What is the Development Agreement?
A development agreement is a formal document that two or more parties sign for the construction or improvement of a product, property, idea, service, or a combination thereof. This kind of agreement is also famous by the name of the joint development agreement. The latter applies when two parties pour equal resources for the development project.
Development agreements may be further categorized according to the kind of object or entity being created. For example, if a local government contracts a land development firm to turn a slum area into an economic zone, it will be called a real estate development agreement. The same thing applies when developing software, products, or even, music.
How to Write a Development Agreement
Here are a few agreement-making tips to guide you in the creation of valid agreements for your business or organization. Read and study them well.
1. Select the Right Kind of Development Agreement
Like the creation of other kinds of agreements, it is important to pick the right kind of agreement based on the type of development project you are working on. For instance, software development projects may require different contract terms compared to property development and operating agreements. Study your project well before you decide on what specific type of development contract to use.
2. Align Agreement Terms With Your Goals
Another important tip to follow when making this document (or other kinds of agreements) is the correlation of your basic agreement terms with your company’s or organization’s goals. This means that you need to carefully negotiate the terms and conditions of your development project.
For example, if you want a third-party company to develop a new software tool for your computing company, you need to be clear on what kind of software program you need. Your agreement should also specify the payment scheme and how the royalties will be divided. Don’t forget to include non-compete, non-disclosure agreements, or confidentiality agreements in your development contracts.
3. Follow an Agreement Format
For an easier and quicker agreement-writing process, you may follow a standard development agreement format. You may find these online or you may use the pre-formatted agreement templates included above.
An organized format allows you to present the contract terms in an easy to understand manner. When both parties can clearly understand an agreement’s content, they are more likely to sign the formal document.
4. Let a Lawyer Review It
Even if you have drafted your development agreement, we will still recommend having a lawyer review it. Attorneys specializing in contract law can help you identify weak points in your sample agreement. This protects you and your business from future penalties or breaches in the contract.
5. Use a Tracking Software Tool
In a recent market survey, 46.2% of respondents reported a loss of revenue due to lengthy contract approval timeframes. Avoid this fate for your development projects. For companies and organizations that handle multiple development projects throughout the year, it may be necessary to invest in contract management software tools. This allows you to accurately track and monitor the status of your development agreements and prevent loss of revenue.