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Information Technology Agreements

Legal agreements in the information technology area cover contracts that deal with the following issues:

IT Agreements for the purchase or lease of Hardware

Hardware is the mechanical equipment associated with data processing. It is sometimes simply referred to as “equipment”. Hardware comprises a central processing unit which interacts with input devices, storage devices and output devices.

Common input devices are keyboards, mouses, scanners, cameras and joysticks; output devices include visual display units and printers.

How is the term ‘Software’ used in IT Agreements?

The term “software” is generally used to describe a computer program. In its narrow sense, software is not a tangible product but rather an intangible series of instructions to the computer held on physical media such as in the form of silicon chips, magnetic tapes or disks.
Broadly speaking, there are two types of software “system software” and “application software”.

  1. System software is generally used to describe a silicon chip developed by the manufacturer which is permanently resident in the central processing unit.

    System software should be distinguished from the “firmware”, which is the read-only memory software controlling a computer between the time it is turned on and the time the primary operating system takes control of the machine.

  2. Applications software refers to programs supplied independently which enable the computer to perform specific and varied tasks.
    With all software, a distinction must be made between source code and object code.
    Source code is the language, not far removed from English, in which a program is initially written, while object code is essentially a series of electrical impulses and is the “language” which the computer understands.
  3. Software is converted from source code to object code by means of a compiler program. Clear as mud?


    The term “multimedia” loosely describes a product which uses more than one medium. It may incorporate text, graphics, animation, audio and video and is frequently interactive.


    The internet is essentially a decentralised, self-maintained telecommunications network made up of interlinking small networks.
    Associated with the internet is the World Wide Web, a forum consisting of billions of individual sites.

    Cloud computing IT Contracts

    Cloud computing involves using and storing data and programs on the internet in the form of a service, rather than via the computer’s own hard drive. The “cloud” simply refers to the internet and the infrastructure which underpins it.

    Services typically delivered via the cloud include Software as a Service (SaaS) and Infrastructure as a Service (IaaS). Services may include web hosting, data storage and webmail.

    The primary attraction of cloud computing is that it enables users to acquire services as required and relatively free from concerns about the underpinning technology. It enables users to minimise their investment in applications and infrastructure and gives easy access to the latest technology.
    Cloud computing has assumed considerable significance in the context of IT contracts, particularly out-sourcing contracts.

    The challenge posed to IT contract drafting and negotiation is that the acquisition of cloud computing services may involve numerous service providers, not all of which will have a direct contractual relationship with the end user. This typically needs to be addressed through a robust subcontracting regime.
    Various legal issues potentially arise out of storage in the cloud.

    Most typically, there are:

    1. security
    2. transborder data flow and
    3. privacy-related risks.

    To some extent, these risks should not require the user to lower expectations of data security or to assume greater risk, but, typically, service providers will express concern that they have less control over the choice of subcontractor or the destination of data as compared to non-cloud storage methods.
    The issue has been the subject of review by various levels of government around Australia. For the most part, Australian government bodies support the adoption of cloud technology where value for money can be demonstrated, but with the qualification that normal security and other privacy standards must not be compromised. We know that this is definitely how the Commonwealth sees things.

    So what is an IT contract then?

    An IT contract is a contract for the supply of hardware or software or for services provided in connection with the selection, operation or use of hardware or software.
    Contracts of this nature may extend to multimedia, the development of web sites and the delivery of software or services by means of the internet.
    If you need an IT contract please get in touch!

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