Overview: Project Closeout for Software Development
Project closeout is the final stage of your software development workflow. Done properly, it confirms delivery, transfers ownership, establishes warranty terms, and releases both parties from future claims. Done poorly, it leaves disputes open for years.
Why Closeout Matters
- Cuts Off Liability: A proper release with Section 1542 waiver bars future claims the client didn't know about at closeout
- Confirms IP Transfer: Documents that all intellectual property has been assigned and delivered
- Establishes Warranty Scope: Defines exactly what you will and won't fix post-delivery
- Enables Enforcement: A signed closeout document can be enforced via CCP 664.6 stipulated judgment
California Law for Project Closeout
Two California statutes are critical for project closeout: Civil Code 1542 (unknown claims) and Code of Civil Procedure 664.6 (settlement enforcement).
California Civil Code Section 1542 - Unknown Claims Waiver
This statute protects releasing parties from unknowingly giving up claims they don't know exist. For a release to cover unknown claims, you MUST expressly waive Section 1542. The full statutory text:
"A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party."
California Code of Civil Procedure Section 664.6 - Settlement Enforcement
This statute allows parties to a signed settlement agreement to enforce it by motion rather than a new lawsuit. If your closeout agreement includes settlement of any disputes, you can request the court "retain jurisdiction" to enforce the agreement. This makes enforcement faster and cheaper if the other party breaches.
Key Closeout Legal Principles
| Issue | California Rule | Closeout Impact |
|---|---|---|
| Unknown Claims | CC 1542: Preserved unless waived | Must expressly waive with full text |
| Settlement Enforcement | CCP 664.6: Motion enforcement | Include "retain jurisdiction" language |
| IP Assignment | Must be in writing (17 USC 204) | Confirm prior assignments in closeout |
| Warranty Disclaimers | UCC 2-316: Must be conspicuous | Use caps/bold for AS-IS disclaimers |
| Contract SOL | CCP 337: 4 years written contracts | Release cuts off before SOL expires |
Final Acceptance Signoff Process
Final acceptance is the client's formal acknowledgment that all deliverables meet the acceptance criteria defined in the SOW. This triggers final payment and starts any warranty period.
Acceptance Process Steps
- Delivery Notice: Developer provides written notice that deliverables are ready for acceptance testing
- Acceptance Period: Client has defined period (typically 10-15 business days) to test against acceptance criteria
- Accept or Reject: Client must either accept in writing or provide specific rejection reasons
- Cure Period: If rejected, developer has defined period to cure deficiencies
- Deemed Acceptance: If client fails to respond within acceptance period, deliverables are deemed accepted
What Acceptance Covers
- All deliverables listed in the SOW
- Compliance with specifications and acceptance criteria
- Documentation and training materials
- Source code and related assets
- Third-party licenses and credentials
IP Assignment Confirmation
Even if your MSA or SOW includes IP assignment language, best practice is to confirm the assignment at closeout. This creates a clear record that IP has transferred and prevents disputes about what was included.
What to Confirm
- Work Product: All code, documentation, designs created for the project
- Deliverables: All items listed in the SOW
- Derivative Works: Any modifications to client's existing materials
- Excluded Items: Pre-existing materials, third-party components, developer tools
Pre-Existing Materials
Your closeout should reference the schedule of pre-existing materials from your original agreement. The client gets a license to these, not ownership. Confirm what license rights apply (perpetual, non-exclusive, sublicensable, etc.).
Code Repository Transfer
Transferring the code repository involves more than just sharing access. You need to transfer ownership, provide documentation, and ensure the client can maintain the code going forward.
Repository Transfer Checklist
- Transfer repository ownership (GitHub/GitLab/Bitbucket admin rights)
- Provide complete commit history
- Remove any developer personal accounts from repo access
- Transfer or document all CI/CD pipeline configurations
- Provide environment variable documentation
- Transfer domain registrations and DNS management
- Transfer cloud hosting accounts (AWS, GCP, Azure)
- Provide database access credentials and backup procedures
- Document all API keys and third-party service credentials
- Provide deployment documentation and runbooks
Documentation Deliverables
- README with setup instructions
- Architecture documentation
- API documentation
- Database schema documentation
- Deployment procedures
- Known issues and technical debt log
Warranty Terms
Software warranty terms range from complete AS-IS disclaimers to limited bug-fix warranties. The right choice depends on your project type, client relationship, and risk tolerance.
AS-IS Disclaimer
An AS-IS disclaimer provides no warranty whatsoever. The client accepts the software in its current state with all faults. This is appropriate for:
- Prototype or proof-of-concept projects
- Fixed-price projects with tight budgets
- Projects where client controlled specifications
- Open-source or community projects
Limited Bug-Fix Warranty
A limited warranty typically covers defects in the software for a defined period (30-90 days). It usually includes:
- Coverage: Software will perform substantially in accordance with specifications
- Duration: 30, 60, or 90 days from final acceptance
- Remedy: Developer will fix bugs at no additional cost
- Exclusions: Client modifications, misuse, third-party issues
- Limitation: Exclusive remedy - no consequential damages
Warranty Comparison
| Warranty Type | Coverage | Best For |
|---|---|---|
| AS-IS | None - client assumes all risk | Prototypes, low-budget projects |
| 30-Day Limited | Critical bugs only | Standard commercial projects |
| 90-Day Limited | All bugs per specifications | Enterprise clients, larger projects |
| Extended Warranty | 1+ year coverage | Bundled with support agreement |
Support and Maintenance Agreements
Support agreements define ongoing obligations after project closeout. They can be bundled with closeout or executed as separate agreements.
Types of Post-Delivery Support
- Bug Fix Support: Fixing defects discovered after warranty expires
- Enhancement Support: Adding new features or modifications
- Maintenance Support: Updates for compatibility, security patches
- Hosting/DevOps: Ongoing infrastructure management
Support Agreement Terms
- Scope: What's covered vs. new development
- Response Times: SLAs for different severity levels
- Hours: Monthly retainer hours or time-and-materials
- Rates: Hourly rates for support vs. new development
- Term: Duration and renewal terms
- Termination: Notice period and transition assistance
Final Release with Section 1542 Waiver
A mutual release at closeout bars both parties from bringing future claims related to the project. In California, you must expressly waive Civil Code Section 1542 to release unknown claims.
Release Structure
- Recitals: Background on the project and reason for release
- Release of Claims: Broad release of all claims arising from the project
- Section 1542 Waiver: Express waiver with full statutory text
- Acknowledgment: Parties acknowledge understanding of waiver
- Carve-outs: Claims not released (warranty, ongoing support)
- Representations: Authority to sign, no assignment of claims
What to Carve Out
Your release should NOT release:
- Obligations under the closeout agreement itself
- Warranty obligations for the warranty period
- Support agreement obligations
- Confidentiality obligations that survive termination
- Indemnification obligations for third-party claims
Sample Closeout Clauses
Copy these California-compliant clauses for your project closeout documents. Customize the bracketed sections for your specific project.
FINAL ACCEPTANCE CERTIFICATE Project: [Project Name] SOW Reference: [SOW Number/Date] Developer: [Developer Name] Client: [Client Name] Date: [Date] Client hereby certifies that: 1. All Deliverables listed in the SOW have been delivered by Developer. 2. Client has completed acceptance testing in accordance with the acceptance criteria set forth in the SOW. 3. All Deliverables conform to the specifications and acceptance criteria. 4. Client accepts all Deliverables as complete and satisfactory. 5. Upon execution of this Certificate, Developer is entitled to final payment of $[Amount] in accordance with the payment terms of the Agreement. 6. The warranty period for the Deliverables begins on the date of this Certificate and extends for [90] days thereafter. This acceptance is subject only to Developer's warranty obligations as set forth in the Agreement. CLIENT: DEVELOPER: _________________________ _________________________ Signature Signature _________________________ _________________________ Name/Title Name/Title _________________________ _________________________ Date Date
IP ASSIGNMENT CONFIRMATION Developer confirms and agrees that, pursuant to the Agreement dated [Date]: 1. ASSIGNMENT. Developer has assigned, and hereby confirms the assignment of, all right, title, and interest in and to the Work Product to Client, including all intellectual property rights therein. "Work Product" means all deliverables, source code, object code, documentation, designs, inventions, and other materials created by Developer in the performance of the Agreement. 2. FURTHER ASSURANCES. Developer agrees to execute any additional documents and take any actions reasonably requested by Client to perfect, evidence, or enforce Client's ownership of the Work Product. 3. MORAL RIGHTS. To the extent permitted by law, Developer waives all moral rights in the Work Product, including rights of attribution and integrity. 4. PRE-EXISTING MATERIALS. The following Pre-Existing Materials are excluded from the assignment and are licensed to Client pursuant to Section [X] of the Agreement: - [List pre-existing materials] 5. THIRD-PARTY MATERIALS. The following third-party materials are incorporated in the Deliverables. Client is responsible for maintaining applicable licenses: - [List third-party components and licenses] Developer represents and warrants that (a) Developer has full right and authority to make the foregoing assignment; (b) the Work Product is original and does not infringe any third-party intellectual property rights; and (c) Developer has not previously assigned or encumbered any rights in the Work Product.
CODE REPOSITORY TRANSFER 1. REPOSITORY TRANSFER. Developer has transferred ownership of the following code repositories to Client: Repository: [Repository Name/URL] Platform: [GitHub/GitLab/Bitbucket] Transfer Date: [Date] New Owner: [Client GitHub/GitLab Username or Organization] 2. TRANSFER INCLUDES: a) Complete source code and commit history b) All branches and tags c) Issue tracking history and documentation d) CI/CD pipeline configurations e) Wiki and project documentation 3. ACCESS CREDENTIALS. Developer has provided or transferred the following credentials and access: a) Repository admin access b) Deployment credentials: [List] c) API keys: [List - stored in secure location] d) Third-party service accounts: [List] e) Domain registrar access: [Details] f) Hosting/cloud platform access: [Details] 4. DEVELOPER ACCESS REMOVAL. Developer confirms that all Developer personnel access to the repositories and associated services has been revoked, except for: [List any retained access and purpose]. 5. DOCUMENTATION. Developer has provided the following documentation: a) README with setup and build instructions b) Architecture documentation c) API documentation d) Deployment runbook e) Environment configuration guide 6. CLIENT ACKNOWLEDGMENT. Client acknowledges receipt of all transferred items and accepts responsibility for ongoing maintenance, security, and backups.
WARRANTY DISCLAIMER THE DELIVERABLES ARE PROVIDED "AS IS" WITHOUT WARRANTY OF ANY KIND. DEVELOPER EXPRESSLY DISCLAIMS ALL WARRANTIES, WHETHER EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, INCLUDING WITHOUT LIMITATION ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, NON-INFRINGEMENT, ACCURACY, RELIABILITY, OR QUALITY. DEVELOPER DOES NOT WARRANT THAT THE DELIVERABLES WILL MEET CLIENT'S REQUIREMENTS, OPERATE WITHOUT INTERRUPTION, BE ERROR-FREE, OR BE COMPATIBLE WITH ANY PARTICULAR HARDWARE OR SOFTWARE. CLIENT ASSUMES ALL RISK AS TO THE QUALITY AND PERFORMANCE OF THE DELIVERABLES. SHOULD THE DELIVERABLES PROVE DEFECTIVE, CLIENT ASSUMES THE ENTIRE COST OF ALL NECESSARY SERVICING, REPAIR, OR CORRECTION. SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OF IMPLIED WARRANTIES, SO THE ABOVE EXCLUSIONS MAY NOT APPLY TO CLIENT. IN SUCH JURISDICTIONS, DEVELOPER'S LIABILITY SHALL BE LIMITED TO THE MAXIMUM EXTENT PERMITTED BY LAW. CLIENT ACKNOWLEDGES THAT CLIENT HAS READ THIS DISCLAIMER, UNDERSTANDS IT, AND AGREES TO BE BOUND BY ITS TERMS. Client Initials: _______ Date: _______
LIMITED WARRANTY 1. WARRANTY. Developer warrants that, for a period of ninety (90) days following Final Acceptance (the "Warranty Period"), the Deliverables will perform substantially in accordance with the specifications set forth in the Statement of Work. 2. REMEDY. If Client notifies Developer in writing of a breach of this warranty during the Warranty Period, Developer will, at its option: (a) repair or correct the nonconforming Deliverable at no additional cost to Client; or (b) refund a portion of the fees paid attributable to the nonconforming Deliverable. This remedy is Client's exclusive remedy for breach of this warranty. 3. EXCLUSIONS. This warranty does not cover defects or failures caused by: a) Modifications made by anyone other than Developer b) Use of the Deliverables other than as specified in the documentation c) Client's failure to implement updates or corrections provided by Developer d) Third-party software, hardware, or services e) Force majeure events f) Client's breach of the Agreement 4. WARRANTY CLAIMS. To make a warranty claim, Client must: (a) notify Developer in writing within the Warranty Period; (b) provide detailed description of the defect; (c) provide reasonable cooperation and access to reproduce the defect. 5. RESPONSE TIME. Developer will acknowledge warranty claims within [2] business days and provide an estimated resolution timeline. Critical defects (system down/unusable) will be addressed with reasonable priority. 6. DISCLAIMER. EXCEPT FOR THE EXPRESS WARRANTY SET FORTH ABOVE, THE DELIVERABLES ARE PROVIDED "AS IS." DEVELOPER DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. 7. LIMITATION. IN NO EVENT SHALL DEVELOPER BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL, OR PUNITIVE DAMAGES ARISING FROM ANY WARRANTY CLAIM, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
TRANSITION AND HANDOFF OBLIGATIONS Developer agrees to complete the following transition activities prior to or concurrent with project closeout: CODE AND REPOSITORY: [ ] Transfer repository ownership to Client [ ] Provide complete commit history [ ] Remove all Developer personnel access [ ] Document all branches and their purposes [ ] Clean up and archive unused branches [ ] Ensure all code is properly commented DOCUMENTATION: [ ] Provide system architecture documentation [ ] Provide API documentation [ ] Provide database schema documentation [ ] Provide user documentation/manuals [ ] Provide administrator documentation [ ] Provide deployment/operations runbook CREDENTIALS AND ACCESS: [ ] Transfer all API keys and secrets [ ] Transfer domain registrar access [ ] Transfer hosting/cloud account access [ ] Transfer SSL certificate management [ ] Provide list of all third-party services and credentials [ ] Transfer monitoring/logging access ENVIRONMENTS: [ ] Document all environment configurations [ ] Transfer production environment access [ ] Transfer staging environment access [ ] Transfer development environment setup instructions [ ] Provide environment variable documentation KNOWLEDGE TRANSFER: [ ] Conduct [X] hours of knowledge transfer sessions [ ] Record knowledge transfer sessions (if requested) [ ] Answer reasonable questions during transition period [ ] Introduce Client to third-party vendors (if applicable) COMPLETION: Developer and Client will sign off on completion of each category above. Any items not completed will be listed with agreed timeline for completion. Developer: _________________ Date: _______ Client: _________________ Date: _______
MUTUAL RELEASE OF CLAIMS
This Mutual Release ("Release") is entered into as of [Date] by and between [Developer Name] ("Developer") and [Client Name] ("Client").
RECITALS
A. Developer and Client entered into [Agreement Name] dated [Date] (the "Agreement") for software development services.
B. The project has been completed and Client has issued Final Acceptance.
C. The parties wish to release each other from any claims arising from the Agreement and the project.
RELEASE
1. DEVELOPER RELEASE. Developer, on behalf of itself and its officers, directors, employees, agents, successors, and assigns, hereby releases and forever discharges Client and its officers, directors, employees, agents, affiliates, successors, and assigns from any and all claims, demands, damages, liabilities, actions, and causes of action of any kind, whether known or unknown, suspected or unsuspected, that Developer now has or may have arising out of or related to the Agreement or the project.
2. CLIENT RELEASE. Client, on behalf of itself and its officers, directors, employees, agents, successors, and assigns, hereby releases and forever discharges Developer and its officers, directors, employees, agents, affiliates, successors, and assigns from any and all claims, demands, damages, liabilities, actions, and causes of action of any kind, whether known or unknown, suspected or unsuspected, that Client now has or may have arising out of or related to the Agreement or the project.
3. CALIFORNIA CIVIL CODE SECTION 1542 WAIVER. Each party acknowledges that it has been advised by legal counsel and is familiar with the provisions of California Civil Code Section 1542, which provides:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY."
EACH PARTY, BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHTS IT MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTE OR COMMON LAW PRINCIPLE OF SIMILAR EFFECT.
Developer Initials: _______ Client Initials: _______
4. EXCLUSIONS. This Release does not release:
a) Developer's warranty obligations for the Warranty Period
b) Obligations under any Support Agreement between the parties
c) Confidentiality obligations that survive termination of the Agreement
d) Indemnification obligations for third-party intellectual property claims
e) Obligations under this Release itself
5. REPRESENTATIONS. Each party represents and warrants that: (a) it has full authority to execute this Release; (b) it has not assigned or transferred any claims released herein; (c) it has had the opportunity to consult with legal counsel regarding this Release.
6. GOVERNING LAW. This Release shall be governed by the laws of the State of California.
7. ENTIRE AGREEMENT. This Release constitutes the entire agreement between the parties regarding the subject matter hereof and supersedes all prior agreements and understandings.
IN WITNESS WHEREOF, the parties have executed this Release as of the date first written above.
DEVELOPER: CLIENT:
_________________________ _________________________
Signature Signature
_________________________ _________________________
Name/Title Name/Title
_________________________ _________________________
Date Date
NON-DISPARAGEMENT 1. MUTUAL NON-DISPARAGEMENT. Each party agrees not to make, publish, or communicate to any person or entity any Disparaging Comments about the other party or its officers, directors, employees, agents, products, or services. 2. DEFINITION. "Disparaging Comments" means any negative, critical, or derogatory statements, whether written or oral, that would reasonably tend to damage the reputation, goodwill, or business relationships of the other party. This includes, without limitation, statements on social media, review websites, professional networking sites, industry forums, and communications with clients, prospective clients, or business partners. 3. PERMITTED STATEMENTS. This provision does not restrict: a) Truthful statements made in response to legal process or government inquiry b) Truthful statements made to legal counsel for the purpose of seeking legal advice c) Statements required by law or regulation d) Factual statements regarding the scope and nature of work performed (e.g., portfolio descriptions) e) Good-faith internal communications within each party's organization 4. REMEDY. The parties acknowledge that Disparaging Comments would cause irreparable harm not adequately compensable by money damages. Accordingly, either party may seek injunctive relief to prevent breach of this provision, in addition to any other remedies available at law or in equity. 5. DURATION. This non-disparagement obligation shall survive termination of the Agreement and this Release for a period of [three (3) years] from the date of this Release. 6. EXISTING STATEMENTS. Each party represents that, as of the date of this Release, it has not made any Disparaging Comments about the other party. If either party becomes aware of any such statements made by its personnel, it will use reasonable efforts to remove or retract such statements.
Frequently Asked Questions
California courts require that the releasing party have actual knowledge of Section 1542's protections before waiving them. Simply referencing the statute isn't enough - courts have found releases invalid where the party didn't understand what they were waiving. Including the full statutory text and having both parties initial next to it demonstrates that both parties read and understood the waiver. This protects the release from later challenges claiming the waiver was ineffective.
Final acceptance alone doesn't prevent lawsuits - it only confirms that deliverables met specifications at the time of acceptance. The client could still sue for: latent defects discovered later, breach of warranty, misrepresentation, or fraud. That's why you need both final acceptance AND a mutual release. The release bars future claims (except carved-out items like warranty). Without a release, you're exposed until the statute of limitations runs (4 years for written contracts in California).
It depends on your project type and client relationship. AS-IS is appropriate for prototypes, proof-of-concepts, or projects where the client controlled specifications. A limited warranty (30-90 days) is standard for commercial projects and shows confidence in your work. Consider: (1) your ability to actually fix bugs if needed, (2) whether you're retaining the client for support, (3) the project budget and your profit margin. Enterprise clients typically expect some warranty; startups may accept AS-IS for lower prices.
You can still close the project - a release isn't legally required. However, without a release, both parties retain the right to sue over project-related disputes until the statute of limitations expires. If the client refuses to sign, consider: (1) whether there's an underlying dispute to resolve first, (2) offering something in exchange (extended warranty, minor fixes), (3) documenting their refusal in writing. You should still get final acceptance to trigger final payment and memorialize delivery.
At minimum, retain project files for the statute of limitations period (4 years for written contracts in California). Better practice: retain for 7 years (standard business record retention) or longer if the project involved regulated industries. Keep: contracts, SOWs, change orders, email correspondence, final deliverables, and proof of delivery. You can delete working files and drafts. Consider your data retention policy, storage costs, and any contractual or regulatory requirements.