Author: Tanu Mehta, IV year of B.B.A.,LL.B.(Hons.) from The Northcap University
A technology contract in simple terms is a collective combination of Information Technology and Software Contracts. A technology contract is also known as a technology service agreement which is usually signed between a company and an entity providing technology services. This agreement is basically signed to describe the rights and responsibilities of both parties who have entered into this business relationship.
A technology agreement is used to showcase the liabilities of the parties, the scope of the entity’s technology services and its requisite amount of chargeable fees. It also talks about the situations and measures when the contract is terminated by any party in any case.
Examples of technology agreements would be an entity entering into a contract with another company to provide access and services via software or technology.
Why is there a need for technology contracts?
People used to receive "Bill-receipts" and other types of proof of transactions in paper form back when technology was less developed, but with the advent of advanced technology, such proof of transactions has become out of date and difficult to look up to. Bills and receipts are necessary because they prove that you completed a transaction; however, if you enjoy shopping, I believe stacking up receipts would truly erode that preference. Bills, receipts, and other transactional proofs are difficult to keep up with, whereas a technology-based transaction maintains everything correctly. Any transaction made using technology or an electronic contract will save all supporting documentation.Since the majority of people conduct business online or using other forms of technology, technology contracts are simple and convenient, and more people are beginning to understand their significance as time goes on.
Due to COVID-19, e-contract usage will soon increase even further. As a result, fewer individuals will conduct hand-to-hand transactions, making tech contracts the most popular option. Since COVID-19 is a highly contagious virus, minimising all transactions involving human contact would be extremely beneficial. E-contracts are the only way to do this.
A few types of technology contracts are:
A) Software License and Ownership Agreements
These agreements enable the transfer of Intellectual Property Rights (IPR) embedded in the software from the Vendor (which entity has developed the software and, therefore, owns the connected IPR), to the Customer. Such Agreement can either be for a mere License to use the product (IPR) wherein the ownership of the IPR continues to remain with the Vendor or for the sale of the rights of ownership of the IPR by the Vendor to the Customer.
Examples - End-User License Agreements (EULA), Enterprise Licenses, Distribution Contracts, Assignments, and Work-For-Hire Agreements,
Commercial Product examples - Microsoft Word, MS Excel, Tally Solutions Accounting Package
B) IT Professional Services Agreement
Agreements for Services provided by the Vendor and his staff to customers of the nature of System Integration, Technology Support, Website Development, Software Maintenance, Technology Consulting, etc. are classified as IT Professional Services Agreements. Merely providing readymade software and technology to customers does not constitute an IT Professional Services Agreement. Here the Professional services rendered involve the human element.
Important necessary requisites in a technology contract
1. Competency to contract
The provisions of the Indian Contract Act, of 1872 apply similarlyto technology contracts as to offline contracts. This means that the competent age to enter into a technology contract is the age of majority (i.e. 18 years). Hence, it can be said that minors cannot enter into technology contracts. Minors entering into such contracts will render them void, although their guardian can on behalf of minors enter into technology contracts. Another requirement is, the person entering into technology contracts must be of unsound mind.
2. Awareness with regard to privacy policies of the technology contracts
So, before entering into a technology contract the parties to the contract must be aware and aggregable to the privacy policies of the technology being contracted upon.
3. Communicating the party
The main requirement of such an agreement is that the parties enter into the agreement by consenting to the offer made. Without the user's assent, the contract can never be formed and before contracting, the parties should duly communicate with each other so that the terms and conditions will be visibly clear.
Necessary essentials to technology contracts
The fundamental significance that the phrase "offer" denotes applies to both the technology contract and regular contracts. Any contract must first contain an offer or agreement that the user must accept in order for it to take effect. Offers are posted on various websites and domains.
Acceptance is a crucial clause in a technology contract. Every offer must satisfy the fundamental need of acceptance in order to become a contract; without acceptance, an offer cannot become a contract. The user must carefully study the terms and conditions before accepting the offer in order to avoid being taken advantage of.Acceptance can be expressed by replying to the email or by clicking the "I accept" button.
A party cannot withdraw their assent from a contract after signing it, even if they falsely claim that they were not a party to it. This makes a signature an essential piece of evidence. A party's signature acts as worrisome evidence because it demonstrates their complete assent. However, the user must make sure they have read all the necessary instructions before signing a contract and have given their assent appropriately.
4. The Requirement of the stamp
The Indian Stamp Act, of 1899, which regulates stamp requirements, stipulates that such documents must bear a defined stamp in order to be legally binding and enforceable in court. If they do not, they cease to exist in the eyes of the law.
Role performed by technology lawyers in the technology contracts
A technology lawyer practises in the legal areas that deal with securing a person or business's ideas, marketing strategies, compositions, and the right to use all three. Typically, a firm will use these concepts, marketing plans, and compositions for profit.
Also, a technology lawyer is responsible to review the privacy policies of the technology used and contracted between the parties, i.e., to see whether the software which is being used by one party is in consonance with the privacy policies of the country.
The article envisaged the concept of a technology agreement with further advancement of its emerging need in the modern era, its necessary requirements, and essentials that altogether constitute a technology contract. Lastly, the article ended while taking a glance at the role of a technology lawyer.