Rules and Regulation

Website development

This information sheet covers the most important issues that a person should consider and possibly address in a contract when engaging a website developer to create a website.

In this information sheet:

This information sheet covers the most important issues that a person should consider and possibly address in a contract when engaging a website developer to create a website. Who should use this information sheet? This information sheet is to help you to engage a website developer (web developer) to create a website. It assumes that you have found a web developer who has the necessary skills, expertise and resources to deliver the website you want. This information sheet also directs attention to the best practice for setting up online contracts with users of the website.

Why should you have a written agreement with your web developer?

Having a written agreement helps to ensure that you receive what you want from your web developer, for example:

  • by setting out the scope of work you want the web developer to do;
  • when you want the website to be delivered, tested and live;
  • how much you are to pay and when;
  • what rights each party has in relation to the website.

Arts Law recommends you discuss and finalise an agreement before the web developer starts work and before you pay any money to the web developer.

What should you do if the web developer gives you a ‘standard’ agreement?

If a web developer gives you an agreement, it will generally reflect a position which is most favourable to the web developer. If you are not satisfied with some of the terms, you should try to negotiate changes or prepare a new agreement. Look at the agreement in light of the issues discussed below and consider:

  • if you – or anyone you know – has dealt with the web developer before. You might discover problems that have come up in the past;
  • the potential costs of engaging the web developer;
  • how important and complex the website is;
  • what each party is responsible for;
  • whether you are likely to have a long term relationship with the web developer, for instance in relation to ongoing website hosting, maintenance or hosting; and
  • whether you can continue using and modifying the website if the relationship turns sour.

What issues should a web development agreement cover?

Who is the web developer?

It is important to establish who the web developer is and in which capacity the web developer is entering into the website development agreement. For example, is the web developer an individual or are you dealing with a company? It is important to establish who is entering into the agreement or it may be difficult or impossible to enforce if something goes wrong. Business or trading names are not proof of a separate legal entity. Accordingly, you should ask any individuals you are dealing with under which business structure they operate, and for the details of any company if they are using a separate legal entity. The website of the Australian Securities and Investment Commission (ASIC) has a search function which allows you to check ASIC’s Registers for possible company names or relevant numbers to the legal entity such as Australian Business Numbers (ABN). This information can also be accessed at the ABN Lookup database which is the public view of the Australian Business Register (ABR).

What are your obligations?

  • Payments: You should consider how you want the fees to be structured.

Set fees can be useful, for instance a set maximum payable fee for the completion of the entire website or a set fee per identified stage completed.

If you agree to pay on the basis of time spent, there is a risk that you will be charged more than you expected if the project becomes larger than expected. Try to cap hours that can be spent on the project and ensure that the web developer can only carry out additional hours with your prior written approval, or be very specific about what you want the web developer to do.

  • When do you have to pay? Paying set fees at different stages of the project rather than upfront can be helpful and mitigate risk.

You should think about whether you want to be able to withhold payment if you are not happy with what the web developer has delivered.

What are the web developer’s obligations?

  • Website: be as clear and detailed as possible in the agreement about what you want the web developer to create. You should specify what you want the website to do and what you want it to look like.
  • Timetable: you should set out a clear timetable for the web developer to comply with for the various stages including final delivery, testing (if applicable) and live date. If the web developer causes a delay or is unable to deliver, what should your options be under the agreement? One option may be to withhold money until the web developer continues or completes the development work. Another option might be to terminate the agreement (see below) but this generally means that the web developer will not complete your website and you will need to spend more time and money with a new web developer coming up to speed on the project.
  • Testing: if your website is large or complicated, you should request acceptance testing at various stages of the website development and agree that you do not pay for delivery until the tests are passed. If you do not do this, you risk paying for a website which does not work in the agreed manner. For a testing regime to be useful, you will need to identify the performance standards the website must satisfy and make sure that you can actually test the website in this way. The performance standards the website must satisfy should also be part of the contract with the web developer.
  • Confidentiality: if your plan to launch the website is confidential, or you have other confidential information you need to share with the web developer, you should require that the web developer promises to keep that information confidential, not share it with anyone else and only use it for the purpose of developing the website for you. See the Arts Law’s information sheet on “Protecting your ideas” for more information as well as a sample confidentiality agreement.
  • Domain names: if the web developer is applying for domain name registration on your behalf, you should require that the application be made in your name rather than the web developer’s name. If the web developer uses their own name, it may be more difficult to ensure the domain name is renewed and to transfer the domain name if you decide to sell this part of your business in the future. See the Arts Law information sheet “Protecting your professional name” for information on domain names.
  • Deliverables: make sure the agreement is clear as to what ‘deliverables’ the web developer must provide to you for you to operate the website, as well as any technical requirements that you may need from a web host (should the requirement to change hosts arise).
  • Code: you should ask the web developer to provide you with a copy of all website code created for each stage so that if you need to get another web developer to complete the project you have the information they require.
  • Source code: the agreement should also cover whether the web developer is giving you the source code (the “human readable” code) and related materials. If the web developer does not agree to give the source code, you should require the web developer to put the source code and materials in escrow for you to be held by an independent third party escrow agent. This will enable you to access the source code if the developer fails to support the website or becomes insolvent. If you do not have the source code and you cannot access it, it may be difficult to support the website without the web developer.