Legal relationship between web designers and clients

Please note the Law may have changed since the publication of article.

Simon Halberstam looks at some of the most important contractual issues relating to Website agreements. The article is based on the template Website agreements prepared by the author.

The normal course of trade involves three agreements; Website Specification Agreement (WSA), Website Design Agreement (WDA) and Website Maintenance and Operation Agreement (WMA). Each of these agreements should cover a wide range of legal issues. In this introductory article, a general overview is given. The articles are based on the template Website agreements prepared by the author. All issues covered In future articles, the issues specific to each of the agreements will be examined in more detail.

The sequence WSA, WDA, WMA reflects the typical commercial order of events. Having concluded a WSA, it is anticipated that the parties will then enter a WDA. After acceptance under a WDA, the parties will normally enter into a WMA.

It is normal practice and advisable from the Designer’s perspective for the Designer to provide the agreements which are to form the legal basis of the transaction. Whilst it is difficult to generalise, the Designer should be particularly cautious before agreeing any amendments to clauses relating to terms of payment, additional charges, intellectual property rights, indemnities, limitation of liability, warranties and governing law. Any such changes could have adverse legal implications, often beyond the grasp of the Designer.

1. Website Specification Agreement

This covers the scoping exercise carried out by the Designer after preliminary discussions with a potential Client. The specification developed as a result of this agreement may or may not lead to a WDA for the design of a Website based on that specification. The Designer may choose whether to charge for the specification or not. Charging for this process will prevent the Designer spending a lot of time with timewasters.

In any event, it is worth having a signed contract to cover this exercise as this may give some protection from potential liability should relations between the parties deteriorate.

2. Website Design Agreement (“WDA”)

This should cover the creation of the Website on the basis of the agreed specification and encompass acceptance testing of the Website by the Client. By linking the design to an agreed specification, such an agreement seeks to define the agreed work and to prevent the sort of profit erosion caused by “shifting goalposts” when Clients change their minds and expect the Designer to alter the design without extra charge for the extra work.

WDA should enable the Designer to charge extra for additional work, falling outside the agreed specification. Intellectual property rights are a major focal point. Once the Website is completed, WDA will normally provide for relevant copyright to be transferred to the Client on receipt of full payment. However, WDA should include provisions which enable the Designer to retain copyright in the underlying computer code and scripts. This enables the Designer legally to re-use the same code and scripts in other Website design projects.

3. Website Maintenance and Operation Agreement

As is the case for software houses, it is very important to have a separate maintenance contract. WMA gives the Designer a separate recurring revenue stream for hosting, maintaining and updating the Website. It also enables the Designer clearly to separate out those tasks which are covered by the annual fee from those for which extra charges can be made. This clear separation may well help avoid the financial embarrassment arising from confusion as to which tasks are covered by the maintenance fees and which are not. WMA should also provide a mechanism for extra charges to be made for extra work. Another issue which WMA should anticipate is the situation where a Client wishes to move its Website to a different host. Typically, WMA should enable this transfer to occur but entitle the Designer to charge a fee for licensing the appropriate codes and scripts.

© This article is copyright Simon Halberstam 2008 and should not be construed as legal advice or opinion in any specific facts or circumstances. the contents are intended for generic information purposes only. You are urged to contact a suitably qualified lawyer for specific advice.