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Contracts and Computer Contracts with it's types complete assignment

What is An Agreement?

Every promise or set of promises forming the consideration for each other is an agreement. It is not bounded by the law.


A contract is a promise or set of promises that are legally enforceable and, if violated, allow the injured party access to legal remedies. A contract is an agreement that can be enforced in court.

A contract may be formed when two or more parties each promise to perform some act now or to retain in then future. These agreements are about of doing and not doing of something. The parties involved may be legal persons or organizations.

Requirements for Contract

There we have Four essential requirements for a contract which are explained below:

The Offer

The offer is the "why" of the contract. This section states what a party agrees to either do or not to do upon signing the contract. The offer must be clearly stated so that all parties understand what the expectations are.

e.g. A real estate contract will say that one party is buying the property from the other party.


Consideration is what one party will "pay" to complete the contract. Payment is a loose term when defining consideration in a contract, because what a party gets for signing the contract isn't always money.

Legal Intent

This requirement for a contract refers to the intention of each party. The contract terms must adhere to the laws and regulations in the state where the contract exists. If legal intent doesn't exist, the contract is not valid or legally binding.

e.g. An example of a contract that would not meet the legal intent requirement is if a person signs a contract to rob a bank. Robbing a bank is not a lawful action and thus the contract does not have legal intent

Competent Parties

Those signing the contract and entering into the contract agreement must be competent. This means that they are of legal age to sign a contract; they have the mental capacity to understand what they are signing.

Acceptance of Offer

Acceptance of the offer occurs when the parties sign the document, agreeing to the terms of the contract. Acceptance must be voluntary.

e.g. This means that a person who signs a contract when a gun is pointed directly at him is legally not able to accept the offer, because he is under duress.

Need of Contract

Contracts provide a description of responsibilities: Rather than suffer through the confusion of wondering what each party’s responsibilities are, you’re better to have everything in writing. This will help avoid  confusion or disagreement.

Contracts bind parties to their duties: It is incredibly disruptive if one party attempts to back out of an agreement. A contract will bind the parties to the previously defined description of duties eliminating this problem.

Contracts can establish a time frame for duties: If you need work performed and performed within a certain time frame a contract binds the party to that time frame. As a consultant, you might want to require the other party to provide adequate and timely access to key personnel, for example.

Contracts can secure payment: No one likes to be stiffed for work performed and a binding contract provides a written legal document establishing an agreement to be paid for services rendered.

Contracts provide recourse when the relationship falters: If the relationship between the contracted parties deteriorates, a contract outlines the previously agreed upon steps required for dissolving the relationship without punitive measures.

Computer Contracts

These are Principles & Precedents, which has a national and international focus, collates the breadth of information you need to negotiate and draft contracts for the sale, or acquisition, of computer products and computer-related services.

Covers the full range of contracts for buying, selling, leasing and licensing hardware, software and services, with legal analysis, sample clauses, and complete contracts to help you handle contracts for computer users and vendors, software development, maintenance and licensing arrangements.

Problems of Computer Contract

Computer contracts present special problems due to unique nature of computer technology. These problems are explained below:

Intangible Property

Intangible property, also known as incorporeal property, describes something which a person or corporation can have ownership of and can transfer ownership to another person or corporation, but has no physical substance, for example brand identity or knowledge/intellectual property.

Intellectual Property Rights / Law

Intellectual property rights are the rights given to persons over the creations of their minds. They usually give the creator an exclusive right over the use of his/her creation for a certain period of time. If a computer contract exists between the client and the organization then no one can violate the rights.

Failure of Systems

If the system fails and not meet with the requirement of the customer at run time then according to the contract we have to deal with that customer.

Computer Contract Assessment

What if the software contains bugs?

What if the computer / software goes down in the middle of the wages run?

What if the client copies the programs and distributes the copies?

What if the program run too slowly to be of any practical use?

What if the hardware becomes obsolete and the manufacturer washes his hands of it? 

Types of Computer Contract

There we have certain types of computer contracts. Few of them are explained below:

Cost-Plus Contracts:

Also called Time and Material Contract. Supplier agrees to undertake the development of the software in a fixed price contract manner but final payment is made on the basis of actual costs incurred with labor charges as contract hire. The cost-plus contract pays the builder for direct costs and indirect, or overhead, costs. All expenses must be supported by documentation of the contractor’s spending.

Outsourcing Contracts

It is Sometimes known as Facilities Management. It monitors competencies of supplier. Outsourcing Contract is an agreement between a business and a service provider in which the service provider promises to provide necessary services. Such services include data processing and information management, using its own staff and equipment, and usually at its own facilities.

There we have major points to be discussed which are:

How is performance to be monitored and managed?

What if performance is unsatisfactory?

Which assets / staff being transferred?

Contingency planning and disaster recovery

IP rights, Duration of the agreement, and Termination provisions.

License Agreements

A licensing agreement is a written agreement by which the owner of a property gives another party

permission to use that property under specified parameters. 

Desktop license: It contains a single copy of license.

Server license: It contains multiple copies of license per server.

Site license: It contains multiple copies of license on a specific location

Web Hosting Contracts

The Web Hosting Agreement is an agreement between a web host company and the user/client whereby the web host company agrees to provide web hosting and related services such as email capability in relation to the site, domain name registration, and other services as determined by web host company. The scope of hosting services varies greatly.

Some hosting companies even provide server space for file maintenance and other web services. The web host generally guarantees an up-time to all its web servers. If up-time for the client’s web server falls below a minimum up-time, web host will be responsible to credit the client. Providing security to the end user data is also a part of the contract. User support and system redundancy is checked. Also, server response time and throughput capacity Is also mentioned in the contract.

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