Agile contracts vs. classic contracts! What makes the agile method so special – a method where everything has to be planned?

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Let’s take a look back at quite an enlightening judgment in terms of contractual strategy, made by the Paris Commercial Court on October 7, 2020 and upheld by the Paris Court of Appeal on January 06, 2023, concerning IT contracts based on the “Agile method”.

What’s it all about?

The Agile method has come to rival the traditional approach to project and contract management. It describes itself as a more flexible and tailored method, which allows projects to evolve and become more precise over time, by placing the customer’s needs at the center of the priorities of a project with development entrusted to a service provider. With its rather specific processes and vocabulary, it is particularly popular with IT development projects.

What happened?

In this case, Oopet, a company involved in the pet sector, had approved a quotation from Dual, an IT service provider for mobile application development, in accordance with the principles of the Agile method and without the setting out of prior specifications.

After numerous complaints, in particular about the slow delivery of mobile applications and the numerous faults, two mobile applications were delivered and tested (Oopet nevertheless chose to entrust the development of the Android applications to a new service provider). After noticing further faults and refusing a quote from Dual to repair the bugs and the necessary developments, Oopet asked Dual to refund the sums paid for its IT services.

 What did the judges decide?

In the end, the court found that Dual had satisfied its contractual obligations. In fact, the obligation to carry out functional testing that Oopet had requested of Dual was not included in the quotation, and Oopet, which had not precisely expressed its needs and objectives initially, was consequently not in a position to send requests that could ultimately be qualified as additional to its initial requests, in other words, not included within the scope of the service.

Furthermore, the court pointed out that, since the two companies chose to follow the principles of the agile method without drawing up specifications, the difficulties encountered in “agreeing on the services”, and the faults noted “do not deviate from the norm for this type of development in the absence of specifications and are not abnormal in nature”. In other words, it would not be enough to note faults and difficulties to be able to claim a breach of contract and have a service recognized as a basic part of the contractual requirements. The customer would have to have clearly expressed its needs, or ideally provided for it in a specification. Since the correction of faults in Dual’s applications had not been provided for, the judges refused to refund the sums paid by Oopet to Dual for performance of the Agile contract.

A judgment of the Paris Court of Appeal on January 6, 2023 confirms the Commercial Court’s decision (Paris Court of Appeal, Pôle 5 – Ch. 11, ruling of January 6, 2023).

Key points to remember: Although the Agile method requires a great deal of exchange between the parties involved, the customer still needs to define its requirements precisely from the start, and during the project’s life. It must be able to express any reservations it may have, in the knowledge that each set of signed minutes amounts to acceptance of part of the deliverable. It is the customer’s responsibility to contractually define its requirements and to check that the project’s progress is in line with the objectives it has set. Exchanges linked to the Agile method and the observation of faults (slowness) will not demonstrate an inadequacy between the project and its realization. We still too often see:

# IT development projects (with or without the Agile method) without clear definition of requirements, and therefore questionable in terms of expected results and deliverables (functionalities)

# or clients ask the service provider to write the specifications (often a technical and time-consuming task), with the result that the document is often more in line with what the service provider can offer than with what the client actually wants.

In a judgment dated April 8, 2022, the Strasbourg court also reminded us that clients must check that a software package meets their needs, and that any complaints they may have after 10 years of use are inadmissible!

While the IT service provider has a strong duty to advise, as an expert in the field, the client must also be careful, and cannot avoid its own obligations on the grounds that it is not a technical expert… moreover, it can be expensive for the company in terms of budgets allocated to developments, and above all in commercial terms, since any faults can have a direct impact on business and brand image.

Charlotte URMAN – Trademark Attorney & Marion LUCATTINI – IP Lawyer & Diana CUNHA LOPES – IP Lawyer