ldy26098
/
BMAD-METHOD
mirror of https://github.com/bmad-code-org/BMAD-METHOD.git
1
0
Fork 0
Code Packages Projects Releases Wiki Activity
BMAD-METHOD/docs/learn/module-03-alignment-signoff/lesson-04-external-contract...

5.1 KiB
Raw Blame History

Module 03: Alignment & Signoff

Lesson 4: External Contracts

Formalizing alignment with external contracts

Time: 15 minutes

When You Need External Contracts

External contracts are for:

  • Consultant → Client: You're proposing a solution to a client
  • Business Owner → Suppliers: You're hiring consultants/suppliers to build software

These contracts:

  • Formalize agreements between separate parties
  • Include legal protections (jurisdiction, governing law)
  • Cover payment terms, IP ownership, confidentiality
  • Protect both parties legally

Two Types of External Contracts

1. Project Contract

For: Consultant → Client
When: You're a consultant proposing to a client
Perspective: You're the contractor/service provider

Key Focus:

  • Protecting your work and payment
  • Clear scope boundaries
  • Fair payment terms (upfront payment for fixed-price)
  • IP ownership transfer upon payment

2. Service Agreement

For: Business Owner → Suppliers
When: You're hiring consultants/suppliers to build software
Perspective: You're the client/owner

Key Focus:

  • Protecting your investment
  • Ensuring deliverables meet requirements
  • Clear payment terms and milestones
  • IP ownership of deliverables

Business Models

Before building the contract, determine the business model:

Fixed-Price Project

  • Set price for defined scope
  • Not-to-exceed clause applies
  • Upfront payment recommended (50-100%)
  • Clear deliverables and scope boundaries

Hourly/Time-Based

  • Pay for actual time worked
  • Hourly rate and time tracking
  • Optional not-to-exceed cap
  • Flexible scope

Retainer

  • Monthly commitment
  • Minimum hours per month
  • Availability expectations
  • Overage hourly rate
  • Hour rollover policies

Hybrid

  • Combination of models
  • Multiple payment structures

Key Contract Sections

Saga will guide you through building:

1. Business Model

  • Explains selected payment structure
  • Sets foundation for all payment terms
  • Clarifies expectations upfront

2. Scope of Work

  • IN Scope: What's explicitly included
  • OUT of Scope: What's explicitly NOT included
  • Deliverables: What will be delivered
  • The Path Forward: How work will be done

Critical for fixed-price contracts - Clear scope prevents disputes.

3. Payment Terms

Adapted to business model:

Fixed-Price:

  • Upfront payment recommended (50-100% is fair)
  • Milestone payments tied to deliverables
  • Payment on completion (risky, not recommended)

Hourly:

  • Billing frequency (weekly, bi-weekly, monthly)
  • Payment terms (Net 15, Net 30)
  • Time tracking requirements

Retainer:

  • Monthly retainer amount
  • Minimum hours included
  • Overage billing
  • Hour rollover policy

4. Availability (Retainer Only)

  • Business hours
  • Response time expectations
  • Meeting availability
  • Urgent request policies

5. Not-to-Exceed Clause

Conditional based on business model:

  • Fixed-Price: Required (equals project price)
  • Hourly: Optional cap if desired
  • Retainer: Not applicable (monthly cap exists)

Purpose:

  • Prevents scope creep
  • Protects budget
  • Requires change orders for additional work

6. Confidentiality Clause

  • What information is protected
  • Duration of confidentiality (typically 2-5 years)
  • Exceptions (public info, required by law)
  • Mutual protection

7. Legal Framework

  • Governing Law/Jurisdiction: Which laws apply
  • Contract Language: Language of the contract
  • Work Initiation: When work can begin
  • Dispute Resolution: How conflicts are handled

8. Other Important Sections

  • Change Orders: How scope changes are handled
  • Termination: How to exit the contract
  • Intellectual Property: Who owns what
  • Timeline: Delivery dates and milestones

Best Practices

Saga will provide guidance on:

For Consultants/Service Providers

  • Request upfront deposits (50%+ for fixed-price)
  • Define scope extremely clearly
  • Include change order process
  • Set not-to-exceed cap
  • Specify IP ownership transfer

For Clients/Business Owners

  • Review scope thoroughly
  • Understand payment terms
  • Know what's included/excluded
  • Understand change order process
  • Clarify IP ownership

Common Pitfalls to Avoid

  • Unclear scope definitions
  • Unfair payment terms
  • No change order process
  • Unclear IP ownership
  • No not-to-exceed cap (for fixed-price)

Goal: Simple, fair contracts that build long-term relationships.

After Contract is Finalized

Once contract is signed:

  • ✅ Alignment achieved
  • ✅ Commitment secured
  • ✅ Legal protection in place
  • ✅ Ready to proceed to Product Brief

Next: Module 04: Product Brief

Key Takeaway

External contracts formalize agreements between separate parties with legal protections. They ensure clarity, protect both parties, and secure commitment before starting work.

Next: Lesson 5: Internal Signoff Documents →

← Back to Module Overview

Part of Module 03: Alignment & Signoff