Overview: Contracts for Software Development Agencies
Running a software development agency in California requires a complete contract stack: client agreements, team agreements, and project management documents. This hub provides California-compliant templates and sample clauses for every stage of your dev agency workflow.
Who This Is For
- Dev Agencies: Software development LLCs/corps serving client companies
- Freelancers Scaling Up: Solo devs hiring their first contractors
- Tech Startups: Companies building internal dev teams
- SaaS Companies: Product companies with contract developers
Dev Agency Workflow: 5 Contract Stages
Your contract needs follow the natural lifecycle of a software project. Click any stage for detailed templates, California law guidance, and copyable clause snippets.
Client Onboarding
NDAs for discovery calls, Master Services Agreements, retainer structures. Protect your agency before the first meeting.
View Templates →Project Scoping
Statements of Work, milestone structures, acceptance criteria. Define scope clearly to prevent disputes.
View Templates →Team Assembly
Contractor agreements, employee IP assignments, subcontractor flowdowns. Build your team with proper IP protection.
View Templates →Change Management
Change orders, scope freeze clauses, contract amendments. Handle mid-project changes without disputes.
View Templates →Project Closeout
Final acceptance, IP handoff, warranty terms, releases. Close projects cleanly with proper documentation.
View Templates →Contract Generators
Interactive tools to generate custom contracts. Fill in your details, preview in real-time, download as Word documents.
Master Services Agreement
Framework agreement for ongoing client relationships. Covers payment terms, IP ownership, liability caps, termination.
Generate MSAStatement of Work
Project-specific scope document. Deliverables, milestones, acceptance criteria, timeline.
Generate SOWIndependent Contractor Agreement
Hire contractors with proper IP assignment, classification language, and California compliance.
Generate AgreementEmployee IP Assignment
California Labor Code 2870 compliant invention assignment for employees.
Generate IP AgreementChange Order
Document scope changes, cost adjustments, and timeline impacts mid-project.
Generate Change OrderSoftware Development NDA
Protect confidential information during discovery calls and project discussions.
Generate NDAConsulting Agreement
General consulting engagement template with hourly/fixed-fee options.
Generate AgreementCalifornia Law Guide for Dev Agencies
California has unique laws that affect how you structure software development contracts. Here's what you need to know.
Labor Code 2870 - Employee Invention Rights
California employees retain rights to inventions created entirely on their own time, without company resources, unrelated to company business. Your IP assignment clauses MUST include this carve-out or they're unenforceable. This applies to employees, not independent contractors.
Business & Professions Code 16600 - Non-Competes Void
Non-compete agreements are void in California (with narrow exceptions). You cannot prevent contractors or employees from working for competitors. However, you CAN protect trade secrets with confidentiality agreements and restrict solicitation of your employees.
Dynamex ABC Test - Contractor Classification
California's ABC test presumes workers are employees unless: (A) free from control, (B) performing work outside usual course of business, and (C) engaged in an independent trade. Software developers working on your client projects may fail prong B. Structure carefully.
Key California Contract Rules
| Topic | California Rule | Contract Impact |
|---|---|---|
| Work-for-Hire | 17 USC 101: Software is NOT automatically WFH | Must have explicit IP assignment clause |
| Non-Competes | B&P 16600: Void (with exceptions) | Remove from contractor agreements |
| Employee IP | LC 2870: Personal project exception | Must include statutory notice in IP clause |
| Contractor Classification | ABC Test (Dynamex) | Include classification recitals |
| Prejudgment Interest | CC 3287/3289: 10% per annum | Include in payment default clauses |
| Contract SOL | CCP 337: 4 years (written) | Dispute resolution timing matters |
| Settlement Releases | CC 1542: Unknown claims preserved | Must explicitly waive in releases |
Frequently Asked Questions
Not always. For one-off projects, a standalone project agreement works. But for ongoing relationships with multiple projects, the MSA + SOW structure is more efficient: the MSA covers general terms (payment, IP, liability), and each SOW covers project-specific scope. This avoids renegotiating the same terms for every project.
Whatever your contract says. Under federal copyright law, work created by independent contractors is NOT automatically work-for-hire (software doesn't qualify). Without explicit IP assignment, you own the code and the client has an implied license. Most clients expect to own the code, so include clear IP assignment language.
Yes, but be careful. The ABC test's prong B requires contractors perform work "outside the usual course of the hiring entity's business." If you're a dev agency, having contractors do dev work may fail this test. Consider: (1) using employees, (2) hiring contractors for specialized skills outside your core offering, or (3) structuring contractors as true subcontractors with their own clients.
Work-for-hire means the hiring party is legally considered the author from the start. It only applies to employees or specific categories (not including software) for contractors. IP assignment is a transfer of ownership from creator to client. For software development, always use both: a work-for-hire statement (in case it applies) plus an explicit assignment (belt and suspenders).
No, not in California. Non-competes are void under B&P 16600. Including one may make your whole agreement look unenforceable or signal you don't understand California law. Instead, use confidentiality provisions to protect trade secrets and consider non-solicitation of employees (though even these are limited in CA).
Document everything in writing. Email the client describing the additional work and its cost before doing it. If you proceed without written approval, you may still recover under quantum meruit (reasonable value of services) if the client knew about and benefited from the work. But prevention is better: include a "no work without signed CO" clause in your SOW.
Disclose it upfront in an exhibit to your agreement. List all libraries, frameworks, tools, and code snippets you'll use that you created before this engagement. Specify that you retain ownership but grant the client a license to use them as part of the deliverables. This prevents disputes later about what's "yours" vs. "theirs."
Yes. Employee agreements need: (1) at-will employment language, (2) LC 2870 compliant invention assignment with statutory notice, (3) no non-compete. Contractor agreements need: (1) independent contractor classification recitals, (2) explicit IP assignment (not relying on work-for-hire), (3) scope and deliverables. Using the wrong form creates legal risk.