Take-it or leave-it (or perhaps ‘void-it’)? Some things to consider in your Website Development Agreements

Website developers understand very clearly the notion of the ‘information architecture’ of a website, yet not all of them get it when it comes to the architecture of the service agreement they enter with their clients.

After the ‘functional specifications’ for your customer’s website have been agreed, it is important to then drill down and take the next step of properly documenting the details of what you will supply, how and when it will be supplied, and who will own and be responsible for what at the end of the day.

It is a convenient and common practice to provide a ‘standard form’ or fixed contract that sets out the standard terms on which you will deal with your clients. These often include a schedule with your client’s specific details, (including, for example, the all-important functional specifications and information architecture). Standard form contracts are particularly common when engaging with customers online.

So what issues should you be thinking about in relation to your standard form contracts?

Is your standard form contract ‘fair’

While the idea of a ‘take-it-or-leave-it’ style of contract – where the other party has little or no opportunity to negotiate the terms – is attractive when you are providing the goods and services, it is important for the terms of your standard contract to comply with the law. If not, then it may not worth the paper it is written on, or the ‘click’ it receives.

Website developers (and other service providers) need to be aware of the recent update of laws around Unfair Contract Terms, which have extended the application of the unfair contract laws into contracts with certain ‘small businesses’.

Under these new laws, if your standard form contract:

  • Is with a business that employs less than 20 employees; and
  • If the value of the contract is under $300,000, (or $1 000,000 if the contract term is more than 1 year); and
  • Is for the supply of goods or services,

then you may find yourself caught by the unfair contract provisions of the Australian Consumer Law. Put simply, if a court finds a term of your standard form contract is unfair, then it will be void and not binding. We can help you understand what is fair, and what is not.

Website Development – ‘Good’ or ‘Service’?

Website developers also need to be aware of whether they are supplying a ‘good’ or a ‘service’, as there are different implied warranties for each type of supply under the Australian Consumer Law.

In March 2016, the Federal Court (in Australian Competition and Consumer Commission v Valve Corporation (No 3) found that the supply of digitally downloaded computer software is a ‘good’ – so if the web developer is providing a web app as part of their services, then they need to be aware of the ‘fit for purpose’ guarantee that attaches to ‘goods’ (under section 54 of the Australian Consumer Law). This was the first time the courts applied the extended definition of ‘goods’ to include ‘computer software’ under the Australian Consumer Law.

Whilst there is no requirement under Australian Consumer Law to divide contracts into the ‘supply of goods’ or the ‘supply of services’, it is important for you to be able to identify when a customer has the right to the guarantees attaching to the supply of ‘goods’, and to ensure you address this in the terms of your contract. This is also the case when the software is provided ‘as a service’ – there may be a deemed ‘mixed supply’ of both goods and services within that software-as-a-service (SaaS) model.

If you provide website development services (or any other goods and services for that matter), then we strongly encourage you to have us review your standard form contracts in the context of these issues. For more information, call Andrew on 1300 654 590 or email us at info@andreyev.com.au

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