Contract Review · Software Development Agreement

TechVentures × CodeCraft

Custom ERP build · $450,000 contract value · 14 sections reviewed

Reviewed 2026-04-10

Reviewer: Senior Associate

Playbook: SDA v2.0

Overall Risk Assessment

Very High Risk

Recommendation

Negotiate significant changes before signing.

$450K

Contract Value

8

Issues Flagged

4

Critical

3

High

Executive Summary

This Software Development Agreement is heavily and systematically one-sided in Developer's favor and should not be signed in its current form. Every material commercial term — IP ownership, liability cap, data accountability, and indemnification — favors the Developer. Client pays full price, bears nearly all risk, and has virtually no legal recourse for failure.

Top Negotiation Priorities

§3.1 · IP Ownership

Critical

Developer retains all work product despite Client's $450K investment. Must be restructured as work-for-hire with full assignment to Client.

§6.1 · Liability Cap

Critical

Cap of ~$37,500 (3 months of fees) on a $450K contract. Must be raised to total fees paid, with carve-outs for IP infringement and gross negligence.

§6.3 · Data Liability

Critical

Complete exclusion of Developer liability for data loss "regardless of cause." Must be replaced with negligence-based liability and 48-hour breach notification.

§7.1 & 7.2 · Indemnification

Critical

Inverted indemnification: Client indemnifies Developer for Developer's own negligence with no cap. Developer's reciprocal duty is capped at $50K. Must be rebalanced and made mutual.

§8.1–8.3 · Termination

High

25% early termination penalty, no cure period, and Client loses all licenses to paid-for deliverables. Remove penalty, add 30-day cure, retain perpetual license.

§5.1 · Warranty

High

30-day warranty is far below industry standard for enterprise ERP. Extend to 180 days, strengthen remedy to include refund right, add malicious-code warranty.

§3.3 · Open Source

High

Developer may incorporate open source "at sole discretion without notice." Creates GPL/AGPL contamination risk. Require prior approval and full BOM disclosure.

§2.2 & 2.3 · Payment Terms

Medium

Late interest at 2.5%/month (30% annual) and uncapped expense reimbursement. Reduce interest to 1.5%/month and require pre-approval for expenses above $500.