An IT Services Agreement can either apply to a standalone project, or operate as a framework for the ongoing provision of services by the supplier.
Issues to consider include:
- Are the services being provided on a fixed price or a time and materials (T&M) basis? If on a T&M basis, has the supplier provided the customer with any indications as to what deliverables will be completed?
- Will delivery be staged, using pre-agreed milestones? If so, will the milestones trigger part payments? What happens in the supplier fails to meet any of the milestones?
- Will the material generated by the IT services (the work product) be subject to acceptance testing? What happens if the work product fails acceptance testing? Can the customer reject the work product in case of (repeated) acceptance test failure?
- Can the customer terminate the agreement for convenience before completion of the project? If so, how much notice must the customer give? As well as paying for services up to termination, does the customer need to make any other payments?
- Does ownership of the copyright and other intellectual property rights in the work product (the IP) vest in the customer? Or is the IP retained by the supplier, with the customer being granted a licence? If licensed to the customer, is the licence exclusive or non-exclusive?
- Are any third party components required in connection with the IT services project? Who is responsible for procuring these? Are they licensed directly to the customer, or are they subject to an (intermediate) sub-licence granted by the supplier?
- Are the arrangements between the supplier and its consultants consistent with the customer acquiring ownership of the IP? Should the customer look for additional comfort regarding assignment of the IP directly from the supplier’s consultant (and/or the supplier’s other contractors)?
- What warranties does the supplier provide in relation to the work product? What is the duration of the warranties?
- Is the supplier restricted from providing services to the customer’s competitors? If so, are the restrictions lawful/enforceable?
- Are there restrictions on the customer hiring/poaching the supplier’s staff? Is there a financial penalty associated with a breach of the restriction?