You signed a contract for a PLN 50,000 POC with a penalty of PLN 5,000 for each day of delay — copied from a PLN 2 million contract. After two weeks of delay, your penalty exceeds your fee. After a month — you owe more than you earned. Sound far-fetched? This is literally the clause we see in every third contract template sent by corporate customers.
The problem is not the other party’s bad faith. It lies in the mechanics: the scope and price decrease tenfold, while the liability clauses remain in the version designed for a production system. If you run an IT company, SaaS business, or software house and carry out pilots for large organizations, this article will show you which clauses to negotiate, how to draft them, and why the customer should agree.
Key concepts before we begin
Before we move on to specific clauses, let’s define a few terms that appear in every POC agreement (proof of concept — a test project intended to verify a technical or business hypothesis):
| Concept | What it means for your company |
|---|---|
| Contractual penalty | An amount you pay for breaching a non-monetary obligation (e.g. delay or breach of confidentiality) — regardless of whether the customer suffered any loss |
| Liability cap | The upper limit of your financial liability — expressed as a specific amount or a percentage of your fee |
| Reduction of a penalty (Article 484 § 2 of the Civil Code) | The court’s power to reduce a grossly excessive penalty — e.g. when the penalty is several times higher than the fee |
| Indemnification (indemnity clause) | An obligation to cover costs and losses arising from third-party claims — most commonly copyright infringement claims |
| Claims handling procedure | A set of rules specifying who takes control of the defense, who provides notice of a claim, and who decides whether to settle |
Why clauses from an implementation agreement are unsuitable for a POC
Contract templates used by large customers are designed for contracts worth hundreds of thousands or millions of zlotys. They cover months-long implementations, data migrations, and integrations with production systems. Penalties and liability caps are calibrated to that scale.
When the same template is “trimmed" for a pilot worth tens of thousands of zlotys, the scope of work decreases, but the penalty mechanism remains unchanged. The result: a test project creates risk disproportionate to the fee.
The three most common problems in POC agreements submitted to us for review are:
- Fixed penalties for each day of delay — carried over from a contract worth many times more. After a dozen or so days of delay, the penalty exceeds the entire fee, and after a month it amounts to several times the fee.
- Unlimited IP liability — without a claims handling procedure. The customer enters into a settlement with a licensor without notifying the contractor and then charges the contractor the full cost.
- Failure to specify the test nature of the work — the agreement does not state that a negative outcome is a valid result of the POC. This opens the door to allegations of improper performance.
Public-sector data confirms that even in major IT contracts, liability caps range from 40–100% of the contractor’s fee. For example, the KSAP template agreement for an ERP system implementation sets the liability cap at 100% of the net implementation fee. In National Appeals Chamber ruling KIO 3063/24, the aggregate cap on contractual penalties was set at 40% of the maximum fee. If major public contracts apply such caps, POC agreements should include them all the more.
Contact us — send us your POC agreement template, and we will identify which clauses should be changed and explain how to justify those changes to the customer.
Contractual penalties in a POC agreement — how to turn undefined risk into quantifiable risk
The problem: a fixed penalty copied from a large contract
A typical template: a penalty of PLN 5,000 for each day of delay where the fee for the POC is PLN 50,000. Here is the calculation:
| Days of delay | Total penalty | Penalty as a percentage of the fee |
|---|---|---|
| 10 | PLN 50,000 | 100% |
| 20 | PLN 100,000 | 200% |
| 30 | PLN 150,000 | 300% |
Delays of 2–3 weeks are not uncommon in a POC — that is the nature of exploratory work. A penalty amounting to 200–300% of the fee for a project that caused no production loss is grossly excessive.
What the law says
Article 484 § 2 of the Civil Code gives courts the power to reduce a grossly excessive penalty. The court examines, among other things, the relationship between the penalty and the actual loss, the value of the principal obligation, and the duration and nature of the breach. In judgment SA I AGa 130/23 (2024), the court reduced the penalty to one fifth of the amount claimed after examining the relationship between the penalty and the value of the entire obligation.
The takeaway for the customer: a harsh clause does not provide certainty — it creates a dispute. Instead of protection, the customer gets months of litigation and an unpredictable outcome.
How to negotiate — a specific alternative proposal
Instead of fighting to remove the penalty, propose changing the mechanism:
| Element | Customer’s template | Your alternative proposal |
|---|---|---|
| Daily rate | PLN 5,000 (fixed amount) | 0.5% of the net fee per day (percentage-based) |
| Aggregate penalty cap | None | 20% of the net fee |
| Basis of calculation | For each day of delay | For each day of delay — unchanged |
With a fee of PLN 50,000, the daily rate is PLN 250 and the aggregate cap is PLN 10,000. The penalty still encourages timely performance but does not create risk exceeding the value of the project.
A typical negotiating arrangement: you remove the fixed penalty, increase the percentage rate (e.g. from 0.2% to 0.5% per day), and raise the aggregate cap (e.g. from 10% to 20%). The customer gets a higher daily rate — while you get quantifiable risk.
The recommendations of the President of the Public Procurement Office support this logic: contractual penalties should be tailored to actual needs and risks, and before signing an agreement, the parties are advised to calculate the potential amount of penalties under realistic scenarios.
IP liability in a POC — a procedure that protects both parties
The problem: unlimited liability without a procedure
Corporate (and public-sector) templates contain indemnity clauses that shift the full financial burden of third-party claims for copyright infringement to the contractor. An analysis of public-sector templates (URPL, NIW, Gov.pl, NAWA, NASK) reveals a common pattern:
- The contractor assumes full liability for infringement of IP rights
- The contractor must reimburse all amounts — damages, court costs, and legal representation costs
- The clause remains in force after termination of the agreement
- There is no claims handling procedure — the customer may settle without the contractor’s knowledge
In the context of a POC, this risk is particularly severe. A startup delivers a pilot containing an open-source component. The customer receives a demand from a licensor, settles without notifying the contractor, and then charges the contractor the full cost. The contractor was unaware of the claim, did not control the defense, and could not propose an alternative component.
How to structure it — a five-part claims handling procedure
This does not limit liability — it structures it. That is how it should be presented during negotiations.
| Procedure element | What it governs | Why the customer should agree |
|---|---|---|
| 1. Written notice | The customer notifies the contractor of a claim within an agreed period | Without notice, the contractor cannot mount a defense |
| 2. Right to take control of the defense | The contractor may take control of the dispute | The contractor knows the technology better — and can conduct the defense more effectively |
| 3. Duty to cooperate | The customer cooperates with the contractor in the proceedings | Without cooperation, the defense will be ineffective |
| 4. No unilateral settlements | The customer may not settle without the contractor’s consent | This prevents settlements on terms unfavorable to both parties |
| 5. Right to remedy | The contractor may modify the component, obtain a license, or replace the relevant element | This resolves the problem instead of generating litigation costs |
The customer does not lose protection — it gains a more efficient enforcement mechanism. A contractor familiar with the technology can conduct the defense more effectively than the customer’s legal department.
Open source in a POC — the hidden licensing risk
The test nature of the project does not protect against the consequences of violating an open-source license. An infringement during the pilot phase is treated in the same way as one occurring during the production phase.
| License | Main risk in a POC | Contractor’s obligation |
|---|---|---|
| GPL | “Contamination" of proprietary code — the obligation to disclose the source code of the entire application; conflict with the transfer of exclusive rights to the customer | A list of GPL components + an analysis of whether they are combined with closed-source code |
| MIT | Infringement of moral rights due to a lack of attribution (author information) | Include a copy of the license and information about the author with every distribution |
| Apache 2.0 | Loss of the right to use the software if the NOTICE file is omitted; patent risk | Include the NOTICE file; provide information about the author, license, and modifications |
Gov.pl model clauses require the contractor to provide the customer with a list of the open-source software used, together with its license terms — no later than when the product is delivered for acceptance. POC agreements usually contain no such provisions. They are worth adding — they protect both parties.
General liability cap and the test nature of a POC
A cap linked to the fee
Good contracting practice in the IT industry calls for a liability cap defined as a percentage or multiple of the fee. A cap of 200% of the fee is rarely a problem for the customer, while for the contractor it marks the difference between quantifiable and undefined risk.
The cap structure should be differentiated:
- Categories subject to the cap — delays, operational errors, failure to meet SLA parameters
- Categories excluded from the cap — infringement of IP rights resulting from defects in the product’s legal title, gross breaches of confidentiality, and losses caused intentionally (Article 473 § 2 of the Civil Code — liability for intentional misconduct cannot be excluded)
- Exclusion of liability for lost profits — a standard negotiating point in IT agreements
This structure does not weaken the customer’s position — it organizes the allocation of risk and allows both parties to price their obligations.
The test nature of the work — state it explicitly
A POC is exploratory by nature. A negative outcome — a finding that a given technology does not meet the requirements — is a valid result under the agreement. If the agreement does not specify this, the customer may argue that a negative outcome amounts to improper performance.
What to include in the agreement:
- The purpose of the agreement is to verify a technical/business hypothesis, not to deliver a finished production solution
- A negative outcome (confirmation that the hypothesis does not hold) constitutes proper performance of the agreement
- A report presenting the results — whether positive or negative — is the final deliverable concluding the project
This provision also matters for the legal classification of the agreement. A POC may be treated as a contract for a specific work (where its subject is a specific result — e.g. a report or prototype) or as a best-efforts contract (where its subject is the performance of a study). Defining the result precisely protects against disputes over the nature of the obligation.
Grounds for excluding liability
A POC agreement should address circumstances that exclude or limit the contractor’s liability:
- Force majeure
- The customer’s failure to cooperate (e.g. failure to provide the test environment, access credentials, or data)
- Zero-day vulnerabilities for which no patch is available
- Breaches by third parties for whom the contractor is not responsible
The exploratory nature of POC work increases the likelihood of unforeseen circumstances. If these grounds are omitted from the agreement, the entire risk is shifted to the contractor.
How to negotiate the customer’s template — a playbook for CEOs
The rule: accompany every objection with an alternative proposal
“We do not agree" ends the discussion. “We do not agree; instead, we propose X" — keeps it moving forward. The customer’s lawyers respond more quickly when they have 2 specific issues and alternative proposals to decide on, rather than 15 general objections.
How to structure your response to the template
| Step | What you do | Result |
|---|---|---|
| 1 | Begin by accepting most of the terms | You build trust — the customer sees that you are not challenging the agreement as a whole |
| 2 | Number the disputed points (no more than 3–5), providing reasons and an alternative proposal for each | The customer’s lawyers can quickly assess the scope of the changes |
| 3 | Separate housekeeping changes from substantive ones | The customer sees that you are not multiplying objections |
| 4 | Once the list of disputed points is down to 2–3, propose a meeting (call/video) | At this stage, exchanging documents costs several days per round; a conversation can resolve the matter in an hour |
Checklist before signing a POC agreement
Before signing, check:
- Are contractual penalties calculated as a percentage of the fee rather than as fixed amounts?
- Is there an aggregate cap on penalties (e.g. 10–20% of the fee)?
- Does the IP liability clause contain a claims handling procedure (notice, right to defend, no unilateral settlement, right to remedy)?
- Does the agreement contain a general liability cap linked to the fee?
- Does the agreement specify the test nature of the work and accept a negative outcome as a valid result?
- Have you reviewed all appendices in full (anti-corruption policies, supplier codes of conduct, security appendices)?
- Does the agreement contain a list of open-source components together with their license terms?
- Does it include grounds for excluding liability (force majeure, the customer’s failure to cooperate)?
An appendix that no one has read may contain obligations more onerous than the main body of the agreement. Anti-corruption policies, supplier codes of conduct, security appendices — each of them may introduce additional obligations and penalties. Review them before signing.
How we can help you with a POC agreement
Negotiating clauses in a POC agreement requires a few hours of a lawyer’s time. The cost if the risk materializes may be many times the project fee. The comparison speaks for itself.
We work with founders, CTOs, and Heads of Sales at IT and SaaS companies that receive contract templates from corporate customers. We know these templates — we know what to change and how to justify it so that the other party agrees.
Our support includes:
- Contract template review — we identify clauses that create disproportionate risk and prepare reasoned alternative proposals
- Negotiations with the customer — we support you in negotiations or conduct them directly, ensuring that the changes are accepted
- Response templates — we develop internal templates for comments on common clauses so that future negotiations take less time
- Appendix audit — we review policies, supplier codes of conduct, and security appendices for hidden obligations
- Open-source clauses — we prepare provisions governing liability for OSS components during the pilot phase
We do not create documents “just in case" — we design rules where risk actually arises.
Write to us — send us your POC agreement template, and we will tell you which clauses should be changed and how to justify those changes to the customer.
Summary — two clauses that determine your risk
A POC agreement is not a smaller version of an implementation agreement. It is a distinct type of project — with a different scale of risk, a different type of work, and a different expected result. Liability and contractual penalty clauses should reflect this.
Two mechanisms determine whether your risk is quantifiable:
- Contractual penalties — replace fixed amounts with percentages, introduce an aggregate cap, and run the numbers before signing
- IP liability — add a claims handling procedure: notice, right to defend, no unilateral settlement, right to remedy
You do not have to change the underlying principles — you only need to put the mechanics in order. The customer does not lose protection. You gain risk that you can quantify and factor into the project price.
If you need support reviewing a POC agreement or negotiating with the customer — write to us.
Frequently asked questions
Can I negotiate a large customer’s contract template, or do I have to accept it in full?
You can negotiate it. Even corporate and public-sector templates can be modified — provided your proposals are specific and well justified. Begin your response by accepting most of the terms, then focus on 2–5 points and provide alternative proposals. The customer is more likely to accept a change to the mechanism (e.g. replacing a fixed penalty with a percentage-based one) than the complete removal of a clause.
What percentage of the fee is a reasonable liability cap in a POC agreement?
A cap of around 200% of the contract fee is acceptable to most customers and gives the contractor quantifiable risk. In public-sector IT contracts, caps range from 40–100% of the fee — they should not be higher for a POC, where the scale of risk is lower. Remember to exclude intentional losses (Article 473 § 2 of the Civil Code) and IP infringements resulting from defects in the product’s legal title from the cap.
What should I do if the customer categorically refuses to change the contractual penalty clause?
Propose changing the mechanism instead of removing the clause: increase the percentage rate (e.g. from 0.2% to 0.5% per day) in exchange for introducing an aggregate cap (e.g. 20% of the fee). Show the customer a calculation — a penalty many times higher than the fee may be reduced by a court (Article 484 § 2 of the Civil Code), which means that a harsh clause does not provide certainty, only a costly dispute.
Does a negative POC outcome mean that I failed to perform the agreement and may face penalties?
No — provided the agreement explicitly defines the test nature of the work and accepts a negative outcome as a valid result. If this provision is missing, the customer may allege improper performance. You should therefore state in the agreement that its purpose is to verify a hypothesis and that a report presenting the results, whether positive or negative, is the deliverable concluding the project.
Do courts really reduce contractual penalties — and how much does it cost?
Yes. Article 484 § 2 of the Civil Code gives courts the power to reduce a grossly excessive penalty. In judgment SA I AGa 130/23 (2024), the court reduced the penalty to one fifth of the amount claimed. The problem is that proceedings take months or years, and both parties incur litigation costs. It is therefore better to negotiate a proportionate penalty when drafting the agreement than to rely on the court reducing it later.
How should I discuss changes to the agreement without damaging the business relationship at the outset?
Open the negotiations by saying, “we accept the vast majority of the terms," and present a short list of points with alternative proposals. Separate housekeeping changes from substantive ones. Once the list of disputed issues is down to 2–3, propose a conversation instead of another round of document exchanges. At this stage, written exchanges cost several days per round; a conversation can resolve the matter in an hour.