[IT Litigation] The Core of a Software Development Contract: Why Establishing a Clear Scope of Work is Important

If your company is conducting a software development project, you’d likely have experienced issues related to the Scope of Work. Even if everything seemed fine during the contract negotiations, unforeseen requirements may arise during development, or the expected deliverables might not be achieved. To prevent these issues, it’s essential to clearly define the scope of work in the software development contract.

Law firm Veat, with its team of IT specialist attorneys, provides legal advice on various IT and software development projects, helping companies avoid mistakes during the development contract process. In this post, we’re going to introduce how to detail the scope of work when drafting a software development contract and strategies to reduce legal risks.

What is the Scope of Work in a Software Development Contract?

The scope of work (Statement of Work, SOW) is a document that clearly defines the work the developer must perform, and it's one of the core elements of a software development contract. A software development agreement should not just contain broad terms like "app development" or "website construction," but should include the following detailed information:

If the scope of work is not detailed, there's a higher chance of disputes arising mid-development, such as "Was this feature included?" Therefore, it's extremely important to establish a clear scope from the initial stages of development.

Clauses Related to the Scope of Work That Must Be Included in a Software Development Contract

When conducting a software development project, a vague or unclear scope of work (SOW) can lead to discrepancies in the deliverables, or the project may take longer and cost more than anticipated. To prevent this, the contract should include the following:

1. Specifically Describe the Scope of Work

• Instead of just writing broad terms like “develop an app” in the contract, you should clearly describe the specific list of functions and development goals. For example, instead of broadly describing “provide a function for users to sign up,” you should write something like "implement a signup function using email and mobile phone verification" or "provide signup with SNS account linking (Kakao, Google, Apple)." This will clarify the developer's role and scope.

2. Specify the Date When the Scope of Work Will Be Confirmed

Accurate requirements may not be compiled at the beginning of development. In this case, it is necessary to include a clause in the contract that specifies the date of scope confirmation and forces the scope to be confirmed by that date. For example, “The two parties shall finalize the final scope of work within 30 days after the signing of this contract.” "Any additional changes after the scope of work is finalized must be agreed upon separately.” If such a clause does not exist, requirements may continue to change during development, leading to increased development schedules and costs.

3. Include a Clause for Negotiating Additional Costs When the Scope of Work Changes

Unexpected functions or changes may occur in a software development project. Developers should be able to receive costs for additional work, and clients should be able to prepare for exceeding their budget. When a request for scope change is made, the contract should specify that the two parties negotiate additional costs and create a separate contract or that additional costs resulting from the expansion of the scope of work cannot be claimed if they are not agreed upon in advance. This prevents developers from having to proceed with development without receiving additional costs and prevents clients from having to pay unexpected costs.

From Software Development Contract Advice to IT Litigation

Software development projects involve not only technical but also legal aspects. Law firm Veat provides tailored legal advice to startups and IT companies, centered on IT specialist attorneys and attorneys with engineering backgrounds, and provides a variety of contract drafting services, from software development contract advice to IT system solution development contract drafting, as well as legal advice on whether to pay for services when a software development contract is terminated, and provides professional legal advice on IT-related matters, such as litigation confirming the absence of debt obligations under a software development contract.

If you need legal advice related to software development contracts to minimize legal risks and proceed with development projects smoothly, please feel free to contact Law firm Veat, which has IT specialist attorneys.

Thank you.

Law firm Veat