The legal nature of software development agreements
Custom software development in Georgia is not regulated by a special statute — it is governed by the norms of the Civil Code on the contract for work and labour. Under the concept of Article 629, under a contract for work the contractor undertakes to perform the work provided for by the contract, while the customer is obliged to pay the contractor the agreed remuneration. In the software context this means: the developer produces a result, and the client provides compensation.
The question of ownership is also important. Where the work involves the making of an article and the contractor makes it from materials acquired by himself, he transfers to the customer ownership of the article made. Where a generic thing has been made, the rules of sale are applied. In other words, a software product created by a developer with his own resources passes into the customer's ownership in the manner established by law.
The same article resolves the question of cost estimates: the drawing up of a cost estimate connected with the work is not reimbursed unless otherwise provided by agreement. This means that a model based on counting time and materials is available only by contract — the law establishes a presumption of result-oriented payment.