Software Freelance Contract Red Flags in India: Understanding Liability, SLA, and Exit Clauses

Two software developers based in Pune — Arjun Mehta and his colleague Sneha Iyer — had been taking on freelance projects steadily for about two years. In early March 2025, they were approached by a mid-sized company operating out of Gomti Nagar, Lucknow, dealing in logistics software solutions. The client, associated with a firm named Prudent TechVentures, sent across a draft service contract that, on first reading, seemed fairly routine. But certain clauses stopped Arjun and Sneha cold.

The contract proposed a liability of three times the fees paid to them for any losses the client suffered due to software bugs. It also granted the client a 15-day termination notice window while denying the developers any right to exit for convenience. And the SLA section demanded bug fixes within four hours for critical issues, eight hours for standard issues, and twenty-four hours for minor ones — with no distinction between response time and actual fix time.

Arjun initially consulted a general civil lawyer in Pune, who reviewed the document but couldn't provide clear guidance on whether these clauses were enforceable or negotiable under Indian contract law. Feeling unsatisfied, Arjun reached out to Advocate Sudhir Rao. The specialised review identified three clauses that were either unconscionable under Section 23 of the Indian Contract Act, 1872, or commercially imbalanced in ways that created disproportionate risk for the developers. Specific counter-drafting suggestions were provided, the SLA was restructured to separate response obligations from resolution obligations, and the liability cap was brought in line with standard industry practice. The contract was renegotiated before signing, saving Arjun and Sneha from significant future exposure.

You can read about this case in detail at https://sudhirrao.com/software-freelance-contract-red-flags-liability-sla-exit-cla/