The Custom Software Agreement is essential for organizations seeking to engage professional developers or development firms to create bespoke software solutions in Malaysia. This document serves as a crucial legal framework that protects both parties' interests while ensuring compliance with Malaysian legislation, including the Contracts Act 1950, Copyright Act 1987, and Personal Data Protection Act 2010. It should be used whenever a business commissions custom software development, whether for internal use, customer-facing applications, or system integration projects. The agreement covers essential aspects such as project scope, development methodology, intellectual property rights, acceptance testing, warranty provisions, and maintenance terms. It's particularly important in the Malaysian context where digital transformation initiatives are increasing across various sectors, requiring clear legal frameworks for software development projects.
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1. Parties: Identification and details of the software developer/company and the client
2. Background: Context of the agreement, including the client's need for custom software and developer's expertise
3. Definitions: Key terms used throughout the agreement including Software, Specifications, Acceptance Tests, Intellectual Property Rights, etc.
4. Scope of Services: Detailed description of the software development services to be provided
5. Project Timeline and Milestones: Development phases, delivery dates, and key milestone achievements
6. Acceptance Testing: Procedures for testing, acceptance criteria, and handling of defects
7. Payment Terms: Fee structure, payment schedule, and payment conditions
8. Intellectual Property Rights: Ownership and licensing of the software, including pre-existing IP and newly created IP
9. Confidentiality: Protection of confidential information exchanged during the project
10. Warranties and Representations: Guarantees regarding software performance, quality, and compliance with specifications
11. Term and Termination: Duration of the agreement and circumstances for termination
12. Limitation of Liability: Caps on liability and exclusions of certain types of damages
13. Force Majeure: Provisions for handling circumstances beyond parties' control
14. Governing Law and Jurisdiction: Specification of Malaysian law as governing law and jurisdiction for disputes
15. General Provisions: Standard boilerplate clauses including notices, assignment, and entire agreement
1. Source Code Escrow: Optional provisions for source code escrow arrangements, recommended for business-critical software
2. Data Protection and Privacy: Detailed data handling provisions, required if personal data processing is involved
3. Change Management: Procedures for handling change requests, recommended for complex or long-term projects
4. Service Level Agreement: Performance metrics and support requirements, needed if ongoing maintenance is included
5. Third-Party Components: Provisions regarding use of third-party software or libraries, needed if third-party components are used
6. Training and Documentation: Requirements for user training and documentation, optional based on client needs
7. Insurance: Insurance requirements and coverage details, recommended for high-value projects
8. Security Requirements: Specific security standards and compliance requirements, needed for sensitive applications
1. Schedule 1 - Software Specifications: Detailed technical specifications and functional requirements of the software
2. Schedule 2 - Project Plan: Detailed timeline, milestones, and deliverables
3. Schedule 3 - Acceptance Test Criteria: Specific criteria and procedures for acceptance testing
4. Schedule 4 - Fee Schedule: Detailed breakdown of fees, payment milestones, and rates
5. Schedule 5 - Service Levels: Performance metrics and service level requirements if applicable
6. Appendix A - Technical Architecture: Overview of system architecture and technical stack
7. Appendix B - Security Requirements: Detailed security specifications and compliance requirements
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