5.1 Contract contents v4.5 en
Contents
1. Signature This agreement is hereby approved by supplier and customer Cilia ite written aks Dates NN CUSTOMER CV ie a EEEE Dates enisi NN project leader PUM X RUT development manual 5 1 Contract contents v 4 5 15 16 10 10 1 10 2 Measurement of the process Measurement of the process This is a very important part of a process description To know if the agreement process is striving in the right direction the agreement writer must be able to measure what he is doing or else he will fumble in the dark Som processes are easier than others to meas ure When programming it is easy to measure the lines of code but when producing an agreement it is much harder You must somehow find all loopholes and things not thought of The writer must try to figure out possible faults Resource measurement It is hard to find any measurement parameters for agreements a good agreement can be written on only a few pages which may only take a few hours On the other hand an inex perienced writer can ruin a whole project in the long run e g if the warranty is not spec ified thoroughly enough Even if the product is a small part of a large system you can be responsible to take care of faults arised in the rest of the system It is very important that the writer clearly states which faults that are supported in the delivered product The most important factor in writing an agreement is routine you must have seen both good and ba2. Rights In connection to delivery the ownership and usufruct of the product is transferred to the customer After the delivery day the supplier has the right to use the product The institu tion of computer science at link pings university has the right to use the product in their teaching Rights special agreement The rights for the product is regulated in Sekretess och gander ttsavtalf r genom f rande av PUM projekt Link ping YY Y Y MM DD The agreement is represented in section X page Y Infringement The project group does not take upon oneself to defend the customer if claims or suits re garding patents copyright or other law due to usage of delivered software are declared Contingent limitation force majeure Neither party shall be liable for any failure or delay in performance under this to the ex tent said failures or delays are proximately caused by causes beyond that party s reasona ble control and occurring without its fault or negligence including without limitation failure of suppliers subcontractors and carriers or party to substantially meet its per formance obligations under this Agreement If such failure occurs the delivery may be cancelled RUT development manual 5 1 Contract contents v 4 5 Adjustment to the PUM course Arbitration Disputes regarding interpretation or application of this agreement will be decided by the course leaders of the course TDDC02 at link pings university
3. where the law of purchase the law of agreement and Letter of Intent are discussed RUT development manual 5 1 Contract contents v 4 5 Realization 2 3 Further education 3 1 If you want to get further juridical education courses like Juridik f r M and Dataju ridisk versiktskurs is recommended They are quite short 2 5 and 2 points but contain the basic and essential parts of agreement law Or you can read Rombe 1996 which gives good basic knowledge in the subject Realization Overview How is an agreement established Here follows how an agreement can be signed Two signed copies of the agreement one each Offer acceptance letter order acceptance Offer signed copy of offer by the buyer Protocol customer signature Verbal agreement endorsement letter silent accept Verbal agreement verbal agreement As the description reveals agreements can be one sided or mutual One sided agreement One part sends a document to the other part which completes the agreement by accepting it Offers and accepts may be exchanged in writing or electronically Agreements can also be conceived by action e g a user downloads a computer program from a web site where certain conditions are stated Mutual agreement Mutual agreements are the normal procedure at larger affairs The mutual part means that you create two copies which are then exchanged after both sides have signed it Verbal agreement Ver
4. 01 14 Improved by Martin Virdung Pum 15 12 Changes not yet attended to Examine the PUM agreement preferably with a legal expert Make a checklist adapted to the PUM course 13 References 13 1 Method description Hamrin Klas ADB k paren Studentlitteratur 1994 Metzger Philip W 1973 1981 Managing a programming project New Jersey Pren tice Hall Inc 13 2 Method evaluation Hamrin Klas ADB k paren Studentlitteratur 1994 RUT development manual 5 1 Contract contents v 4 5 13 3 13 4 13 5 References Metzger Philip W 1973 1981 Managing a programming project New Jersey Pren tice Hall Inc Internal comments As chapter 6 illustrates it is quite complex to write an agreement even if it like the exam ple is a small agreement This is an area where we as technicians are laymen but it is an area that we are very probable to encounter when trying to use our knowledge commer cially It is then good to understand the principles of agreements and what they should contain to be able to communicate with the lawyers writing the agreements References on the Internet There exists a Swedish juridical forum where you can get information regarding differ ent areas of law You find it at http www jit se Except the above the government publish all laws on the internet These can be found at http rixlex riksdagen se Another good place is FAQ inom IT Juridi
5. If the buyer accepts the test he cannot later on point on faults on the system and claim compensation As a seller of a system it can be smart to finish the acceptance test well ahead of the installation to see what needs to be developed to get the system accepted Time of guarantee The start and end of a guarantee must be predefined does it start when the program is installed or when it works for 90 or 100 Operation hours should also be speci RUT development manual 5 1 Contract contents v 4 5 5 Realization fied if the guarantee is valid for 90 days is only work hours 8 00 17 implied or the whole day and night If a complaint is made regarding original faults of the product within two years of purchase the law of purchase states that the seller is liable Regarding software at least for PC s it is uncommon with guarantees that are as long as the law of purchase as software tends to be outdated within two years For PC software guarantee times often is 3 12 months Prices Under the pricing heading you often make agreements upon the economic conditions regarding the purchase and conditions for upgrading in the future If the product is not finished there exist several pricing models that can be used Some of the most fre quently used ones are described below see Pricing models and variants thereof re garding service agreements p 6 Payment The customers most important task is to give the seller payment It is
6. be included in the agreement Verification of results At any agreements where there are doubt regarding the contents you should let a lawyer inspect the agreement before signing All parties involved in the agreement should al ways consult a legal expert to assess the agreement it is nice to use some form of check lists when doing this Examples with explanations It is hard to find real examples of agreements as they very often are secret This translat ed agreement is retrieved from Ahlstedt 1990 The following example regards a sale of software for collection of debts and adherent services It is however not a standard agreement it is adapted to the purposes of this particular company The motivation to in clude this example is that it illustrates that it is not trivial to write an agreement The agreement is translated and can be found in Swedish in Ahlstedt 1990 Example Avail Software 1995 Range of agreement Through this agreement the customer obtain a non transferable usufruct so called sin gle licence for the software I Inkasso The customer has the right to use the software freely only on one computer within the company if no special permission is granted Delivery and payment RUT development manual 5 1 Contract contents v 4 5 10 Examples with explanations The delivery shall take place on the specified point of time During transport the supplier stands for the risk Delivery may occur t
7. can be responsible to take care of faults arised in the rest of the system It is very important that the writer clearly states which faults that are supported in the delivered product The most important factor in writing an agreement is routine you must have seen both good and bad agreements before You should have encountered the basic pits to fall in One useful but often expensive thing to do is to hire an agreement lawyer that can go through the agreement If you do not have the possibility or want to the following measurement can be used Create some worst case scenarios of different character and control how the agreement handles those The measurement is more experimental and not very concrete but can give a rather good measure of the quality A fictitious example follows below Suppose you are to deliver software to a medical company in the US The corporate man agement wants to test how good the agreement is When testing you have to of course test the agreement related documents see Detailed description page 4 A number of unpleasant scenarios are produced Some examples The program has a date set for delivery but the package gets lost on the way to the USA resulting in a delay for the US customer A user error results in lethal danger for a patient The US customer claims that we guaranteed that it should be impossible Because of condensation in a ward for burn injuries a RAM is short circuited on the computer runn
8. course of action when a contract disagreement occurs is also dealt with Finally an example agreement in a punctuated form is supplied to illustrate that there are quite a lot to consider when an agreement is reached RUT development manual 5 1 Contract contents v 4 5 1 1 2 1 2 2 Field of application Field of application A contract is by definition a written agreement In this report the term agreement is used as this is the conventional term used amongst legal experts Verbal agreements are valid according to the law but as those are unusual and sometimes hard to substantiate they are only covered briefly This report gives the reader an overview of the process involved in creating different agreements their content and which persons that may sign them The report also contains a chapter that treats the measurability of the process As it is hard to measure how good an agreement is you can however with test discover treacher ous weaknesses in the agreement In business relations agreements refers to purchases rentals cooperation and other com mercial or economic interests Prerequisites Who may sign an agreement For an agreement to be valid it has to be signed by an authorized person Sometimes this may be indistinct In government authorities they usually have internal instructions that regulates who is allowed to sign an agreement In companies it s formally only the presi dent and a few more perso
9. de tails It is more important to study the whole agreement thus not falling into the largest pits an agreement can contain Also read Backstig 1999 chapter 9 2 10 3 Forms for data collection Forms for data collection sounds misleading in this case The forms should be for devel oping qualitative scenarios The best way to create events and ideas not thought of before is to use brainstorming For a brainstorming to be successful it is important that the par ticipants have got as open minds as possible To achieve this as few restrictions as possi ble should exist Another important rule when brainstorming is that no criticism is allowed it prevents the creative thoughts An optimal template consists of an empty pa per or a flip chart In figure 1 below you can study a scenario generated with the help of brainstorming A lorry crashes The program changes It is not detected It is detected The program is a health hazard to the patient The patient is permanently injured indictement Figur 1 Brainstorming product RUT development manual 5 1 Contract contents v 4 5 17 18 History of the process 11 History of the process Version Datum Kommentar 1995 02 13 First draft 1995 02 17 Inspected 1995 06 13 Improved by Pum 18 1996 02 14 Improved by Pum 4 1997 02 13 Improved by Pum 4 2 1 1997 06 09 Improved by Fredrik Qwarfort Olle Bj rneld Pum 4 1998 06 11 Improved by Erik Johanss
10. fee of 200 skr for half service and 1200 skr for full service is issued Payment is made quarterly in advance The supplier has the right to change the charging rates such changes will be notified to the customer and will occur no earlier than the next turn of the month For both parties the period of notice is 3 months Other conditions All complaints must be written to be valid Payment shall always occur with delivery of the goods In cases where a invoice is used the payment is due 10 days from the delivery of the bill In this case services are also regarded as goods Interest on overdue payment is 3 per month is applied if the customers payment is de layed Changes or additions to this agreement must be written or it is not valid Solutions to common problems Unreasonable time schedule It agreements usually contain a time schedule for development delivery installation and other implementation Problems following this schedule occur mostly when the system or software is installed at the customer or when software is developed for the customer This usually originates from an underestimation of the labour effort required by the par ties and by unpredictable difficulties that arises Risk distribution for misjudgements and unpredictable difficulties must be stated in the agreement this is done e g by regulations regarding delays and faults and by giving release from reliability It lies in the interest of both parties to have
11. for prod ucts bought in store Copyright Sourcecode availability Secrecy Describes who is the owner of the product and the rights of the supplier Regulates if the source code should be available Regulates demands on the parties to keep the agreement secret x not applica ble for prod ucts bought in store Liability limi tation Hiring prohi bition Limits the responsibili ties of the sup plier and the customer Prevents a party to hire another ones employees RUT development manual 5 1 Contract contents v 4 5 References Table 2 Checklist Software Maintenence Clause Purpose Development Hardware licence software Agreement Regulates the x Regarding duration duration that leasing agree the agreement is valid ments Premature set tlement Arbitration Regulates can cellations in case of agree ment breaches etc Regulates how disagreements should be han dled RUT development manual 5 1 Contract contents v 4 5 Regarding leasing agree ments 23 24 References RUT development manual 5 1 Contract contents v 4 5 2005 01 14 LiTH RUT development manual 5 1 Contract contents v 4 5 Martin Virdung Abstract This report gives a brief overview of the contents in a contract and how they are created Different types of contracts and who may sign them is also treated in the re port The
12. is not ready for delivery at this time the delivery will be cancelled without any consequences for the supplier Payment Because the project is a part of the course TDDC02 no payment is made The customer is not entitled for compensation if the group does not finish the project Rights In connection to delivery the ownership and usufruct of the product is transferred to the customer After the delivery day the supplier has the right to use the product The institu tion of computer science at link pings university has the right to use the product in their teaching Rights special agreement The rights for the product is regulated in Sekretess och gander ttsavtalf r genom f rande av PUM projekt Link ping YY Y Y MM DD The agreement is represented in section X page Y Infringement The project group does not take upon oneself to defend the customer if claims or suits re garding patents copyright or other law due to usage of delivered software are declared Contingent limitation force majeure Neither party shall be liable for any failure or delay in performance under this to the ex tent said failures or delays are proximately caused by causes beyond that party s reasona ble control and occurring without its fault or negligence including without limitation failure of suppliers subcontractors and carriers or party to substantially meet its per formance obligations under this Agreement If such failure occurs th
13. on the importance of a kept delivery time Levels between 0 1 and 1 of the total amount of the agreement per week is nor mal dependent on the extent of the system adaptations and the customers need for a kept time table Insurances Insurance wise the installation of the system is an uncertain area Often the customer does not take over the responsibility e g the risk for the hardware before the accept RUT development manual 5 1 Contract contents v 4 5 Realization ance test is approved upon but at the same time the sellers insurance does not cover incidents that do not occur outside the company Therefore it is common to add into the agreement that the customer is responsible for the goods as soon as it is received Infringement Here the assignment of responsibility between the parties is defined in the case that the delivered products constitute third parties intellectual properties i e patents or copyright There have been cases where a program supplier has given licenses for software of which he had no right of disposal Which responsibility does the supplier have towards the customer Other documents included in the agreement The agreement should include other documents that are included in the sale Some of those documents are mentioned below User manual Technical documentation The seller still has the copyright for the documents supplied in the sale this means that the customer cannot make copies of the docu
14. testing you usually have a clause in the agreement stating that the seller is not responsible for small faults but guarantees to correct them for a fee Limitation of liability As a seller you should be careful to put down assignments of liability e g indirect losses that can arise due to the delivered product If this is not done the law of pur chase is valid IT agreements usually contain some form of limitation of liability which means that the sellers liability for the product is not as vast as the law of pur chase regulates The limitations often regard liability for some types of damages and to a certain maximum amount of money Most commercial agreements also contains a force majeure clausal which states that the seller is not reliable for events out of his control not foreseeable and not manageable with reasonable effort Conditions of acceptance acceptance test An acceptance test gives the buyer the possibility to check that the agreed products and services comply with his order and expectations In the agreement one should specify how the acceptance test will be performed e g the buyer shall contribute with personnel and relevant data for the test A clausal stating that if the buyer does not within a specified time frame replies that he does not accept the system it should be regarded accepted If the acceptance test fails it should be considered as a delay of delivery which lead to compensation claims from the buyer
15. 2005 01 14 LiTH RUT development manual 5 1 Contract contents v 4 5 Martin Virdung Abstract This report gives a brief overview of the contents in a contract and how they are created Different types of contracts and who may sign them is also treated in the re port The course of action when a contract disagreement occurs is also dealt with Finally an example agreement in a punctuated form is supplied to illustrate that there are quite a lot to consider when an agreement is reached RUT development manual 5 1 Contract contents v 4 5 1 1 2 1 2 2 Field of application Field of application A contract is by definition a written agreement In this report the term agreement is used as this is the conventional term used amongst legal experts Verbal agreements are valid according to the law but as those are unusual and sometimes hard to substantiate they are only covered briefly This report gives the reader an overview of the process involved in creating different agreements their content and which persons that may sign them The report also contains a chapter that treats the measurability of the process As it is hard to measure how good an agreement is you can however with test discover treacher ous weaknesses in the agreement In business relations agreements refers to purchases rentals cooperation and other com mercial or economic interests Prerequisites Who may sign an agreement For an agre
16. S TOMER The product is produces within the course TDDC02 at Linkopings tekniska h gskola during the fall of 200X Parties The tied up parties in this agreement is Customer CUSTOMER represented by NN Supplier PUM X represented by project manager NN Agreed specification The specification agreed upon includes the requirements of the latest specification of re quirements approved by both customer and supplier in which the requirements to be ful filled are specified The product must fulfill the requirements specified at level Basic Requirements of lev el Normal must also be fulfilled but can be subject to renegotiations Requirements of level Extra will be fulfilled if time exists and all the requirements of level normal is fulfilled therefore Extra requirements can be cancelled without renegotiation If the supplier and customer interpret the requirements differently they must be renegotiated Acceptance of product The product is regarded as approved if all requirements of level Basic is fulfilled ac cording to the acceptance test The customer will then deliver a written approval to the project group The approval shall contain the following points identification of customer project group and product delivery date the customers approval of the product the customers signature The supplier is not liable for any faults found by the customer after the approval Delivery I
17. bal agreements are not that common at larger affairs but is nonetheless juridical cor rect An offer that is given verbally to someone must be accepted immediately to be val id unless you agree upon a time limit for the acceptance The problem with verbal agreements is the difficulty to prove that an agreement actually exists especially if it contains many details Qualified accept If the buyer as a response to an offer sends an order that differs from the offer you don t have an agreement but a qualified accept The response from the buyer is then regarded as a new offer that must be answered by the seller to reach an agreement To reach an RUT development manual 5 1 Contract contents v 4 5 3 3 2 Realization agreement the seller must accept the differences in writing If he comes with objections there is no valid agreement It is important that the buyer makes his order during the time the offer is valid If the sell er gets an order after the valid time of the offer he does not have to stand by the offer A prerequisite for this is that the seller within reasonable time informs the buyer that he does not accept otherwise the agreement can be valid if the buyer is in good faith Dispute Regardless of how well reasoned an agreement is you can always come to a dispute It is impossible to predict every possible situation and regulate those in the agreement It s far easier to describe in the agreement a course of acti
18. become very expensive for the customer if he is forced to change contractor or if he needs to install backup systems to run his business The customer can then according to the law of purchase cancel the agreement and claim compensation for damages To avoid such situations the course of action should be specified in the agreement Freight The freight for delivery is not always regulated by the parties in the agreement It is important to have an agreement regarding the delivery of the goods as you need to know when the risk is transferred from the seller to the buyer If the buyer is responsi ble for the risk he must pay for the goods even if it is destroyed lost deteriorated or is diminished by an event not depending on the seller K pL 12 The risk is trans ferred to the buyer when the goods is delivered One way to solve the problem is to let a freight company answer to the risks There exist some more or less standard deliv ery contracts The delivery contracts are described in Backstig 1999 Functional guarantee If you give a guarantee the requirements to get a claim shall be thoroughly described Remember that if nothing else has been agreed upon you as a seller have two years liability for faults toward the buyer stated in the law of purchase But it falls on the customer to prove that the product was faulty which may not be so easy In practice it is impossible to know if the system is free from faults even after extensive
19. ctionality thoroughly in the agreement you avoid future disputes and disagreements Specification of requirements The product shall fulfill the requirements in the specifications that the seller and buy er have agreed upon Often if the specification of requirements is changed the whole contract must be renegotiated This can cause the buyer to claim for damage or to re voke the contract If the agreement does not mention claims for damage or contract revoking the law of purchase is valid One important aspect is that the requirements must be controllable at the point of delivery It may be suitable to couple the delivery protocol and the specification of requirements so that the control of the different re quirements is stated It is also important to specify the requirements on the buyer e g the preparations needed by the buyer environment or products that will be integrated RUT development manual 5 1 Contract contents v 4 5 Realization with the delivered system If the buyer does not fulfill these requirements the seller is not responsible for eventual faults or delays Delays The product may be delayed if the seller encounters large problems This can become very expensive for the customer if he is forced to change contractor or if he needs to install backup systems to run his business The customer can then according to the law of purchase cancel the agreement and claim compensation for damages To avoid such situations the cou
20. curring without its fault or negligence including without limitation failure of suppliers subcontractors and carriers or party to substantially meet its per formance obligations under this Agreement If such failure occurs the delivery may be cancelled The suppliers liability for damages is limited to a maximum of 10 of the contract price The suppliers liability is limited to cases stated in the agreement no compensation for in direct losses or damages that the supplier possibly could not foresee when the agreement is signed are payed Additional services For additional services the same rules apply according to the agreement except the fol lowing exceptions RUT development manual 5 1 Contract contents v 4 5 Solutions to common problems An agreement regarding additional service is agreed upon between the customer and the supplier The order of such a service is sent to the supplier The agreement is valid through a confirmation letter from the supplier In this confirmation letter the way ad dresses and phone numbers in which the parities contact each other is stated Service subscriptions exist in two forms half service and full service Halfservice in cludes all technical upgrades during the contracted time Fullservice includes half service and a juridical service where free counselling regarding area of collecting debts and moreover updates of the changes of law to the program For service subscriptions a monthly
21. d agreements before You should have encountered the basic pits to fall in One useful but often expensive thing to do is to hire an agreement lawyer that can go through the agreement If you do not have the possibility or want to the following measurement can be used Create some worst case scenarios of different character and control how the agreement handles those The measurement is more experimental and not very concrete but can give a rather good measure of the quality A fictitious example follows below Suppose you are to deliver software to a medical company in the US The corporate man agement wants to test how good the agreement is When testing you have to of course test the agreement related documents see Detailed description page 4 A number of unpleasant scenarios are produced Some examples The program has a date set for delivery but the package gets lost on the way to the USA resulting in a delay for the US customer A user error results in lethal danger for a patient The US customer claims that we guaranteed that it should be impossible Because of condensation in a ward for burn injuries a RAM is short circuited on the computer running your software The result is that the computer locks and the dialy sis machine which the program is controlling goes amok The patient dies from the complications These examples are not impossible Preferably the most probable events should be in cluded If the results of th
22. devel oping qualitative scenarios The best way to create events and ideas not thought of before is to use brainstorming For a brainstorming to be successful it is important that the par ticipants have got as open minds as possible To achieve this as few restrictions as possi ble should exist Another important rule when brainstorming is that no criticism is allowed it prevents the creative thoughts An optimal template consists of an empty pa per or a flip chart In figure 1 below you can study a scenario generated with the help of brainstorming A lorry crashes The program changes It is not detected It is detected The program is a health hazard to the patient The patient is permanently injured indictement Figur 1 Brainstorming product RUT development manual 5 1 Contract contents v 4 5 17 18 History of the process 11 History of the process Version Datum Kommentar 1995 02 13 First draft 1995 02 17 Inspected 1995 06 13 Improved by Pum 18 1996 02 14 Improved by Pum 4 1997 02 13 Improved by Pum 4 2 1 1997 06 09 Improved by Fredrik Qwarfort Olle Bj rneld Pum 4 1998 06 11 Improved by Erik Johansson Pum 1 1999 06 08 Improved by Henrik Ekstam Pum 4 4 1 2000 06 11 Improved by Johan Sundqvist Pum 4 2001 06 11 Improved by Samuel Bj rkman Pum 10 2002 06 03 Improved by Jenny Klevefors Pum 4 4 4 2004 01 06 Translated by Svein Erik Lindgren pum11 4 5 2005
23. e delivery may be cancelled RUT development manual 5 1 Contract contents v 4 5 Adjustment to the PUM course Arbitration Disputes regarding interpretation or application of this agreement will be decided by the course leaders of the course TDDC02 at link pings university Signature This agreement is hereby approved by supplier and customer Cilia ite written aks Dates NN CUSTOMER CV ie a EEEE Dates enisi NN project leader PUM X RUT development manual 5 1 Contract contents v 4 5 15 16 10 10 1 10 2 Measurement of the process Measurement of the process This is a very important part of a process description To know if the agreement process is striving in the right direction the agreement writer must be able to measure what he is doing or else he will fumble in the dark Som processes are easier than others to meas ure When programming it is easy to measure the lines of code but when producing an agreement it is much harder You must somehow find all loopholes and things not thought of The writer must try to figure out possible faults Resource measurement It is hard to find any measurement parameters for agreements a good agreement can be written on only a few pages which may only take a few hours On the other hand an inex perienced writer can ruin a whole project in the long run e g if the warranty is not spec ified thoroughly enough Even if the product is a small part of a large system you
24. e end price Then the parties agree upon how the deviations should be distributed Time losses or time winnings are of ten regulated with an incentive clausal Results Products An agreement that regulates a business deal between the parties Product templates There exist several standard agreements that can be a good basis for an agreement the foremost example of this is agreement 90 avtal 90 Larger corporations often have their own standard agreements that are written by the company lawyers Templates and forms Standard agreement There exist a number of standard agreements in the computer area that are relatively neu tral considering interests If the organization does not have any agreements these can be a good starting point when writing an agreement Some standard agreements Agreement 90 avail 90 is a commonly used agreement when selling goods Agreement 90 has been developed in cooperation between LKD Leveransf reningen Kontor och Data DF Dataf reningen i sverige and Silf sveriges ink ps och logistikf rbund Agreement 90 is produced by representatives of both sellers and buyers therefore some of the initial negotiations are settled The agreement is commented which makes it rel atively easy to use ABDAKA is another agreement that often is used when selling serv ices it is written after the same principles as agreement 90 RUT development manual 5 1 Contract contents v 4 5 5 2 Veri
25. e scenarios passes you have a good agreement Begin by pro ducing a large number of scenarios and then you try to reduce them into larger ones that cover the same area without overlapping A few high quality scenarios can cover most loop holes in the agreement The measure of good agreement creation is that the agreement should manage most nor mal cases that can occur after signing Product measurement The product measure that the above resource measure describes is the quality and robust ness of the agreement No common events should be able to turn over a very profitable project The agreement should provide a safe and solid interface between program devel opment and the customer and his environment You could compare the agreement with a RUT development manual 5 1 Contract contents v 4 5 Measurement of the process firewall only things that cannot harm the other side may pass the firewall The company wants an agreement they can trust to invest resources in an old project is very shatter ing and resource demanding The agreements scope does not imply its quality When writing agreements it is very dangerous to put down to many small and unnecessary de tails It is more important to study the whole agreement thus not falling into the largest pits an agreement can contain Also read Backstig 1999 chapter 9 2 10 3 Forms for data collection Forms for data collection sounds misleading in this case The forms should be for
26. edictable difficulties that arises Risk distribution for misjudgements and unpredictable difficulties must be stated in the agreement this is done e g by regulations regarding delays and faults and by giving release from reliability It lies in the interest of both parties to have ha certain flexibility in the agreement they should aim at the com pletion of the agreement rather than giving generous rights of cancellation when delays occur Usually this is made by having a mutual duty of information when unpredictable difficulties arises possibilities to adjust time schedules and the delivery undertaking and also agreements concerning eventual additional work Arbitration clauses In most business agreements not agreements with authorities you have a arbitration clause This means that in case a disagreement occur it shall be settled in a board of arbi tration the clause usually prohibit the parties to file suits in court Instead the arbitration shall be dissolved according to the law of arbitration SFS 1929 45 There are both positive and negative sides of using a board of arbitration One of the ad vantages is that the board often has specialist knowledge in the area of the arbitration A decisive in a arbitration board can be made secret except for the parties involved which RUT development manual 5 1 Contract contents v 4 5 11 9 1 Adjustment to the PUM course often is a large benefit in business relations As the disagreemen
27. ee The start and end of a guarantee must be predefined does it start when the program is installed or when it works for 90 or 100 Operation hours should also be speci RUT development manual 5 1 Contract contents v 4 5 5 Realization fied if the guarantee is valid for 90 days is only work hours 8 00 17 implied or the whole day and night If a complaint is made regarding original faults of the product within two years of purchase the law of purchase states that the seller is liable Regarding software at least for PC s it is uncommon with guarantees that are as long as the law of purchase as software tends to be outdated within two years For PC software guarantee times often is 3 12 months Prices Under the pricing heading you often make agreements upon the economic conditions regarding the purchase and conditions for upgrading in the future If the product is not finished there exist several pricing models that can be used Some of the most fre quently used ones are described below see Pricing models and variants thereof re garding service agreements p 6 Payment The customers most important task is to give the seller payment It is most common that the buyer pay later In long term agreements the customer may be obliged to pay periodically The buyer is however not bound to pay until the seller has given account of what have been done Hellner 2002 Maintenance The agreement should regulate who is authori
28. ement to be valid it has to be signed by an authorized person Sometimes this may be indistinct In government authorities they usually have internal instructions that regulates who is allowed to sign an agreement In companies it s formally only the presi dent and a few more persons that are allowed to sign agreements in the name of the com pany The formal right to sign agreements in the name of the company is often complemented with powers of position to other persons in the company A power of po sition means that a person can sign agreements that comply to the position in the compa ny e g a cashier can sign an agreement regarding selling food but not hire out the premises without a power of attorney Because of this there is a risk that the agreement is not valid as the person that has signed the agreement does not have the right to do so Therefore it may be good to control that the person that is signing the agreement has a power of attorney from an authorized per son If this is not the case the possibility to get right in a dispute still exists according to the law concerning agreements signed in good faith However it can be costly and strenu ous to prove good faith in court Law of purchase The law of purchase is the basis for agreements between entrepreneurs The law regu lates purchases of personal property and orders of a product that will be produced K6 pL 28 Personal property refers to every form of movable objects a
29. ent secret x not applica ble for prod ucts bought in store Liability limi tation Hiring prohi bition Limits the responsibili ties of the sup plier and the customer Prevents a party to hire another ones employees RUT development manual 5 1 Contract contents v 4 5 References Table 2 Checklist Software Maintenence Clause Purpose Development Hardware licence software Agreement Regulates the x Regarding duration duration that leasing agree the agreement is valid ments Premature set tlement Arbitration Regulates can cellations in case of agree ment breaches etc Regulates how disagreements should be han dled RUT development manual 5 1 Contract contents v 4 5 Regarding leasing agree ments 23 24 References RUT development manual 5 1 Contract contents v 4 5
30. er shall when upgrading the software state all changes made since the last published version The customer take upon his self to notify the supplier of changes that are needed omissions hereof are however not con nected to any consequences Delay The delivery is regarded delayed when the delivery date is exceeded with three months The customer then has the right to cancel the contract If the customer is insolvent the law of purchase is valid except this agreements denoted exception Warranty The customer is aware of the fact that software regularly contains small errors The cus tomer has had the opportunity to examine the goods and approve it In cases of large er rors the supplier assumes responsibility to adjust the software within 90 days if notified within 6 months after delivery The adjustment is not charged If notified faults render the software unusable the supplier has the right to if the supplier does not want to correct the software cancel the contract When an agreement is made upon a cost free upgrade the customer has the right to cancel the contract if only if the software contains the notified faults For this condition the lim itations denoted in the first subsection titled WARRANTY are valid Force Majeure Neither party shall be liable for any failure or delay in performance under this to the ex tent said failures or delays are proximately caused by causes beyond that party s reasona ble control and oc
31. ets the opportunity to develop a product in cooperation with the customer If it is a completely new product the seller often has the right to a certain number of visits to show the system to pre sumptive customers This is often a valued form for both parties as the buyer gets a lower price and the seller has the opportunity to show a running system with users in the targeted environment Current account Current account is the opposite to a fixed price agreement In this case the customer pays all the costs the seller has had in the commission Budget price RUT development manual 5 1 Contract contents v 4 5 7 4 4 1 4 2 5 1 Results Budget price means that the seller has given cost estimation but does not guarantee it This is essentially the same thing as current account but the seller has a moral obliga tion to hold the costs within the given budget He also risks a bad reputation if he can not hold his budget Limited budget price This is the same as budget price but the price limit may not be overridden If any extra costs appear the supplier is the one who stands for the extra cost but if it gets cheaper it is the buyer who gets the profit This is the worst alternative for the seller Incentive Incentive in combination with any of the alternatives above means that the seller and buyer share all profits or expenses over the agreed sum The way you do it is by defin ing a reference price which is a guesstimate of th
32. fer to license agree ment Regarding leasing Prices license fee Royalty fee Fines States price and payment conditions States the roy alty fees Often procen tual Predefined fines when delivery delays occur not applica ble for prod ucts bought in store Delivery Delivery acceptance States time of delivery and other details thereabout Describes test ing of the product and the conse quences not applica ble for prod ucts bought in store not applica ble for prod ucts bought in store RUT development manual 5 1 Contract contents v 4 5 21 References Table 2 Checklist Software Maintenence A Hardware licence software Clause Purpose Development Usage regula Describes the not applica tion allowed usage ble if the copy of the product rights is transferred to the customer 22 Error correc tion New versions Education Describes the suppliers obli gation to fix faults Describes if the customer is entitled to receive new versions Describes if the customer is entitled for education not applica ble for prod ucts bought in store Copyright Sourcecode availability Secrecy Describes who is the owner of the product and the rights of the supplier Regulates if the source code should be available Regulates demands on the parties to keep the agreem
33. fication of results Adaptation of a standard agreement The requirements on software can differ quite a lot it is therefore hard to find a fitting standard agreement You can even save much time by writing your own agreement espe cially if it is about small software You already have some protection by the laws of pur chase and agreement If the seller or buyer wants to change anything that is praxis you just adopt the agreement These adaptations then take precedence To adjust the standard agreements to the specific deal you add the points you want and then add one more point that states something like point 1 to x is the valid ones if any other statutes in this agreement It is recommended that you get a standard agreement and rewrite it so it suits both parties and then let a lawyer examine the agreement Checklist for system delivery The checklist in appendix A is a summary of the types of regulations that can be included in different types of system deliveries The list also includes maintenance and license The list is intended to be a checklist for the most essential statutes in the agreement An asterisk indicates that the clausal should be included in the agreement Verification of results At any agreements where there are doubt regarding the contents you should let a lawyer inspect the agreement before signing All parties involved in the agreement should al ways consult a legal expert to assess the agreeme
34. h juridical forum where you can get information regarding differ ent areas of law You find it at http www jit se Except the above the government publish all laws on the internet These can be found at http rixlex riksdagen se Another good place is FAQ inom IT Juridik at http www jur lu se utbild laesa html They cover the most common problems with agreements One problem with the above and as it is Swedish law is that they are in Swedish Other references Malmstr m Ake Civilr tt Liber Herrmods 1994 Ahlstedt Hans Datar ttens ABC Iustus f rlag 1991 Avtal 90 Allm nna best mmelser LKD DF och SILF 1990 Hellgren Georg Lagtextsamling Link pings univ Ekonomiska inst 1996 Backstig Anders RUT 5 2 Framtagning av juridiska villkor v 2 3 1999 Rombe Annika Juridik till vardags Whlstr6m amp Widstrand 1996 Lindberg Agne och Westman Daniel Praktisk IT ratt Norstedts Juridik 2001 Hellner Jan Speciell avtalsr tt II Kontraktsr tt Jan Hellner amp Norstedts Juridik 2002 RUT development manual 5 1 Contract contents v 4 5 19 20 References RUT development manual 5 1 Contract contents v 4 5 References A Checklist for system delivery Clause Purpose Table 2 Checklist Development Software licence Maintenence software Hardware Definitions Simplifies the reading Conveyance of agreement Specification
35. ha certain flexibility in the agreement they should aim at the com pletion of the agreement rather than giving generous rights of cancellation when delays occur Usually this is made by having a mutual duty of information when unpredictable difficulties arises possibilities to adjust time schedules and the delivery undertaking and also agreements concerning eventual additional work Arbitration clauses In most business agreements not agreements with authorities you have a arbitration clause This means that in case a disagreement occur it shall be settled in a board of arbi tration the clause usually prohibit the parties to file suits in court Instead the arbitration shall be dissolved according to the law of arbitration SFS 1929 45 There are both positive and negative sides of using a board of arbitration One of the ad vantages is that the board often has specialist knowledge in the area of the arbitration A decisive in a arbitration board can be made secret except for the parties involved which RUT development manual 5 1 Contract contents v 4 5 11 9 1 Adjustment to the PUM course often is a large benefit in business relations As the disagreement is only tried in one in stance it gives more limited costs than a trial in court could render Another positive side is that arbitrations can be carried out in most industrialized countries this is not the case with national courts On the negative side are that in small proce
36. hrough COD or any specified by the supplier equivalent method The customer compensates the supplier for the cost of delivery Duty of informing When delivery delays occur the customer shall be notified the cause of the delay and a new delivery date shall be included The supplier shall when upgrading the software state all changes made since the last published version The customer take upon his self to notify the supplier of changes that are needed omissions hereof are however not con nected to any consequences Delay The delivery is regarded delayed when the delivery date is exceeded with three months The customer then has the right to cancel the contract If the customer is insolvent the law of purchase is valid except this agreements denoted exception Warranty The customer is aware of the fact that software regularly contains small errors The cus tomer has had the opportunity to examine the goods and approve it In cases of large er rors the supplier assumes responsibility to adjust the software within 90 days if notified within 6 months after delivery The adjustment is not charged If notified faults render the software unusable the supplier has the right to if the supplier does not want to correct the software cancel the contract When an agreement is made upon a cost free upgrade the customer has the right to cancel the contract if only if the software contains the notified faults For this condition the lim itati
37. ing your software The result is that the computer locks and the dialy sis machine which the program is controlling goes amok The patient dies from the complications These examples are not impossible Preferably the most probable events should be in cluded If the results of the scenarios passes you have a good agreement Begin by pro ducing a large number of scenarios and then you try to reduce them into larger ones that cover the same area without overlapping A few high quality scenarios can cover most loop holes in the agreement The measure of good agreement creation is that the agreement should manage most nor mal cases that can occur after signing Product measurement The product measure that the above resource measure describes is the quality and robust ness of the agreement No common events should be able to turn over a very profitable project The agreement should provide a safe and solid interface between program devel opment and the customer and his environment You could compare the agreement with a RUT development manual 5 1 Contract contents v 4 5 Measurement of the process firewall only things that cannot harm the other side may pass the firewall The company wants an agreement they can trust to invest resources in an old project is very shatter ing and resource demanding The agreements scope does not imply its quality When writing agreements it is very dangerous to put down to many small and unnecessary
38. ives a large mark up Development agreement If the seller wants to try new products or have the opportunity to let other customers study an installation a development agreement can be signed This is in practically done by letting the customer obtain a rebate while the seller gets the opportunity to develop a product in cooperation with the customer If it is a completely new product the seller often has the right to a certain number of visits to show the system to pre sumptive customers This is often a valued form for both parties as the buyer gets a lower price and the seller has the opportunity to show a running system with users in the targeted environment Current account Current account is the opposite to a fixed price agreement In this case the customer pays all the costs the seller has had in the commission Budget price RUT development manual 5 1 Contract contents v 4 5 7 4 4 1 4 2 5 1 Results Budget price means that the seller has given cost estimation but does not guarantee it This is essentially the same thing as current account but the seller has a moral obliga tion to hold the costs within the given budget He also risks a bad reputation if he can not hold his budget Limited budget price This is the same as budget price but the price limit may not be overridden If any extra costs appear the supplier is the one who stands for the extra cost but if it gets cheaper it is the buyer who gets the profi
39. justment to the PUM course course is presented below Adjustments to make it appropriate for your project is needed but as the pum projects are similar some time and work can be saved Agreement This agreement defines conditions applying to the product PUM X delivers to the CUS TOMER The product is produces within the course TDDC02 at Linkopings tekniska h gskola during the fall of 200X Parties The tied up parties in this agreement is Customer CUSTOMER represented by NN Supplier PUM X represented by project manager NN Agreed specification The specification agreed upon includes the requirements of the latest specification of re quirements approved by both customer and supplier in which the requirements to be ful filled are specified The product must fulfill the requirements specified at level Basic Requirements of lev el Normal must also be fulfilled but can be subject to renegotiations Requirements of level Extra will be fulfilled if time exists and all the requirements of level normal is fulfilled therefore Extra requirements can be cancelled without renegotiation If the supplier and customer interpret the requirements differently they must be renegotiated Acceptance of product The product is regarded as approved if all requirements of level Basic is fulfilled ac cording to the acceptance test The customer will then deliver a written approval to the project grou
40. k at http www jur lu se utbild laesa html They cover the most common problems with agreements One problem with the above and as it is Swedish law is that they are in Swedish Other references Malmstr m Ake Civilr tt Liber Herrmods 1994 Ahlstedt Hans Datar ttens ABC Iustus f rlag 1991 Avtal 90 Allm nna best mmelser LKD DF och SILF 1990 Hellgren Georg Lagtextsamling Link pings univ Ekonomiska inst 1996 Backstig Anders RUT 5 2 Framtagning av juridiska villkor v 2 3 1999 Rombe Annika Juridik till vardags Whlstr6m amp Widstrand 1996 Lindberg Agne och Westman Daniel Praktisk IT ratt Norstedts Juridik 2001 Hellner Jan Speciell avtalsr tt II Kontraktsr tt Jan Hellner amp Norstedts Juridik 2002 RUT development manual 5 1 Contract contents v 4 5 19 20 References RUT development manual 5 1 Contract contents v 4 5 References A Checklist for system delivery Clause Purpose Table 2 Checklist Development Software licence Maintenence software Hardware Definitions Simplifies the reading Conveyance of agreement Specification of require ments Documenta tion States if the agreement or merchandise can be con veyed toa third part Starting point for what is going to be delivered Demands on documenta tion and lan guage starting point for error cor rection Could also re
41. lfservice in cludes all technical upgrades during the contracted time Fullservice includes half service and a juridical service where free counselling regarding area of collecting debts and moreover updates of the changes of law to the program For service subscriptions a monthly fee of 200 skr for half service and 1200 skr for full service is issued Payment is made quarterly in advance The supplier has the right to change the charging rates such changes will be notified to the customer and will occur no earlier than the next turn of the month For both parties the period of notice is 3 months Other conditions All complaints must be written to be valid Payment shall always occur with delivery of the goods In cases where a invoice is used the payment is due 10 days from the delivery of the bill In this case services are also regarded as goods Interest on overdue payment is 3 per month is applied if the customers payment is de layed Changes or additions to this agreement must be written or it is not valid Solutions to common problems Unreasonable time schedule It agreements usually contain a time schedule for development delivery installation and other implementation Problems following this schedule occur mostly when the system or software is installed at the customer or when software is developed for the customer This usually originates from an underestimation of the labour effort required by the par ties and by unpr
42. ments to be used in the company If this is done the seller is entitled to compensation Models and variants of pricing for service agreements To write an agreement of services differs quite a bit from a goods agreement One point being that what is bought can not always be specified in advance Therefore it is hard to know the final cost There exists different constructions to handle the problems that can occur during these situations The most important ones are agreement on fixed price budget price limited budget price incentive budget price incentive and limited budget price current account and incentive current account The constructions above depend on the following basic constructions Fixed price agreement This means that the price is agreed upon in advance If the supplier can achieve the service cheaper than calculated he earns the winnings If it gets more expensive he stands for the extra costs Fixed priced agreements can be good if the specifications of the system are detailed and one has a clear picture of how the system is to be built As a seller you always need to do a risk mark up when calculating the price A vague specification of the system gives a large mark up Development agreement If the seller wants to try new products or have the opportunity to let other customers study an installation a development agreement can be signed This is in practically done by letting the customer obtain a rebate while the seller g
43. most common that the buyer pay later In long term agreements the customer may be obliged to pay periodically The buyer is however not bound to pay until the seller has given account of what have been done Hellner 2002 Maintenance The agreement should regulate who is authorized of performing system maintenance it should also specify the service level that the seller has both regarding parts and the whole system For acute faults a time frame for the repairs should be specified The customer should begin with an assessment of the risks and the consequences of possi ble operation disturbances thereafter a balanced consideration of the risks and the costs of maintenance must be done Maintenance of hardware and software is considered a service as such the law of purchase is not applicable and there exist no law for services besides one solely for consumers Therefore freedom of agreement exists for maintenance Copyright usufruct Here you agree upon the copyright of the software that is included in the system Copyright means that the author is exclusively entitled the work by producing copies thereof and to make it publicly available The number of licenses and so on should also be agreed upon Conveyance of agreement This point of agreement should state in what way the customer can convey the agree ment to another part This can be the case if the company that has bought the system is acquired by another company Fines To put pres
44. mputer program from a web site where certain conditions are stated Mutual agreement Mutual agreements are the normal procedure at larger affairs The mutual part means that you create two copies which are then exchanged after both sides have signed it Verbal agreement Verbal agreements are not that common at larger affairs but is nonetheless juridical cor rect An offer that is given verbally to someone must be accepted immediately to be val id unless you agree upon a time limit for the acceptance The problem with verbal agreements is the difficulty to prove that an agreement actually exists especially if it contains many details Qualified accept If the buyer as a response to an offer sends an order that differs from the offer you don t have an agreement but a qualified accept The response from the buyer is then regarded as a new offer that must be answered by the seller to reach an agreement To reach an RUT development manual 5 1 Contract contents v 4 5 3 3 2 Realization agreement the seller must accept the differences in writing If he comes with objections there is no valid agreement It is important that the buyer makes his order during the time the offer is valid If the sell er gets an order after the valid time of the offer he does not have to stand by the offer A prerequisite for this is that the seller within reasonable time informs the buyer that he does not accept otherwise the agreement can be
45. n arise due to the delivered product If this is not done the law of pur chase is valid IT agreements usually contain some form of limitation of liability which means that the sellers liability for the product is not as vast as the law of pur chase regulates The limitations often regard liability for some types of damages and to a certain maximum amount of money Most commercial agreements also contains a force majeure clausal which states that the seller is not reliable for events out of his control not foreseeable and not manageable with reasonable effort Conditions of acceptance acceptance test An acceptance test gives the buyer the possibility to check that the agreed products and services comply with his order and expectations In the agreement one should specify how the acceptance test will be performed e g the buyer shall contribute with personnel and relevant data for the test A clausal stating that if the buyer does not within a specified time frame replies that he does not accept the system it should be regarded accepted If the acceptance test fails it should be considered as a delay of delivery which lead to compensation claims from the buyer If the buyer accepts the test he cannot later on point on faults on the system and claim compensation As a seller of a system it can be smart to finish the acceptance test well ahead of the installation to see what needs to be developed to get the system accepted Time of guarant
46. n the specification of requirements the product components that are to be delivered are defined Delivery will occur when all product components are completed however no later than YY Y Y MM DD Delivery day is the day the customer receives the software The delivery is considered delayed if the delivery day is later than the agreed one If the delay depends on the customer or any circumstances from his side the project group may RUT development manual 5 1 Contract contents v 4 5 13 14 Adjustment to the PUM course postpone the delivery to a later point of time The customer is not entitled for compensa tion if the product is delayed or fails to appear Risk responsibility for software The risk for the software is transferred to the customer at the delivery Risks include any unforeseen and not wanted or specified in the requirement specifica tion behaviour of the software Maintenance The supplier has no obligation to maintain the delivered system If maintenance is want ed a separate agreement has to be signed End of project The end of the course TDDC02 defines the end of the development of the product This occur YY YY MM DD If the product is not ready for delivery at this time the delivery will be cancelled without any consequences for the supplier Payment Because the project is a part of the course TDDC02 no payment is made The customer is not entitled for compensation if the group does not finish the project
47. nd intellectual properties and characteristics The law of purchase is optional meaning that the existing agreement is the prevailing one If no agreement exists the law of purchase is valid In addition the law of agreement is also valid For more information see backstig 1999 where the law of purchase the law of agreement and Letter of Intent are discussed RUT development manual 5 1 Contract contents v 4 5 Realization 2 3 Further education 3 1 If you want to get further juridical education courses like Juridik f r M and Dataju ridisk versiktskurs is recommended They are quite short 2 5 and 2 points but contain the basic and essential parts of agreement law Or you can read Rombe 1996 which gives good basic knowledge in the subject Realization Overview How is an agreement established Here follows how an agreement can be signed Two signed copies of the agreement one each Offer acceptance letter order acceptance Offer signed copy of offer by the buyer Protocol customer signature Verbal agreement endorsement letter silent accept Verbal agreement verbal agreement As the description reveals agreements can be one sided or mutual One sided agreement One part sends a document to the other part which completes the agreement by accepting it Offers and accepts may be exchanged in writing or electronically Agreements can also be conceived by action e g a user downloads a co
48. ns that are allowed to sign agreements in the name of the com pany The formal right to sign agreements in the name of the company is often complemented with powers of position to other persons in the company A power of po sition means that a person can sign agreements that comply to the position in the compa ny e g a cashier can sign an agreement regarding selling food but not hire out the premises without a power of attorney Because of this there is a risk that the agreement is not valid as the person that has signed the agreement does not have the right to do so Therefore it may be good to control that the person that is signing the agreement has a power of attorney from an authorized per son If this is not the case the possibility to get right in a dispute still exists according to the law concerning agreements signed in good faith However it can be costly and strenu ous to prove good faith in court Law of purchase The law of purchase is the basis for agreements between entrepreneurs The law regu lates purchases of personal property and orders of a product that will be produced K6 pL 28 Personal property refers to every form of movable objects and intellectual properties and characteristics The law of purchase is optional meaning that the existing agreement is the prevailing one If no agreement exists the law of purchase is valid In addition the law of agreement is also valid For more information see backstig 1999
49. nt it is nice to use some form of check lists when doing this Examples with explanations It is hard to find real examples of agreements as they very often are secret This translat ed agreement is retrieved from Ahlstedt 1990 The following example regards a sale of software for collection of debts and adherent services It is however not a standard agreement it is adapted to the purposes of this particular company The motivation to in clude this example is that it illustrates that it is not trivial to write an agreement The agreement is translated and can be found in Swedish in Ahlstedt 1990 Example Avail Software 1995 Range of agreement Through this agreement the customer obtain a non transferable usufruct so called sin gle licence for the software I Inkasso The customer has the right to use the software freely only on one computer within the company if no special permission is granted Delivery and payment RUT development manual 5 1 Contract contents v 4 5 10 Examples with explanations The delivery shall take place on the specified point of time During transport the supplier stands for the risk Delivery may occur through COD or any specified by the supplier equivalent method The customer compensates the supplier for the cost of delivery Duty of informing When delivery delays occur the customer shall be notified the cause of the delay and a new delivery date shall be included The suppli
50. of require ments Documenta tion States if the agreement or merchandise can be con veyed toa third part Starting point for what is going to be delivered Demands on documenta tion and lan guage starting point for error cor rection Could also refer to license agree ment Regarding leasing Prices license fee Royalty fee Fines States price and payment conditions States the roy alty fees Often procen tual Predefined fines when delivery delays occur not applica ble for prod ucts bought in store Delivery Delivery acceptance States time of delivery and other details thereabout Describes test ing of the product and the conse quences not applica ble for prod ucts bought in store not applica ble for prod ucts bought in store RUT development manual 5 1 Contract contents v 4 5 21 References Table 2 Checklist Software Maintenence A Hardware licence software Clause Purpose Development Usage regula Describes the not applica tion allowed usage ble if the copy of the product rights is transferred to the customer 22 Error correc tion New versions Education Describes the suppliers obli gation to fix faults Describes if the customer is entitled to receive new versions Describes if the customer is entitled for education not applica ble
51. on Pum 1 1999 06 08 Improved by Henrik Ekstam Pum 4 4 1 2000 06 11 Improved by Johan Sundqvist Pum 4 2001 06 11 Improved by Samuel Bj rkman Pum 10 2002 06 03 Improved by Jenny Klevefors Pum 4 4 4 2004 01 06 Translated by Svein Erik Lindgren pum11 4 5 2005 01 14 Improved by Martin Virdung Pum 15 12 Changes not yet attended to Examine the PUM agreement preferably with a legal expert Make a checklist adapted to the PUM course 13 References 13 1 Method description Hamrin Klas ADB k paren Studentlitteratur 1994 Metzger Philip W 1973 1981 Managing a programming project New Jersey Pren tice Hall Inc 13 2 Method evaluation Hamrin Klas ADB k paren Studentlitteratur 1994 RUT development manual 5 1 Contract contents v 4 5 13 3 13 4 13 5 References Metzger Philip W 1973 1981 Managing a programming project New Jersey Pren tice Hall Inc Internal comments As chapter 6 illustrates it is quite complex to write an agreement even if it like the exam ple is a small agreement This is an area where we as technicians are laymen but it is an area that we are very probable to encounter when trying to use our knowledge commer cially It is then good to understand the principles of agreements and what they should contain to be able to communicate with the lawyers writing the agreements References on the Internet There exists a Swedis
52. on at a potential dispute This is in business matters often solved in a dispute clause see chapter 8 Solutions to common problems page 11 Detailed description Some of the more important points in agreements are discussed in detail below The ex act text is however not discussed For that we refer to a lawyer who is more knowledgea ble in computer juridical Important points One question that often rises is whether the supplier sells what is offered or if the buyer buys what s specified in the specification of requirements If the agreement is vague the parties can disagree on what s in effect Therefore it is important to have control over the points of agreement and which documents that has a character of agreement The agree ment shall clearly state what applies to different matters Below are some points that should be included in the agreement Definitions To avoid uncertainties regarding the agreement everything must be well defined so no ambiguous statements are included e g Are both hardware and software meant when the product is mentioned If there is no clear definition on ambiguous words in the agreement misunderstandings may easily appear Clarification of functionality The functionality that the buyer has described in the offer often needs to be clarified If the customer does not understand the system that they are about to buy you might have to lend them a helping hand By describing the systems future fun
53. ons denoted in the first subsection titled WARRANTY are valid Force Majeure Neither party shall be liable for any failure or delay in performance under this to the ex tent said failures or delays are proximately caused by causes beyond that party s reasona ble control and occurring without its fault or negligence including without limitation failure of suppliers subcontractors and carriers or party to substantially meet its per formance obligations under this Agreement If such failure occurs the delivery may be cancelled The suppliers liability for damages is limited to a maximum of 10 of the contract price The suppliers liability is limited to cases stated in the agreement no compensation for in direct losses or damages that the supplier possibly could not foresee when the agreement is signed are payed Additional services For additional services the same rules apply according to the agreement except the fol lowing exceptions RUT development manual 5 1 Contract contents v 4 5 Solutions to common problems An agreement regarding additional service is agreed upon between the customer and the supplier The order of such a service is sent to the supplier The agreement is valid through a confirmation letter from the supplier In this confirmation letter the way ad dresses and phone numbers in which the parities contact each other is stated Service subscriptions exist in two forms half service and full service Ha
54. onsequences will follow you if you are delayed or even id you fail to implement the product This is a reasonable demand when not being paid Make sure the customer take responsibility for any disputes with third parties due to the work you are doing There have been cases where disputes have occurred be cause the pum group has had access to third party code Clarify that you will not be responsible for any costs that may accour to the customer using your product Give the customer the rights to your project he probably get it anyway see Up phovsr ttslagen 40 a http rixlex riksdagen se which can increase the customers understanding for the work This must be discussed with the course leaders as both students and the university possesses the copyright The student s part of this is that they have been producing things and the university has provided teachers and re sources If the group has the intention to do something more serious that can generate earnings you should not do it as a pum project If you decide to do so anyway contact the course leaders early on to get further help 9 2 PUM agreement To produce an agreement as this documents makes clear is not an easy process In the pum projects this is done in parallel with the specification of requirements the project plan and a lot of other things To make things easier a suggested agreement for the pum RUT development manual 5 1 Contract contents v 4 5 Ad
55. p The approval shall contain the following points identification of customer project group and product delivery date the customers approval of the product the customers signature The supplier is not liable for any faults found by the customer after the approval Delivery In the specification of requirements the product components that are to be delivered are defined Delivery will occur when all product components are completed however no later than YY Y Y MM DD Delivery day is the day the customer receives the software The delivery is considered delayed if the delivery day is later than the agreed one If the delay depends on the customer or any circumstances from his side the project group may RUT development manual 5 1 Contract contents v 4 5 13 14 Adjustment to the PUM course postpone the delivery to a later point of time The customer is not entitled for compensa tion if the product is delayed or fails to appear Risk responsibility for software The risk for the software is transferred to the customer at the delivery Risks include any unforeseen and not wanted or specified in the requirement specifica tion behaviour of the software Maintenance The supplier has no obligation to maintain the delivered system If maintenance is want ed a separate agreement has to be signed End of project The end of the course TDDC02 defines the end of the development of the product This occur YY YY MM DD If the product
56. pear Clarification of functionality The functionality that the buyer has described in the offer often needs to be clarified If the customer does not understand the system that they are about to buy you might have to lend them a helping hand By describing the systems future functionality thoroughly in the agreement you avoid future disputes and disagreements Specification of requirements The product shall fulfill the requirements in the specifications that the seller and buy er have agreed upon Often if the specification of requirements is changed the whole contract must be renegotiated This can cause the buyer to claim for damage or to re voke the contract If the agreement does not mention claims for damage or contract revoking the law of purchase is valid One important aspect is that the requirements must be controllable at the point of delivery It may be suitable to couple the delivery protocol and the specification of requirements so that the control of the different re quirements is stated It is also important to specify the requirements on the buyer e g the preparations needed by the buyer environment or products that will be integrated RUT development manual 5 1 Contract contents v 4 5 Realization with the delivered system If the buyer does not fulfill these requirements the seller is not responsible for eventual faults or delays Delays The product may be delayed if the seller encounters large problems This can
57. rse of action should be specified in the agreement Freight The freight for delivery is not always regulated by the parties in the agreement It is important to have an agreement regarding the delivery of the goods as you need to know when the risk is transferred from the seller to the buyer If the buyer is responsi ble for the risk he must pay for the goods even if it is destroyed lost deteriorated or is diminished by an event not depending on the seller K pL 12 The risk is trans ferred to the buyer when the goods is delivered One way to solve the problem is to let a freight company answer to the risks There exist some more or less standard deliv ery contracts The delivery contracts are described in Backstig 1999 Functional guarantee If you give a guarantee the requirements to get a claim shall be thoroughly described Remember that if nothing else has been agreed upon you as a seller have two years liability for faults toward the buyer stated in the law of purchase But it falls on the customer to prove that the product was faulty which may not be so easy In practice it is impossible to know if the system is free from faults even after extensive testing you usually have a clause in the agreement stating that the seller is not responsible for small faults but guarantees to correct them for a fee Limitation of liability As a seller you should be careful to put down assignments of liability e g indirect losses that ca
58. s are settled The agreement is commented which makes it rel atively easy to use ABDAKA is another agreement that often is used when selling serv ices it is written after the same principles as agreement 90 RUT development manual 5 1 Contract contents v 4 5 5 2 Verification of results Adaptation of a standard agreement The requirements on software can differ quite a lot it is therefore hard to find a fitting standard agreement You can even save much time by writing your own agreement espe cially if it is about small software You already have some protection by the laws of pur chase and agreement If the seller or buyer wants to change anything that is praxis you just adopt the agreement These adaptations then take precedence To adjust the standard agreements to the specific deal you add the points you want and then add one more point that states something like point 1 to x is the valid ones if any other statutes in this agreement It is recommended that you get a standard agreement and rewrite it so it suits both parties and then let a lawyer examine the agreement Checklist for system delivery The checklist in appendix A is a summary of the types of regulations that can be included in different types of system deliveries The list also includes maintenance and license The list is intended to be a checklist for the most essential statutes in the agreement An asterisk indicates that the clausal should
59. should include other documents that are included in the sale Some of those documents are mentioned below User manual Technical documentation The seller still has the copyright for the documents supplied in the sale this means that the customer cannot make copies of the documents to be used in the company If this is done the seller is entitled to compensation Models and variants of pricing for service agreements To write an agreement of services differs quite a bit from a goods agreement One point being that what is bought can not always be specified in advance Therefore it is hard to know the final cost There exists different constructions to handle the problems that can occur during these situations The most important ones are agreement on fixed price budget price limited budget price incentive budget price incentive and limited budget price current account and incentive current account The constructions above depend on the following basic constructions Fixed price agreement This means that the price is agreed upon in advance If the supplier can achieve the service cheaper than calculated he earns the winnings If it gets more expensive he stands for the extra costs Fixed priced agreements can be good if the specifications of the system are detailed and one has a clear picture of how the system is to be built As a seller you always need to do a risk mark up when calculating the price A vague specification of the system g
60. sputes have occurred be cause the pum group has had access to third party code Clarify that you will not be responsible for any costs that may accour to the customer using your product Give the customer the rights to your project he probably get it anyway see Up phovsr ttslagen 40 a http rixlex riksdagen se which can increase the customers understanding for the work This must be discussed with the course leaders as both students and the university possesses the copyright The student s part of this is that they have been producing things and the university has provided teachers and re sources If the group has the intention to do something more serious that can generate earnings you should not do it as a pum project If you decide to do so anyway contact the course leaders early on to get further help 9 2 PUM agreement To produce an agreement as this documents makes clear is not an easy process In the pum projects this is done in parallel with the specification of requirements the project plan and a lot of other things To make things easier a suggested agreement for the pum RUT development manual 5 1 Contract contents v 4 5 Adjustment to the PUM course course is presented below Adjustments to make it appropriate for your project is needed but as the pum projects are similar some time and work can be saved Agreement This agreement defines conditions applying to the product PUM X delivers to the CU
61. sses the arbitration can become relatively ex pensive as the losing part pays the costs of the other party and the costs for the arbitra tors These costs can many times be significant and tend to favour the most economic strong of the parties Adjustment to the PUM course General An authorized person may only sign agreements see Who may sign an agreement page 2 As the PUM course is given by IDA institution for computer science at Tekniska H g skolan i Link ping they are responsible for the work done by the students Therefore the students are not authorized to sign agreements with the customer without consent from the university Even if juridical disagreements are very uncommon in the pum course it does not hurt to use the contract to clarify what applies You are reading a course where the first priority is to learn software development methods and not to design a product for the customer This can help the customer and the pum group to get a similar view of the work which can decrease the number of conflicts Try to make a gentleman s agreement with your customer Some points that is wise to include Clearly state that no consequences will follow you if you are delayed or even id you fail to implement the product This is a reasonable demand when not being paid Make sure the customer take responsibility for any disputes with third parties due to the work you are doing There have been cases where di
62. sure on the seller the agreement can contain fines This means that if de lays occur the buyer can demand a fine A fine is of a predefined amount that is to be omitted without any burden of proof for the buyer Fines are normally specified per delayed week or delivery day depending on the importance of a kept delivery time Levels between 0 1 and 1 of the total amount of the agreement per week is nor mal dependent on the extent of the system adaptations and the customers need for a kept time table Insurances Insurance wise the installation of the system is an uncertain area Often the customer does not take over the responsibility e g the risk for the hardware before the accept RUT development manual 5 1 Contract contents v 4 5 Realization ance test is approved upon but at the same time the sellers insurance does not cover incidents that do not occur outside the company Therefore it is common to add into the agreement that the customer is responsible for the goods as soon as it is received Infringement Here the assignment of responsibility between the parties is defined in the case that the delivered products constitute third parties intellectual properties i e patents or copyright There have been cases where a program supplier has given licenses for software of which he had no right of disposal Which responsibility does the supplier have towards the customer Other documents included in the agreement The agreement
63. t This is the worst alternative for the seller Incentive Incentive in combination with any of the alternatives above means that the seller and buyer share all profits or expenses over the agreed sum The way you do it is by defin ing a reference price which is a guesstimate of the end price Then the parties agree upon how the deviations should be distributed Time losses or time winnings are of ten regulated with an incentive clausal Results Products An agreement that regulates a business deal between the parties Product templates There exist several standard agreements that can be a good basis for an agreement the foremost example of this is agreement 90 avtal 90 Larger corporations often have their own standard agreements that are written by the company lawyers Templates and forms Standard agreement There exist a number of standard agreements in the computer area that are relatively neu tral considering interests If the organization does not have any agreements these can be a good starting point when writing an agreement Some standard agreements Agreement 90 avail 90 is a commonly used agreement when selling goods Agreement 90 has been developed in cooperation between LKD Leveransf reningen Kontor och Data DF Dataf reningen i sverige and Silf sveriges ink ps och logistikf rbund Agreement 90 is produced by representatives of both sellers and buyers therefore some of the initial negotiation
64. t is only tried in one in stance it gives more limited costs than a trial in court could render Another positive side is that arbitrations can be carried out in most industrialized countries this is not the case with national courts On the negative side are that in small processes the arbitration can become relatively ex pensive as the losing part pays the costs of the other party and the costs for the arbitra tors These costs can many times be significant and tend to favour the most economic strong of the parties Adjustment to the PUM course General An authorized person may only sign agreements see Who may sign an agreement page 2 As the PUM course is given by IDA institution for computer science at Tekniska H g skolan i Link ping they are responsible for the work done by the students Therefore the students are not authorized to sign agreements with the customer without consent from the university Even if juridical disagreements are very uncommon in the pum course it does not hurt to use the contract to clarify what applies You are reading a course where the first priority is to learn software development methods and not to design a product for the customer This can help the customer and the pum group to get a similar view of the work which can decrease the number of conflicts Try to make a gentleman s agreement with your customer Some points that is wise to include Clearly state that no c
65. valid if the buyer is in good faith Dispute Regardless of how well reasoned an agreement is you can always come to a dispute It is impossible to predict every possible situation and regulate those in the agreement It s far easier to describe in the agreement a course of action at a potential dispute This is in business matters often solved in a dispute clause see chapter 8 Solutions to common problems page 11 Detailed description Some of the more important points in agreements are discussed in detail below The ex act text is however not discussed For that we refer to a lawyer who is more knowledgea ble in computer juridical Important points One question that often rises is whether the supplier sells what is offered or if the buyer buys what s specified in the specification of requirements If the agreement is vague the parties can disagree on what s in effect Therefore it is important to have control over the points of agreement and which documents that has a character of agreement The agree ment shall clearly state what applies to different matters Below are some points that should be included in the agreement Definitions To avoid uncertainties regarding the agreement everything must be well defined so no ambiguous statements are included e g Are both hardware and software meant when the product is mentioned If there is no clear definition on ambiguous words in the agreement misunderstandings may easily ap
66. zed of performing system maintenance it should also specify the service level that the seller has both regarding parts and the whole system For acute faults a time frame for the repairs should be specified The customer should begin with an assessment of the risks and the consequences of possi ble operation disturbances thereafter a balanced consideration of the risks and the costs of maintenance must be done Maintenance of hardware and software is considered a service as such the law of purchase is not applicable and there exist no law for services besides one solely for consumers Therefore freedom of agreement exists for maintenance Copyright usufruct Here you agree upon the copyright of the software that is included in the system Copyright means that the author is exclusively entitled the work by producing copies thereof and to make it publicly available The number of licenses and so on should also be agreed upon Conveyance of agreement This point of agreement should state in what way the customer can convey the agree ment to another part This can be the case if the company that has bought the system is acquired by another company Fines To put pressure on the seller the agreement can contain fines This means that if de lays occur the buyer can demand a fine A fine is of a predefined amount that is to be omitted without any burden of proof for the buyer Fines are normally specified per delayed week or delivery day depending
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