Alex Du is a lawyer at the Toronto law firm of McMillan Binch and a member of the firm’s KNOWlaw(tm) Group.

Being on the Internet isn’t always as easy as it looks. A website that doesn’t accomplish your goals – whether those are simply marketing your business and its products and services, or carrying on an e-commerce business – can do more harm than good.

Many companies turn to professional website developers to make sure their websites are effective and creative. Think of your website development agreement as providing the framework for you and the developer to communicate and collaborate with each other towards the completion of the site.

When you’re negotiating your agreement with a developer, keep the following basics in mind:

Know what you want

This may sound obvious, but start by listing what you want your website to do. Even if this changes as you go along, it’s a good starting point to help determine what services you’ll need, how much the website will cost and whether the developer has the required skills and experience.

Know what the

developer has to do

In the agreement, specify clearly what services the developer will provide and when. Services may include:

* coding and web page layout including graphic design and creation;

* creating online games, puzzles and other entertainment elements;

* developing an e-commerce infrastructure including order and payment mechanisms;

* collecting, tracking and analyzing information about customers

* maintenance and support of the website and training.

The agreement should set out a delivery schedule of dates or time frames for certain events or items to be completed or delivered to you for your approval.

Know what

you have to do

If you want the developer to include your content on your website, you’ll need to provide it – whether it’s existing material, text, contact information or simply images the developer will use to program new animation or other new content.

Your agreement should set out what you will provide to the developer and any restrictions on how the developer can use that material.

Decide in advance, too, who will be responsible for creating and updating the content on the website and when.

Payment

Just as your list of what you want your website to do may change over the course of development, your budget will likely change too. But your agreement should have a starting budget, a mechanism for calculating compensation for overtime, and additional services.

You will probably want fee updates for work completed at regular intervals, as well as a cost estimate for completion.

The payment schedule should set out how much will be paid and when. You will likely want the trigger for payment to be completion of certain steps, rather than specified dates, and you should consider a holdback amount payable upon final acceptance.

Internet rights

Ensure that your development agreement specifies who is responsible for making sure that you have the rights to use material on your website. If you are using your own existing material, make sure you have Internet rights from all the people who contributed to it.

If the developer is providing content (whether images, audio-only or audiovisual clips or text), make sure that the developer will obtain the rights, releases, consents and clearances you need and will assign them to you.

The agreement should also provide for an assignment of rights and a waiver of moral rights from the developer and any of the developers’ employees and independent contractors.

Approval

Your agreement should give you final approval over the layout, content and ‘look and feel’ of your website and any links incorporated into the website. Remember though that if your wish list changes, it may increase the cost and the time it takes to complete your site.

Final approval will be especially important for those projects where the website includes an existing traditional media property. You may have contractual obligations to other people (for example, the author/illustrator of a children’s book on which your website is based) to give them approval rights over Internet exploitation of their work.

Testing

Your agreement should set out detailed and specific technical standards for the site and how it will operate. These standards will form the basis for determining whether the developer has done what he or she was supposed to do.

Your agreement should build in the opportunity for you to test the site to make sure it meets those standards – and time for the developer to make any changes – before the website is considered complete.

Whose website

is it anyway?

The development agreement should clearly state what each party will own once the services are completed. In many cases you will be the sole and exclusive owner of the domain name and the website content.

However, it’s not unusual or unreasonable for a developer to retain rights in certain elements of the website that form part of the developer’s ‘know-how’ or set of programming tools. In fact, on your project the developer may use elements of its own programming library that it has developed over time from work on previous projects.

If the developer keeps ownership in those elements, your agreement should include an irrevocable and perpetual licence from the developer to use and modify such elements as long as they are part of your website.

Increasingly, particularly when they develop content, developers see themselves as creators of new properties, not just as technical service providers. These developers may seek Internet distribution rights, or a right to share in revenues generated by the property they have helped create. Normally, these distribution rights are non-exclusive and would allow the developer to enter into an agreement with a specialty website or portal so that a link would be placed on those sites to your site or parts of your site. There are a variety of ways compensation is calculated for this kind of distribution mechanism, one of which is a fee for every ‘hit’ to your site. If you agree to grant distribution rights, you should consider asking for a share in the revenues generated.

Lately, there have been more ‘joint initiatives’ between new media developers and traditional media producers. In these cases, it is not unusual for the website to be co-branded, co-promoted and co-owned by each party.

However, be careful that your agreement doesn’t inadvertently assign half of all your rights to your partner. For example, you may intend to grant a co-ownership interest in the website alone, but a poorly worded agreement may grant rights in the underlying property as well.

Termination

Your website agreement should state when it will be possible for you or the developer to terminate the agreement – and what happens when you do.

The termination provisions should cover all possibilities such as whether the site is complete and will vary depending on whether yours is a straightforward services deal or a joint initiative.

If termination occurs before your site is complete, you will want the developer to turn over to you (in electronic format and hard copy) whatever materials have been developed, including any search engines, scripts, code and other required elements, as well as any materials you provided the developer, provided that you are up-to-date in your payments.

If you’re in a joint initiative with a developer, or have granted distribution rights, your termination provisions should deal with issues such as who owns the site after termination, and who will run it, whether the distribution rights terminate automatically, and whether and how you share in revenues generated from the website after termination.

If your developer hosts your site, be sure your agreement requires the developer to transfer the site in its entirety to another host without any interruption of service.

(This article contains general comments only. It is not intended to be exhaustive and should not be considered as advice in any particular situation.)