Contract Milestones

Many agreements are structured so that the developer is paid a predetermined sum by the client at specific milestones, such as delivery of the design specification, the Alpha version, the Beta version, and the final version. The contract defines deliverables with specific, objective criteria on how the milestone is determined to have been met. Nonetheless, as often as not, some disagreement about this occurs between the parties, such as whether a version submitted as Beta by the developer is accepted as Beta by the client.

Obviously, the definition of the deliverables is an important section of the contract. An unfortunate but unavoidable situation for the developer is that the client decides when the milestone has been reached. The unscrupulous client may manipulate the process and improve cashflow by delaying approvals. The developer s best legal protection is the language of the contract. The truth is that the developer has no real recourse against slow payment because legal action itself is slow and therefore more appropriate in collecting when payment is refused. The client who makes a custom of such chicanery may have a hard time attracting quality developers to future projects.

Delays are not necessarily foul play, however. More often, they are simple realities of organizational life. Administrative mix-ups, lost invoices, and corporate policies regarding payment cycles all can contribute to late payment. For the small developer facing financial hardships, understandable excuses offer small comfort. The time to ask about the approval process, both in terms...