The concerns that need to be addressed during contract negotiations include the following factors.
Warranty
The guarantees provided by the contractor that the deliverables will meet the specifications. This segment of the contract should state specifically what the contractor warrants, and what the contractor will do if the deliverables fail to meet the warranty guarantees. For example, if the contractor guarantees the application will provide a one-second response, and the implemented application fails to meet those specifications, this contract defines recourse against the contractor.
Installation
The contractor’s and customer’s commitment for installing the application should be specified. If the contractor is to have personnel present to help during the installation, that should be specified. If the contractor is to provide machine time on certain days, that, too, should be specified in the contract.
Penalties
Penalties assessed in the event of failure on the part of either the contractor or the customer to meet contractual obligations should be covered in the contract. Where dollar penalties are to be assessed, the amount should be specified in the contract. For example, if the contractor is late in delivering the product, a per-day dollar penalty can be assessed, as well as a dollar penalty for failure of the customer to make computer time available, etc.
Service discontinuance
If the contractor decides to discontinue service on the application system, the customer’s rights in those instances should be specified. For example, if any of the training material or application system is copyrighted then those copyrights should be passed to the customer in the event that service on the purchased products is discontinued.
