diff --git a/poetry/core/json/schemas/poetry-schema.json b/poetry/core/json/schemas/poetry-schema.json
index 10aff39e5..8397ba8ab 100644
--- a/poetry/core/json/schemas/poetry-schema.json
+++ b/poetry/core/json/schemas/poetry-schema.json
@@ -326,6 +326,10 @@
                     "items": {
                         "type": "string"
                     }
+                },
+                "develop": {
+                    "type": "boolean",
+                    "description": "Whether to install the dependency in development mode."
                 }
             }
         },
diff --git a/poetry/core/packages/package.py b/poetry/core/packages/package.py
index d5c822d25..28488ff69 100644
--- a/poetry/core/packages/package.py
+++ b/poetry/core/packages/package.py
@@ -299,6 +299,7 @@ def add_dependency(
                     rev=constraint.get("rev", None),
                     category=category,
                     optional=optional,
+                    develop=constraint.get("develop", True),
                 )
             elif "file" in constraint:
                 file_path = Path(constraint["file"])
diff --git a/poetry/core/packages/vcs_dependency.py b/poetry/core/packages/vcs_dependency.py
index 119afb64a..fd1ea14a8 100644
--- a/poetry/core/packages/vcs_dependency.py
+++ b/poetry/core/packages/vcs_dependency.py
@@ -18,6 +18,7 @@ def __init__(
         rev=None,
         category="main",
         optional=False,
+        develop=False,
     ):
         self._vcs = vcs
         self._source = source
@@ -29,6 +30,7 @@ def __init__(
         self._branch = branch
         self._tag = tag
         self._rev = rev
+        self._develop = develop
 
         super(VCSDependency, self).__init__(
             name, "*", category=category, optional=optional, allows_prereleases=True
@@ -54,6 +56,10 @@ def tag(self):
     def rev(self):
         return self._rev
 
+    @property
+    def develop(self):  # type: () -> bool
+        return self._develop
+
     @property
     def reference(self):  # type: () -> str
         return self._branch or self._tag or self._rev
diff --git a/tests/fixtures/complete.toml b/tests/fixtures/complete.toml
new file mode 100644
index 000000000..a894a89c6
--- /dev/null
+++ b/tests/fixtures/complete.toml
@@ -0,0 +1,45 @@
+[tool.poetry]
+name = "poetry"
+version = "0.5.0"
+description = "Python dependency management and packaging made easy."
+authors = [
+    "Sébastien Eustace <sebastien@eustace.io>"
+]
+license = "MIT"
+
+readme = "README.rst"
+
+homepage = "https://python-poetry.org/"
+repository = "https://github.com/python-poetry/poetry"
+documentation = "https://python-poetry.org/docs"
+
+keywords = ["packaging", "dependency", "poetry"]
+
+# Requirements
+[tool.poetry.dependencies]
+python = "~2.7 || ^3.2"  # Compatible python versions must be declared here
+toml = "^0.9"
+# Dependencies with extras
+requests = { version = "^2.13", extras = [ "security" ] }
+# Python specific dependencies with prereleases allowed
+pathlib2 = { version = "^2.2", python = "~2.7", allows-prereleases = true }
+# Git dependencies
+cleo = { git = "https://github.com/sdispater/cleo.git", branch = "master" }
+
+# Optional dependencies (extras)
+pendulum = { version = "^1.4", optional = true }
+
+[tool.poetry.extras]
+time = [ "pendulum" ]
+
+[tool.poetry.dev-dependencies]
+pytest = "^3.0"
+pytest-cov = "^2.4"
+
+[tool.poetry.scripts]
+my-script = 'my_package:main'
+
+
+[[tool.poetry.source]]
+name = "foo"
+url = "https://bar.com"
diff --git a/tests/fixtures/distributions/demo-0.1.0-py2.py3-none-any.whl b/tests/fixtures/distributions/demo-0.1.0-py2.py3-none-any.whl
new file mode 100644
index 000000000..9e0805593
Binary files /dev/null and b/tests/fixtures/distributions/demo-0.1.0-py2.py3-none-any.whl differ
diff --git a/tests/fixtures/distributions/demo-0.1.0.tar.gz b/tests/fixtures/distributions/demo-0.1.0.tar.gz
new file mode 100644
index 000000000..133b64421
Binary files /dev/null and b/tests/fixtures/distributions/demo-0.1.0.tar.gz differ
diff --git a/tests/fixtures/invalid_pyproject/pyproject.toml b/tests/fixtures/invalid_pyproject/pyproject.toml
new file mode 100644
index 000000000..06a8e27da
--- /dev/null
+++ b/tests/fixtures/invalid_pyproject/pyproject.toml
@@ -0,0 +1,11 @@
+[tool.poetry]
+name = "invalid"
+version = "1.0.0"
+authors = [
+    "Foo <foo@bar.com>"
+]
+license = "INVALID"
+
+[tool.poetry.dependencies]
+python = "*"
+pendulum = {"version" = "^2.0.5", allows-prereleases = true}
diff --git a/tests/fixtures/project_with_setup/my_package/__init__.py b/tests/fixtures/project_with_setup/my_package/__init__.py
new file mode 100644
index 000000000..e69de29bb
diff --git a/tests/fixtures/project_with_setup/setup.py b/tests/fixtures/project_with_setup/setup.py
new file mode 100644
index 000000000..71b3074d8
--- /dev/null
+++ b/tests/fixtures/project_with_setup/setup.py
@@ -0,0 +1,19 @@
+# -*- coding: utf-8 -*-
+
+from setuptools import setup
+
+
+kwargs = dict(
+    name="my-package",
+    license="MIT",
+    version="0.1.2",
+    description="Demo project.",
+    author="Sébastien Eustace",
+    author_email="sebastien@eustace.io",
+    url="https://github.com/demo/demo",
+    packages=["my_package"],
+    install_requires=["pendulum>=1.4.4", "cachy[msgpack]>=0.2.0"],
+)
+
+
+setup(**kwargs)
diff --git a/tests/fixtures/sample_project/README.rst b/tests/fixtures/sample_project/README.rst
new file mode 100644
index 000000000..f7fe15470
--- /dev/null
+++ b/tests/fixtures/sample_project/README.rst
@@ -0,0 +1,2 @@
+My Package
+==========
diff --git a/tests/fixtures/sample_project/pyproject.toml b/tests/fixtures/sample_project/pyproject.toml
new file mode 100644
index 000000000..a26d33087
--- /dev/null
+++ b/tests/fixtures/sample_project/pyproject.toml
@@ -0,0 +1,59 @@
+[tool.poetry]
+name = "my-package"
+version = "1.2.3"
+description = "Some description."
+authors = [
+    "Sébastien Eustace <sebastien@eustace.io>"
+]
+license = "MIT"
+
+readme = "README.rst"
+
+homepage = "https://python-poetry.org"
+repository = "https://github.com/python-poetry/poetry"
+documentation = "https://python-poetry.org/docs"
+
+keywords = ["packaging", "dependency", "poetry"]
+
+classifiers = [
+    "Topic :: Software Development :: Build Tools",
+    "Topic :: Software Development :: Libraries :: Python Modules"
+]
+
+# Requirements
+[tool.poetry.dependencies]
+python = "~2.7 || ^3.6"
+cleo = "^0.6"
+pendulum = { git = "https://github.com/sdispater/pendulum.git", branch = "2.0" }
+tomlkit = { git = "https://github.com/sdispater/tomlkit.git", rev = "3bff550", develop = false }
+requests = { version = "^2.18", optional = true, extras=[ "security" ] }
+pathlib2 = { version = "^2.2", python = "~2.7" }
+
+orator = { version = "^0.9", optional = true }
+
+# File dependency
+demo = { path = "../distributions/demo-0.1.0-py2.py3-none-any.whl" }
+
+# Dir dependency with setup.py
+my-package = { path = "../project_with_setup/" }
+
+# Dir dependency with pyproject.toml
+simple-project = { path = "../simple_project/" }
+
+# Dependency with markers
+functools32 = { version = "^3.2.3", markers = "python_version ~= '2.7' and sys_platform == 'win32' or python_version in '3.4 3.5'" }
+
+
+[tool.poetry.extras]
+db = [ "orator" ]
+
+[tool.poetry.dev-dependencies]
+pytest = "~3.4"
+
+
+[tool.poetry.scripts]
+my-script = "my_package:main"
+
+
+[tool.poetry.plugins."blogtool.parsers"]
+".rst" = "some_module::SomeClass"
diff --git a/tests/fixtures/simple_project/README.rst b/tests/fixtures/simple_project/README.rst
new file mode 100644
index 000000000..f7fe15470
--- /dev/null
+++ b/tests/fixtures/simple_project/README.rst
@@ -0,0 +1,2 @@
+My Package
+==========
diff --git a/tests/fixtures/simple_project/dist/simple-project-1.2.3.tar.gz b/tests/fixtures/simple_project/dist/simple-project-1.2.3.tar.gz
new file mode 100644
index 000000000..149aa9527
Binary files /dev/null and b/tests/fixtures/simple_project/dist/simple-project-1.2.3.tar.gz differ
diff --git a/tests/fixtures/simple_project/dist/simple_project-1.2.3-py2.py3-none-any.whl b/tests/fixtures/simple_project/dist/simple_project-1.2.3-py2.py3-none-any.whl
new file mode 100644
index 000000000..fcdeda313
Binary files /dev/null and b/tests/fixtures/simple_project/dist/simple_project-1.2.3-py2.py3-none-any.whl differ
diff --git a/tests/fixtures/simple_project/pyproject.toml b/tests/fixtures/simple_project/pyproject.toml
new file mode 100644
index 000000000..72d0c0bee
--- /dev/null
+++ b/tests/fixtures/simple_project/pyproject.toml
@@ -0,0 +1,25 @@
+[tool.poetry]
+name = "simple-project"
+version = "1.2.3"
+description = "Some description."
+authors = [
+    "Sébastien Eustace <sebastien@eustace.io>"
+]
+license = "MIT"
+
+readme = "README.rst"
+
+homepage = "https://python-poetry.org"
+repository = "https://github.com/python-poetry/poetry"
+documentation = "https://python-poetry.org/docs"
+
+keywords = ["packaging", "dependency", "poetry"]
+
+classifiers = [
+    "Topic :: Software Development :: Build Tools",
+    "Topic :: Software Development :: Libraries :: Python Modules"
+]
+
+# Requirements
+[tool.poetry.dependencies]
+python = "~2.7 || ^3.4"
diff --git a/tests/fixtures/simple_project/simple_project/__init__.py b/tests/fixtures/simple_project/simple_project/__init__.py
new file mode 100644
index 000000000..e69de29bb
diff --git a/tests/test_factory.py b/tests/test_factory.py
new file mode 100644
index 000000000..af15b627f
--- /dev/null
+++ b/tests/test_factory.py
@@ -0,0 +1,197 @@
+# -*- coding: utf-8 -*-
+from __future__ import absolute_import
+from __future__ import unicode_literals
+
+import pytest
+
+from poetry.core.factory import Factory
+from poetry.core.utils._compat import PY2
+from poetry.core.utils._compat import Path
+from poetry.core.utils.toml_file import TomlFile
+
+
+fixtures_dir = Path(__file__).parent / "fixtures"
+
+
+def test_create_poetry():
+    poetry = Factory().create_poetry(fixtures_dir / "sample_project")
+
+    package = poetry.package
+
+    assert package.name == "my-package"
+    assert package.version.text == "1.2.3"
+    assert package.description == "Some description."
+    assert package.authors == ["Sébastien Eustace <sebastien@eustace.io>"]
+    assert package.license.id == "MIT"
+    assert (
+        package.readme.relative_to(fixtures_dir).as_posix()
+        == "sample_project/README.rst"
+    )
+    assert package.homepage == "https://python-poetry.org"
+    assert package.repository_url == "https://github.com/python-poetry/poetry"
+    assert package.keywords == ["packaging", "dependency", "poetry"]
+
+    assert package.python_versions == "~2.7 || ^3.6"
+    assert str(package.python_constraint) == ">=2.7,<2.8 || >=3.6,<4.0"
+
+    dependencies = {}
+    for dep in package.requires:
+        dependencies[dep.name] = dep
+
+    cleo = dependencies["cleo"]
+    assert cleo.pretty_constraint == "^0.6"
+    assert not cleo.is_optional()
+
+    pendulum = dependencies["pendulum"]
+    assert pendulum.pretty_constraint == "branch 2.0"
+    assert pendulum.is_vcs()
+    assert pendulum.vcs == "git"
+    assert pendulum.branch == "2.0"
+    assert pendulum.source == "https://github.com/sdispater/pendulum.git"
+    assert pendulum.allows_prereleases()
+    assert pendulum.develop
+
+    tomlkit = dependencies["tomlkit"]
+    assert tomlkit.pretty_constraint == "rev 3bff550"
+    assert tomlkit.is_vcs()
+    assert tomlkit.vcs == "git"
+    assert tomlkit.rev == "3bff550"
+    assert tomlkit.source == "https://github.com/sdispater/tomlkit.git"
+    assert tomlkit.allows_prereleases()
+    assert not tomlkit.develop
+
+    requests = dependencies["requests"]
+    assert requests.pretty_constraint == "^2.18"
+    assert not requests.is_vcs()
+    assert not requests.allows_prereleases()
+    assert requests.is_optional()
+    assert requests.extras == ["security"]
+
+    pathlib2 = dependencies["pathlib2"]
+    assert pathlib2.pretty_constraint == "^2.2"
+    assert pathlib2.python_versions == "~2.7"
+    assert not pathlib2.is_optional()
+
+    demo = dependencies["demo"]
+    assert demo.is_file()
+    assert not demo.is_vcs()
+    assert demo.name == "demo"
+    assert demo.pretty_constraint == "*"
+
+    demo = dependencies["my-package"]
+    assert not demo.is_file()
+    assert demo.is_directory()
+    assert not demo.is_vcs()
+    assert demo.name == "my-package"
+    assert demo.pretty_constraint == "*"
+
+    simple_project = dependencies["simple-project"]
+    assert not simple_project.is_file()
+    assert simple_project.is_directory()
+    assert not simple_project.is_vcs()
+    assert simple_project.name == "simple-project"
+    assert simple_project.pretty_constraint == "*"
+
+    functools32 = dependencies["functools32"]
+    assert functools32.name == "functools32"
+    assert functools32.pretty_constraint == "^3.2.3"
+    assert (
+        str(functools32.marker)
+        == 'python_version ~= "2.7" and sys_platform == "win32" or python_version in "3.4 3.5"'
+    )
+
+    assert "db" in package.extras
+
+    classifiers = package.classifiers
+
+    assert classifiers == [
+        "Topic :: Software Development :: Build Tools",
+        "Topic :: Software Development :: Libraries :: Python Modules",
+    ]
+
+    assert package.all_classifiers == [
+        "License :: OSI Approved :: MIT License",
+        "Programming Language :: Python :: 2",
+        "Programming Language :: Python :: 2.7",
+        "Programming Language :: Python :: 3",
+        "Programming Language :: Python :: 3.6",
+        "Programming Language :: Python :: 3.7",
+        "Programming Language :: Python :: 3.8",
+        "Topic :: Software Development :: Build Tools",
+        "Topic :: Software Development :: Libraries :: Python Modules",
+    ]
+
+
+def test_create_poetry_with_packages_and_includes():
+    poetry = Factory().create_poetry(
+        fixtures_dir.parent / "masonry" / "builders" / "fixtures" / "with-include"
+    )
+
+    package = poetry.package
+
+    assert package.packages == [
+        {"include": "extra_dir/**/*.py"},
+        {"include": "extra_dir/**/*.py"},
+        {"include": "my_module.py"},
+        {"include": "package_with_include"},
+        {"include": "tests", "format": "sdist"},
+        {"include": "for_wheel_only", "format": ["wheel"]},
+        {"include": "src_package", "from": "src"},
+    ]
+
+    assert package.include == ["extra_dir/vcs_excluded.txt", "notes.txt"]
+
+
+def test_create_poetry_with_multi_constraints_dependency():
+    poetry = Factory().create_poetry(
+        fixtures_dir / "project_with_multi_constraints_dependency"
+    )
+
+    package = poetry.package
+
+    assert len(package.requires) == 2
+
+
+def test_validate():
+    complete = TomlFile(fixtures_dir / "complete.toml")
+    content = complete.read()["tool"]["poetry"]
+
+    assert Factory.validate(content) == {"errors": [], "warnings": []}
+
+
+def test_validate_fails():
+    complete = TomlFile(fixtures_dir / "complete.toml")
+    content = complete.read()["tool"]["poetry"]
+    content["this key is not in the schema"] = ""
+
+    if PY2:
+        expected = (
+            "Additional properties are not allowed "
+            "(u'this key is not in the schema' was unexpected)"
+        )
+    else:
+        expected = (
+            "Additional properties are not allowed "
+            "('this key is not in the schema' was unexpected)"
+        )
+
+    assert Factory.validate(content) == {"errors": [expected], "warnings": []}
+
+
+def test_create_poetry_fails_on_invalid_configuration():
+    with pytest.raises(RuntimeError) as e:
+        Factory().create_poetry(
+            Path(__file__).parent / "fixtures" / "invalid_pyproject" / "pyproject.toml"
+        )
+
+    if PY2:
+        expected = """\
+The Poetry configuration is invalid:
+  - u'description' is a required property
+"""
+    else:
+        expected = """\
+The Poetry configuration is invalid:
+  - 'description' is a required property
+"""
+    assert expected == str(e.value)