Software Development Agreement (Australia)
This Software Development Agreement (the “Agreement”) is entered into on [Effective Date] by and between:
[Client Name] (ABN [Client ABN]), with its registered or principal address at [Client Address], [Client City] [Client State] [Client Postcode], Australia (the “Client”); and
[Developer Name] (ABN [Developer ABN]), with its registered or principal address at [Developer Address], [Developer City] [Developer State] [Developer Postcode], Australia (the “Developer”).
The Client and the Developer are referred to collectively as the “Parties” and individually as a “Party”.
BACKGROUND
The Client wishes to commission the Developer to design, develop, and deliver the bespoke software project known as [Project Name] (the “Project”), and the Developer agrees to carry out the Project on the terms set out in this Agreement.
1. DEFINITIONS
1.1 In this Agreement:
- “Software” means the bespoke software application to be designed and developed by the Developer as described in clause 2, including all source code, object code, documentation, and related materials.
- “Deliverables” means the specific outputs listed in clause 2.2.
- “Project Fee” means AUD [Project Fee] (exclusive of GST), payable in accordance with clause 4.
- “Background IP” means all intellectual property rights owned or licensed by the Developer prior to the Effective Date or developed independently of the Project.
- “Project IP” means all intellectual property rights created specifically for the Client as part of the Project.
- “GST” has the meaning given in the A New Tax System (Goods and Services Tax) Act 1999 (Cth).
- “ACL” means the Australian Consumer Law, being Schedule 2 to the Competition and Consumer Act 2010 (Cth).
2. SCOPE OF WORK
2.1 The Developer shall design, develop, and deliver the following software:
[Project Description]
2.2 The Deliverables to be provided under this Agreement are:
[Deliverables]
2.3 The Developer shall complete the Project and deliver the Deliverables by [Completion Date] (the “Completion Date”).
2.4 The Developer shall carry out all development work with due care and skill. Nothing in this Agreement limits any guarantee under the ACL that cannot be excluded by agreement.
2.5 Any changes to the agreed scope of work must be agreed in writing by both Parties by way of a change order signed by authorised representatives of each Party. The Developer reserves the right to charge additional fees for work that falls outside the agreed scope.
3. CLIENT OBLIGATIONS
3.1 The Client shall:
- provide all content, assets, branding guidelines, third-party credentials, and other materials required by the Developer in a timely manner;
- review and approve or request revisions to deliverables within 5 business days of receipt;
- designate a named contact with authority to approve designs and give instructions on behalf of the Client;
- ensure that all content and materials provided by the Client do not infringe the intellectual property rights, privacy rights, or any other rights of any third party; and
- pay all sums due under this Agreement on the dates specified.
3.2 The Client acknowledges that any delay in providing required content, approvals, or instructions may result in a corresponding extension to the Completion Date, for which the Developer shall not be liable.
4. FEES AND PAYMENT
4.1 In consideration of the Deliverables, the Client shall pay the Developer the Project Fee of AUD [Project Fee] (exclusive of GST) in accordance with the following milestone schedule:
[Payment Milestones]
4.2 GST is payable in addition to the Project Fee at the applicable rate. The Developer shall issue a valid tax invoice for each milestone payment.
4.3 Invoices are payable within 14 days of the invoice date. If the Client fails to pay any amount by the due date, the Developer may charge interest at the rate of 10% per annum on the overdue amount, accruing daily.
4.4 The Developer may suspend work on the Project if any payment is overdue by more than 14 days, without prejudice to any other rights or remedies.
5. INTELLECTUAL PROPERTY RIGHTS
5.1 Upon receipt of full payment of the Project Fee, [Ip Ownership]. The Parties acknowledge that under s 35(6) of the Copyright Act 1968 (Cth), copyright in a work made by an independent contractor is owned by the contractor unless there is a written agreement to the contrary, and that this clause constitutes such an agreement where applicable.
5.2 The Developer’s Background IP shall at all times remain the exclusive property of the Developer. The Developer grants the Client a perpetual, royalty-free, non-exclusive licence to use the Background IP to the extent necessary to use, maintain, and operate the Software.
5.3 The Client warrants that all content, images, logos, trade marks, and other materials provided by the Client to the Developer are owned by the Client or that the Client has all necessary licences, permissions, and rights to use them in the Software. The Client shall indemnify the Developer against any third-party claims arising from a breach of this warranty.
5.4 Nothing in this Agreement grants any rights in respect of any patent, registered design, or plant variety right. Where the Software may give rise to a patentable invention under the Patents Act 1990 (Cth), the Parties agree to negotiate in good faith a separate patent assignment or licence agreement.
6. CONFIDENTIALITY
6.1 Each Party shall keep confidential all non-public proprietary information of the other Party disclosed in connection with this Agreement (“Confidential Information”) and shall not disclose such information to any third party without prior written consent, except where required by law or by a governmental or regulatory authority.
6.2 The obligations in clause 6.1 shall survive termination or expiry of this Agreement for a period of three years.
6.3 The Developer may include a brief description of the Project (but not the Software’s source code or confidential specifications) in its portfolio and marketing materials unless the Client provides written notice that the Project is confidential.
7. ACCEPTANCE TESTING
7.1 Upon completion of the Software, the Developer shall deploy the Software to a staging or testing environment for the Client’s review and user acceptance testing (UAT).
7.2 The Client shall, within 10 business days of notification of delivery, either: (a) notify the Developer in writing of any material defects or non-conformances with the agreed specification; or (b) accept the Software in writing.
7.3 The Developer shall remedy any material defects notified by the Client within a reasonable time at no additional charge. Minor issues that do not prevent the use of the Software in its intended manner shall not prevent acceptance.
7.4 If the Client does not provide written notification of material defects within 10 business days of delivery, the Client shall be deemed to have accepted the Software.
8. PRIVACY
8.1 Each Party shall comply with the Privacy Act 1988 (Cth) and the Australian Privacy Principles (APPs) in Schedule 1 to that Act in respect of any personal information collected, used, or disclosed in connection with this Agreement.
8.2 Where the Developer handles personal information on behalf of the Client in the course of developing the Software, the Developer shall: (a) handle that information only as directed by the Client; (b) implement appropriate technical and organisational security measures consistent with APP 11 (security of personal information); and (c) not disclose that information to any third party without the Client’s prior written consent.
9. AUSTRALIAN CONSUMER LAW
9.1 Nothing in this Agreement excludes, restricts, or modifies any consumer guarantee, right, or remedy conferred on the Client under the Australian Consumer Law (Schedule 2 to the Competition and Consumer Act 2010 (Cth)) that cannot be excluded, restricted, or modified by agreement.
9.2 To the extent permitted by the ACL, the Developer’s liability for a breach of a guarantee that cannot be excluded is limited, at the Developer’s option, to re-supplying the services or paying the cost of having the services re-supplied.
10. LIMITATION OF LIABILITY
10.1 Subject to clause 9 and to the extent permitted by applicable law, the Developer’s total aggregate liability to the Client under or in connection with this Agreement shall not exceed the total Project Fee paid by the Client.
10.2 To the extent permitted by law, neither Party shall be liable to the other for any indirect, special, or consequential loss or damage, including loss of profits, loss of business, or loss of data, arising out of or in connection with this Agreement.
10.3 The Developer makes no warranty that the Software will be free from all defects, errors, or security vulnerabilities. The Developer shall use reasonable care and skill in developing the Software.
11. TERMINATION
11.1 Either Party may terminate this Agreement by written notice if the other Party commits a material breach and fails to remedy it within 14 days of written notice requiring remedy; or if the other Party becomes insolvent, is placed into administration or liquidation, or ceases to carry on business.
11.2 If the Client terminates this Agreement other than due to the Developer’s material breach, the Client shall pay the Developer for all work completed and expenses reasonably incurred up to the date of termination, calculated on a pro-rata basis against the Project Fee.
11.3 On termination, each Party shall return or destroy the other Party’s Confidential Information, and any partial intellectual property created up to the date of termination shall be governed by clause 5.
12. GENERAL
12.1 Entire Agreement. This Agreement constitutes the entire agreement between the Parties in relation to the Project and supersedes all prior agreements, negotiations, and representations.
12.2 Variation. No variation to this Agreement shall be effective unless made in writing and signed by authorised representatives of both Parties.
12.3 Assignment. Neither Party may assign this Agreement without the prior written consent of the other Party, such consent not to be unreasonably withheld.
12.4 Relationship. Nothing in this Agreement creates a partnership, employment, agency, or joint venture between the Parties. The Developer is an independent contractor.
12.5 Severability. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect.
12.6 Governing Law. This Agreement is governed by the laws of [Developer State], Australia, and the Parties submit to the exclusive jurisdiction of the courts of that state or territory.
IN WITNESS WHEREOF, the Parties have executed this Software Development Agreement as at the date first written above.
THE CLIENT
Full name: [Client Name]
ABN: [Client ABN]
Address: [Client Address], [Client City] [Client State] [Client Postcode]
THE DEVELOPER
Full name: [Developer Name]
ABN: [Developer ABN]
Address: [Developer Address], [Developer City] [Developer State] [Developer Postcode]
Client
________________
Signature
Date: ________________
Developer
________________
Signature
Date: ________________
What Is a Software Development Agreement (Australia)?
A Software Development Agreement in Australia records the software development to be provided, the fees, the service standards, and each party's obligations between the provider and the client under the Corporations Act 2001 (Cth).
Under section 35(6) of the Copyright Act 1968 (Cth), copyright in software created by an independent contractor — including computer programs, source code, object code, and related documentation — belongs to the contractor by default, not to the client who commissioned and paid for the work. This default position surprises many clients and is a frequent source of disputes in the Federal Court of Australia. To transfer copyright ownership to the client, the parties must execute a written assignment that complies with section 196 of the Copyright Act 1968 (Cth), which requires the assignment to be in writing and signed by the assignor. An oral agreement or informal understanding is insufficient. The forms-legal.com Software Development Agreement (Australia) template includes an express copyright assignment clause so the client obtains full ownership upon payment of the agreed fee.
Patent rights in any novel technical inventions arising from the software development project are governed by the Patents Act 1990 (Cth), administered by IP Australia. Where the development may give rise to a patentable invention — for example, a novel algorithm, data processing method, or technical process — the agreement should address whether the patent rights are assigned to the client or retained by the developer under a licensing arrangement.
The Australian Consumer Law (ACL), being Schedule 2 to the Competition and Consumer Act 2010 (Cth) and enforced by the Australian Competition and Consumer Commission (ACCC), imposes mandatory consumer guarantees on software development services. Under section 60 of the ACL, there is a guarantee that services will be rendered with due care and skill. Under section 61, there is a guarantee that services will be fit for the particular purpose disclosed by the client. These guarantees cannot be excluded, restricted, or modified by a contract term under section 64 of the ACL. Since November 2023, the unfair contract terms regime under sections 23 to 28 of the ACL also applies to standard form software development contracts with small businesses.
Privacy obligations under the Privacy Act 1988 (Cth) and the Australian Privacy Principles (APPs), enforced by the Office of the Australian Information Commissioner (OAIC), apply where the software project involves personal information about individuals. APP 11 requires reasonable security safeguards, and APP 8 governs cross-border disclosure. GST applies to software development services under the A New Tax System (Goods and Services Tax) Act 1999 (Cth), and payment terms should specify whether prices are inclusive or exclusive of GST. The agreement uses Australian business conventions including ABN identification, AUD pricing, DD/MM/YYYY date formatting, and governing law of the relevant Australian state or territory. Section 127 of the Corporations Act 2001 (Cth) governs execution of documents by companies, and the agreement should specify whether each party will execute under section 127 or under a power of attorney. The Australian Taxation Office (ATO) administers GST under the A New Tax System (Goods and Services Tax) Act 1999 (Cth), and milestone invoices must be valid tax invoices to enable the recipient to claim input tax credits. The Federal Court of Australia and the Supreme Courts of each state have jurisdiction over IP and contractual disputes arising from software development projects.
When Do You Need a Software Development Agreement (Australia)?
A Software Development Agreement should be signed before any development work commences whenever a business commissions bespoke software from an independent developer or software house in Australia. The agreement is equally important whether the developer is a sole trader, a small studio, or a large Pty Ltd company.
Without a written agreement, the default position under section 35(6) of the Copyright Act 1968 (Cth) means the developer owns all IP in the software — even software the client has paid for in full. The client would then have no right to modify, resell, or sublicence the software without the developer's consent. Resolving these disputes before the Federal Court of Australia or the state Supreme Courts is costly and disruptive. A written agreement eliminates this risk by specifying ownership upfront.
The agreement is particularly important where the software will handle personal information subject to the Privacy Act 1988 (Cth). In that case, the developer will be handling personal information on behalf of the client during the development process, triggering obligations under the Australian Privacy Principles. The agreement should require the developer to handle personal information in accordance with APP 11 (security), APP 8 (cross-border disclosure for offshore developers), and to notify the client immediately of any suspected data breach. Where the software is for a financial services business regulated by the Australian Securities and Investments Commission (ASIC) under the Corporations Act 2001 (Cth), or for a healthcare provider regulated under the Health Practitioner Regulation National Law, additional sector-specific data handling and security requirements will apply.
The agreement should also be signed when engaging offshore developers, as Australian law — including the Copyright Act 1968 (Cth) and the ACL — can still apply to the transaction where the client is based in Australia. APP 8 of the Privacy Act 1988 (Cth) requires the client to take reasonable steps to ensure any offshore developer who handles personal information treats it in a manner consistent with the APPs. Where the offshore developer cannot satisfy this requirement, the client remains accountable to the OAIC for any privacy breach by the offshore party.
For software projects that will be commercially significant — for example, a SaaS platform, a mobile application distributed through the Apple App Store or Google Play, or an enterprise system — the agreement should also address resale rights, sublicensing terms, and whether the developer is permitted to reuse any elements of the software in projects for other clients. The distinction between Background IP (pre-existing developer tools and frameworks) and Project IP (bespoke code created for the client) is critical in this context and must be clearly defined.
What to Include in Your Software Development Agreement (Australia)
A legally sound Australian Software Development Agreement must include the following elements to protect both the client and the developer under the Copyright Act 1968 (Cth), the ACL, and the Privacy Act 1988 (Cth).
Parties and project description: Full legal names and ABNs of both the client and the developer; a precise description of the software to be developed including the platform (web, mobile, desktop, embedded), technology stack, and any third-party integrations; and a project timeline with key milestones.
IP ownership and assignment: A clear statement that the developer assigns all Project IP — including copyright in source code under section 196 of the Copyright Act 1968 (Cth), any patentable inventions under the Patents Act 1990 (Cth), and all related documentation — to the client upon payment of the project fee. An alternative perpetual licence option where the developer retains ownership. Background IP protection preserving the developer's pre-existing tools, frameworks, and libraries, with a perpetual royalty-free licence to the client to use Background IP to the extent necessary to operate the finished software.
Milestone-based payment: Payment in AUD tied to defined delivery milestones — for example, 30% on signing, 40% on design approval, 30% on final acceptance — to protect both parties. GST provisions compliant with the A New Tax System (Goods and Services Tax) Act 1999 (Cth). The developer's right to suspend work for non-payment and to charge interest on overdue invoices.
Acceptance testing: A formal user acceptance testing (UAT) process with defined acceptance criteria, a testing period, a mechanism for the client to raise defects, and a remedy period for the developer to correct them. Deeming acceptance where the client fails to respond within the testing period protects the developer against clients who unreasonably withhold sign-off.
Scope change control: A requirement that all scope variations be documented in a written change order signed by both parties before additional work commences, with agreed additional fees. This prevents scope creep disputes, which are among the most frequently litigated issues in Australian software project disputes.
Privacy and data security: The developer's obligation to handle any personal information encountered during the project in accordance with the APPs under the Privacy Act 1988 (Cth); APP 11 security safeguards; APP 8 cross-border disclosure controls; breach notification obligations under the Notifiable Data Breaches scheme, enforced by the OAIC; and data return or deletion on project completion.
ACL compliance and limitation of liability: An acknowledgment that sections 60 to 62 consumer guarantees cannot be excluded; a limitation of liability clause compliant with section 64A of the ACL; and mutual indemnities for IP infringement. The forms-legal.com Software Development Agreement (Australia) template includes all these elements, drafted for use by Australian businesses engaging developers across all states and territories.
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title = {Software Development Agreement (Australia) (Australia)},
year = {2026},
howpublished = {\url{https://forms-legal.com/australia/business/services/software-development-agreement-australia}},
note = {Free legal document template. Based on Corporations Act 2001 (Cth)}
}Also available for these jurisdictions:
Frequently Asked Questions
Under s 35(6) of the Copyright Act 1968 (Cth), where a literary work (including computer code) is made by an independent contractor, copyright is owned by the contractor — not the client — unless there is a written agreement to the contrary. This default rule surprises many clients who assume they automatically own the software they have paid to have built. To transfer copyright to the client, the parties must execute a written assignment complying with s 196 of the Copyright Act 1968 (Cth), which requires the assignment to be in writing and signed by the assignor. An oral agreement or an informal understanding is not sufficient. This Software Development Agreement template includes an express assignment clause, so that the client obtains full copyright ownership upon payment of the project fee. Where the developer wishes to retain ownership and license the software to the client instead, the template provides an alternative perpetual-licence option.
The Australian Consumer Law (ACL), being Schedule 2 to the Competition and Consumer Act 2010 (Cth), imposes mandatory consumer guarantees on the supply of services in trade or commerce. Under s 60, there is a guarantee that services will be rendered with due care and skill. Under s 61, there is a guarantee that services, and any product resulting from the services, will be fit for the particular purpose disclosed by the consumer and that the consumer will achieve a particular result where that result was made known to the supplier. These guarantees cannot be excluded, restricted, or modified by a contract term (s 64 ACL). However, where the client is not a 'consumer' for ACL purposes (broadly, where the price exceeds $100,000 and the services are not ordinarily acquired for personal use), the parties may limit liability to re-supply of the services. Businesses dealing primarily with other businesses should take legal advice on whether their clients will be 'consumers' under the ACL.
Milestone-based payments are the industry standard for bespoke software development projects in Australia. A common structure is 30% on signing (to cover initial planning and design work), 40% on design or prototype approval (milestone mid-project), and 30% on final delivery and acceptance. Tying payment to milestones protects the client — because they do not pay the full price until the software is delivered — while also protecting the developer, who receives staged payments throughout the project rather than waiting for a single lump sum at the end. Each milestone payment should be triggered by a defined, objective event (not a subjective assessment), such as 'delivery of approved wireframes to the client' or 'client acceptance of the staging environment'. The contract should also address what happens if the client unreasonably withholds acceptance, to prevent the developer being held to ransom by an uncooperative client.
Where a software development project involves the collection, storage, or processing of personal information about individuals — for example, customer records, employee data, or user accounts — the Privacy Act 1988 (Cth) and the Australian Privacy Principles (APPs) will apply to the APP entity (the client organisation). Of particular relevance is APP 11, which requires APP entities to take reasonable steps to protect personal information from misuse, interference, loss, and unauthorised access. A developer who handles personal information during the development process may also be subject to privacy obligations as a contracted service provider. The software development agreement should include a clause requiring the developer to handle any personal information encountered during the project in accordance with the APPs, to implement appropriate security measures, and to notify the client immediately of any suspected data breach. Where the finished software will be used to collect personal information, the client should also requires the software is designed to helps compliance with the APPs, including by implementing appropriate access controls and data minimisation features.
Yes. It is common practice in Australian software development agreements to distinguish between 'Background IP' (intellectual property the developer owned before the project, or developed independently of it) and 'Project IP' (intellectual property created specifically for the client under the agreement). The developer assigns Project IP to the client upon full payment but retains ownership of Background IP. The developer then grants the client a perpetual, royalty-free, non-exclusive licence to use the Background IP to the extent necessary to operate the finished software. This approach protects the developer's reusable code libraries, frameworks, and tools while ensuring the client owns the bespoke elements created for their project. Without this distinction, an assignment of all IP in the software could inadvertently transfer ownership of the developer's entire codebase — an outcome neither party typically intends.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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