What is an IT Contract?

By definition, an IT contract refers to any type of third-party contract under which an IT system is leased, licensed, supplied, supported, or maintained. It is a legal document that serves as a provision of information and any communications technology services and maintenance technology services to the company or to any of its subsidiaries. An IT contract can also be any type of contract that has at least some sort of connection to the world of information technology. An IT contract is signed whenever someone orders goods over the internet, sells their time as a web developer, or whenever they license someone else to use their software.

Who are IT contractors?

IT contractors refer to companies that can provide skills to clients on a business-to-business contract basis rather than becoming traditional employees. They can either work directly for the end client (which creates the need for a direct contract) or they can also find assignments via recruitment agencies. IT contracts run for typically 6 months but can be more or less. Since contract renewals can also be an option, many IT contractors end up working with the same client for several years.

Different Types of IT Contracts

As stated earlier, IT Contracts can be any type of contract that has some connection to the world of information technology. When the situation is right, many typical offline contracts can be IT contracts even if they are simply accepted online. Here are some types of IT Contracts:

Elements of an Effective IT Contract

While many different aspects of IT contracts are very similar to any other ordinary contracts, there may still be a number of other elements that can require extra care and skill to ensure that they do not harm your organization in the long run. With that being said, here are the elements or the contents that you should keep an eye for in an IT contract:

Statement of the work. This element of the IT Contract defines the scope of the contract. It is a detailed explanation of the work that is to be done as well as the conditions that have to be met as part of the deal. This element is usually written early in the contract. An example of this is a statement of work for a new computer server which includes the contract scope, which usually includes when the new equipment is to be delivered and installed.Contract Duration. It should also be clear on how long the parties involved plan to be working together. The start and end dates must be clearly indicated in the contract. Rollover clauses may be included, which will automatically renew said contract unless a party specifically requests to end it on a certain date.Item Specifications. When the transaction involves an item purchase or build, this element is included. Specifications refer to the technical requirements of the product that is being procured. There are usually three types of specifications that can be seen in contracts. Design specifications define the problem to be solved or the requirements that the product must meet. Functional specifications outline what the product must be able to perform. Performance specifications include information about the product’s needed level of performance.Costs. This element needs to be included in the contract so that both parties know what they’re paying and what they’ll get in return. Breakdown of the costs may include having a fixed fee for everything, a base fee so that support is guaranteed, a fixed number of hours of support for set fees, and flat fees.Warranty. This element is also included when a transaction involves tangible products. It can be classified into two types: implied or expressed. As its name states, an implied warranty is generally assumed when acquiring products or services. An expressed warranty refers to the type of warranty that is clearly stated in the contract, and for this reason, it is usually stronger than an implied warranty.Hardware. Make sure that you understand what kind of hardware is covered in the contract. A written list that is agreed upon by the parties involved may be needed. Restrictions may also be put in place, such as only using the equipment that the backer has provided. Caveats can also be included, such as not being able to use equipment that is older than a specified age.Software. The general gist of this element is that you would want to deal with the suppliers of the specialist software packages for full support. You should also be able to consider and understand the software that you are going to use and want the contract to cover. You should also consider what software is running on your servers if you have one. This includes the type of server operating systems, security software, security databases, client management software, and database packages. Finally, you should also be aware of the kind of software that you have installed in your PCs and laptops such as the operating system, security software, and various word processing applications.Contract Termination. In an IT procurement contract, this clause is included to protect the buyer’s interests. It usually states that the buyer can terminate the contract at any given time. A contract termination section should also state what rights and responsibilities will continue even if the contract is already terminated such as the duty to protect any form of trade secrets that have been shared throughout the course of the contract.Methods of resolving disputes. Make sure that a clause in the contract exists stating what can happen whenever a problem arises or a complaint is lodged between the support provider and the client. It should cover various ways on how to file and lodge any complaints, as well as ways on how to handle any disputes that cannot be resolved (going to arbitration).

What Not to Include in an IT Contract

There are also items that should not be included in writing an IT Contract. Here are the following:

How to Prepare an Effective IT Contract

All kinds of IT contracts will be different. They usually depend on the kind of support that is required in the project. But generally speaking, all contracts should set out the main provider’s expectations of the organization as well as the responsibilities of the provider. An effective IT contract is needed in order to keep the parties involved throughout the duration of the contract. Here are the steps to follow and consider when you need to make one of your own:

1. Write a clear statement of the work.

In preparing the IT contract, a very clear description of the work to be done is needed. This is usually written in the beginning so that the parties involved immediately know what to expect. In this part, you need to establish your identity and what you are going to do for the potential client. Stating that you need to connect with the audience is not enough. You need to clearly state your responsibilities throughout the duration of the business relationship. The necessary names should also be indicated in this part of making the contract.

2. Indicate the start and end dates.

The next step to be taken would be indicating how long the parties involved should be working together. This can be done by outlining the project’s scope and the dates on when certain goals should be achieved. It is important to avoid being vague in this process, and a clear number and dates method should be used when talking about the timeframes of the project. Also, outline some milestones and deadlines here, and make sure that you are clear about when something should be due or when the deliverables should be provided, and its corresponding results or consequences if not done on time. A rollover clause can be included here too, which automatically renews the contract if certain terms are met.

3. Indicate the payment details.

In this step, it is important that the exact details on how payment is done should be included. It can be done upfront, or through a number of months until it is completed. The amount being charged is completely up to you. When a monthly payment method is being used, performance bonuses can be added for additional incentive and motivation. But it is important when using a monthly method to include an upfront payment, which is to be paid before the work or business relationship begins.

The IT contract should be able to specify who will serve as your key contact. This individual should be someone who holds a senior position, who is ideally the business owner. A key contact in an IT contract may also be referred to as the account manager. The responsibilities of a key contact include being responsible for providing the regular activity reporting, being the key contact in case any issues are being escalated, and being responsible for compliance with the support contacts.

5. Include clauses regarding confidentiality.

An essential step in making an effective IT contract is including terms about confidentiality, its respective clauses, or a non-disclosure agreement clause. Having a non-disclosure agreement included in the contract benefits all parties involved because it protects their trade secrets and any other shared personal information. Also agreeing to a non-compete clause means that no work with a client’s competitor is to be made within the duration of the contract.

6. Include the termination clause.

Writing a termination clause is also important in preparing the contract. This part states the things that need to be done should the client wish to terminate the service. Criteria should also be included should the contract be ended earlier than planned. This could be on a specific date. It should also state the things to do when the project is finished or the final payment is completed. As stated earlier, this section should also include the rights and responsibilities of both parties that should still continue even if the contract is already terminated or finished.


What is the difference between an IT contract employee and a consultant?

IT contract employees refer to individuals who are hired by consulting or staffing firms and then assigned to projects at companies that require assistance. When referring to independent consultants, these are the people who sell their own services to businesses or companies and bill them for the services being sold.

What are the responsibilities of someone working in IT support?

The responsibilities of someone working in IT support include maintaining the computer networks for all types of businesses, providing any form of technical support, and ensuring that the whole operations of the company continue to run smoothly. They are also responsible for maintaining and monitoring the company’s computer systems, as well as installing, configuring, and resolving any kinds of technical discrepancies as they emerge.

In a contract, what is the order of precedence section?

The order of precedence section of a contract establishes the order of documents should any conflict arise when having a look at the language of the individual documents. For example, when a software program is to be acquired by the buyer, he/she may be able to generate a request for proposal document, and the seller may prepare an appropriate response which then sets forth a procurement contract. The contract’s order of precedence provision may then state that the contract terms and conditions take precedence over the request for proposal document and that the buyer’s request for proposal will take precedence over the seller’s answer to the request.

If a deal is to be done between an IT support provider and a client or when a company needs to procure hardware, software, or services for their next big project, the managers then need to understand the importance of having an effective IT contract. Having a contract signed ensures the company’s confidence in the level of support that they will receive from the provider. And as said many times, it protects their interest should any dispute arise. Different examples of IT contracts can be found above this article if you need a reference to use for yourself.