change is requested, impact (time/cost) is assessed, you approve before work begins.
6. Warranties and Support
What to look for: Guarantee that the work will actually work.
Red flags:
- No warranty period
- "As-is" delivery with no bug fixes
- Warranty that excludes everything
What you want: Bug fixes for a reasonable period after delivery (30-90 days is typical). Clear definition of what constitutes a bug vs. a change request.
7. Termination
What to look for: How either party can exit.
Red flags:
- No termination clause
- Termination only benefits one party
- No provision for partial delivery
What you want: Either party can terminate with notice. You own what's been built and paid for. Clear wind-down process.
8. Liability
What to look for: Reasonable limits on damages.
Red flags:
- Unlimited liability for the client
- No liability for the developer
- No insurance requirements
What you want: Mutual limitation of liability (often capped at contract value). Developer carries appropriate insurance.
9. Confidentiality
What to look for: Protection for your business information.
Red flags:
- No confidentiality provisions
- One-sided (only protects developer)
- Exceptions that swallow the rule
What you want: Mutual NDA. Your business information stays confidential. They can mention the engagement but not share details without permission.
Questions to Ask Before Signing
- Who owns the code? (Should be you)
- What happens if the project runs over? (Time and money)
- What happens if I need to cancel? (What do I get?)
- What's included in support after launch? (Bugs vs. changes)
- Can I take the code to another developer? (Should be yes)
- What happens if there's a dispute? (Mediation, arbitration, jurisdiction)
Warning Signs in Contract Negotiations
🚩 They won't negotiate anything 🚩 They rush you to sign 🚩 They can't explain terms in plain language 🚩 Key sections are "standard" but won't show you the standard 🚩 Verbal promises not reflected in writing
What Good Looks Like
A fair contract:
- Protects both parties
- Is clear and readable
- Anticipates problems
- Provides resolution mechanisms
- Balances risk appropriately
If a contract is so one-sided that you feel uncomfortable, that's data about the relationship.
Getting Help
For significant contracts ($20K+), consider:
- Having a lawyer review (few hundred dollars, worth it)
- Asking for redlines and explanations
- Talking to references about their contract experience
Questions about our engagement terms? Let's discuss — we believe in transparency