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Warranties are an important element to any website development agreement. Common warranties found in these types of agreements include those described below.
■ Intellectual property (e.g., website developer warrants that whatever intellectual property it contributed does not infringe, and company makes the same warranty for whatever intellectual property it provided).
■ Website developer warrants that no “open-source” software will be used (or if this warranty cannot be made, the developer provides specifics and the company either consents or not).
■ Company may ask for warranties relating to the experience or capability of the developer (or this may be covered in the recitals as noted above).
■ Company may ask for warranties that all of the individuals that the website developer assigns to the project have invention assignment and confidentiality agreements with the developer (although the company may want to individually interview each such person and make sure that each person understands the relevant confidentiality issues).
■ Company may ask that the developer warrant that it is appropriately qualified and licensed to do the work.
■ Company may ask the developer to warrant that it is not aware of any aspect of the work that will infringe any other obligations—such as a warranty that the developer has not previously agreed to any noncompetition clauses that could be triggered by the work.
■ Company may ask for a general warranty that the work will be done in a professional manner in accordance with standards in the industry and in a good workmanlike manner.
The warranty clause will almost universally contain a disclaimer of any implied warranties of merchantability or fitness for purpose, or any other warranty not expressly contained in the agreement.
With respect to indemnification, claims relating to intellectual property and infringement are often those of most concern in a website development agreement. As with most other indemnification clauses in information technology agreements, it is important to also include the procedures with respect to indemnification. The indemnified party is typically required to:
■ Give prompt notice of any claim;
■ Allow the indemnifying party to defend the claim;
■ Agree to cooperate in the defense of the claim (generally at the indemnifying party’s expense); and
■ Turn over copies of all correspondence or other documentation relating to the claim, and agree to continue to do so during the course of the dispute.
Sometimes it is appropriate to have a “basket” that limits the indemnification for matters that exceed a certain amount and, perhaps, a cap by which indemnification is limited to a certain maximum dollar amount. These types of terms are only appropriate under certain circumstances and should not be used as a general rule. The parties should also determine ahead of time whether payments to be made pursuant to, or damages that arise as a result of, a party’s obligation to indemnify the other party are limited by the limitation of liability in the agreement, or whether such payments and damages are uncapped with respect to any exclusion of consequential damages or cap on direct damages set forth in the agreement.
Content of the Website
As part of its development process, the company will want to determine what content it wants on its website and in what form it is going to deliver that content to the developer. To some extent this may affect the developer’s fees because the developer may find delivery in certain formats easier to use than other formats. Content examples may include:
■ The company catalogue
■ The company organization chart
■ Other company promotional material
The website development agreement should also clearly articulate for what content of the website the developer will be responsible. Here are a few examples:
■ Company wants a link to a database containing medical terms.
■ Company wants a link to a database containing phone numbers.
■ Company wants a link to a database allowing for stock quotes or other financial market information.
In addition to the foregoing, the website development agreement should state which party is responsible for securing the appropriate permissions and licenses for the content. If the website is to have professional advertising (i.e., ads with professional models, or where professional photos of the company products or people are included), the details of that should be specified in the agreement, and the appropriate responsibilities for obtaining the necessary releases and permissions established. Finally, ownership of all elements of the content should be clear. Virtually everything on the website should be subjected to the question, “Who really owns this?” If it was created by company employees, the ownership should be clear because the copyright laws provide for ownership by the company of anything created by its employees within the scope of their employment. However, this does not extend to material created by independent contractors nor, of course, to material that employees may have improperly taken from other sources.