Engaging a Web Designer - one contract you should read - February 2009

It is amazing how naïve otherwise sensible business people can be when it comes to commissioning a designer to develop a website for them.  Whether it is a lack of knowledge or simple forgetfulness many businesses overlook formalities like having a website development contract.  This lax approach can have serious consequences.

While it may be impracticable to scour every contract that you come across in business, let alone get legal advice on them all, some contracts are just too important to take lightly.  A website is one of them, and even more so if it is for an e-commerce site.

Securing rights in your website

What is surprising is that some businesses will ask their web designers to register domain names for them.   Clearly, they are unaware of possible problems.  Domain names are based in contract, so the user of the name should be the owner in whose name the domain is held.  If the web designer runs off to France and takes control of the website, there would be real difficulties for the business whose domain was owned by that designer.  By registering the domain name in the business owner’s own name the owner would be in a position to take any necessary legal and other steps in relation to its own website domain.   

Businesses that don’t secure rights in their own name can run into problems if they want to engage someone else to maintain or redesign or host their site.  Worse still many a business enters into sale negotiations only to discover that they don’t have the rights in their own site, and can't sell it.  Yet the website can be the most important asset an internet business owns.  Securing the necessary rights from the web developer at that stage could prove expensive.

So before engaging the services of a web designer, every business should consider the contractual position.  The only exception is if the business is using itsr own employees to do the job of developing the website.

What to watch out for

Thinking of the contract terms BEFORE formally commissioning the designer is vital.  Under the law a contract comes into being once the 3 Ps are known – that is the parties, the price and the project.  So, businesses should take care to discuss the terms at the outset so the web designer knows they are not formally being engaged to do the work until terms have been sorted out.  What is not so well known by the public is that it is not necessary to sign a contract to be subject to it.

Many developers will have their own terms and conditions which, of course, will be biased in their favour.  Have a look at their terms and conditions so you can decide whether you want to carry on talking to them.  Here are some of the issues you should be watching out for:

•    Under the general law if there is no written contract, the website developer will be the owner of the copyright in your website.  However, you are free to provide otherwise in your contract commissioning the work.
•     Ideally you should try to get copyright in everything including any underlying software.  However, there are very real reasons why the web developer may be reluctant to give you copyright in everything.  If they are happy to do so then make sure the contract has a clause agreeing to assign the copyright and other intellectual property in the website and its contents to you.
•    The reason the website developer will be unlikely to agree to this, is that they will want to be free to reuse the code, or there may be third party software used which they are not in a position to assign to you.  In that case make sure the developer grants you an irrevocable non-exclusive worldwide license to use any intellectual property rights that they won’t be assigning to you.
•    If at all possible ask for a warranty to the effect that all the intellectual property in the website is the developer’s own work and has not been copied.  This should be supported with an indemnity in case the rights of third parties are breached by the website through no fault of yours and you are sued. It is important that this indemnity extends to other copyright elements that the web designer is providing, such as copyrighting services, photographs and any video or other features.  
•    On the other hand if you are providing material like photographs don’t be surprised if you have to give a similar warranty and indemnity to the designer.
•    Most disputes arise because of false expectations.  It is too easy to assume the web developer knows what you mean.  So, make sure there is a specification setting out what you expect to get and by when.
•    Another obvious cause of dispute involves payment.  What will the estimate or quote cover and what further fees might you be asked to pay?  It is all too easy when you don’t understand the extent of the work involved in any requests you make for additional bits and pieces, to get a shock when you find out how much it is going to cost you.  Good practice is to ask the developer to signal in advance everything that will attract an extra charge so you can choose not to go ahead if it will be too expensive.  Another good idea is to pay in stages and only once you sign off each stage.

Having managed to find a reliable designer the next step is to sort out the hosting, support and maintenance contract for your site, which will be the subject of a separate article.