The verdict in three sentences
Under US law, software built by an independent contractor belongs to the contractor unless there is a written assignment, because most software does not qualify as "work made for hire" under the Copyright Act; UK law reaches the same result under the CDPA 1988. For an app at 65,000 USD (about 60,000 EUR), securing the assignment, Git access and an exit plan of 3,250 to 6,500 USD costs little next to a full rewrite. Source code escrow, at 600 to 2,000 USD a year, completes the setup when the vendor will not hand over code continuously.
The clauses that actually protect a small business
Many founders assume that paying the invoice makes them owners. It does not. Without a clause you get at best an implied licence to use, with no right to modify the code or hand it to another developer.
| Clause | What it must state | Risk if missing | Typical cost or impact |
|---|---|---|---|
| IP assignment | Present assignment of all copyright, worldwide, with a backup work-for-hire clause | Cannot modify or sell the app | Usually included, sometimes +5 to 15% |
| Source code delivery | Commented code, build scripts, dependencies, at each milestone | Code unusable by a third party | Within fixed price |
| Git repository access | Repo owned by the client (GitHub, GitLab) with admin rights | Vendor holds the only history | 0 to 21 USD a month |
| Documentation | Architecture, setup, API, deployment runbooks | 2 to 3 months of reverse engineering | 3 to 5% of budget |
| Exit (transition) plan | Handover support days, knowledge transfer, data export | Lock-in when changing vendor | 5 to 10% of budget |
| Third-party and open source | Licence list, no unapproved copyleft | Forced disclosure of your code (GPL) | Audit 900 to 2,200 USD |
| Late delivery damages | Daily amount, cap, milestones covered | No leverage if the project slips | Often 0.1% of price per day, cap 5 to 10% |
The assignment must use present-tense wording ("hereby assigns") rather than a promise to assign later, which US courts have treated as weaker.
Escrow, shared repo or continuous delivery: which option
| Option | How it works | Annual cost 2026 | Fits when |
|---|---|---|---|
| Client-owned Git repo | Vendor pushes code to your repo continuously | 0 to 250 USD | Always, it is the standard to require |
| Two-party escrow (NCC Group, EscrowTech, Codekeeper) | Dated code deposit released on vendor failure | 600 to 2,000 USD | Vendor keeps ownership (licence or SaaS) |
| Three-party escrow with verification | Deposit updated each release, build verified by agent | 2,000 to 5,000 USD | Critical app, single vendor |
| Milestone delivery | Code and docs archive handed over each phase | Included | Fixed-price project in 3 to 5 milestones |
| Reversibility audit | A third party checks another developer can take over | 1,600 to 4,500 USD one-off | Before final acceptance |
Escrow only works if release conditions are clear: bankruptcy, ceasing business, or maintenance failure for more than 30 days.
The exit plan in practice
A good plan sets out 3 costed elements: handover support (often 10 to 20 person-days), data export in an open format (CSV, JSON, SQL dump) and transfer of hosting, domain and third-party accounts (app stores, payment APIs, transactional email).
Mini case study
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Thomas, managing director of a medical supplies distributor in Manchester, commissions an order-taking app for his 25 sales reps at 65,000 USD (about 51,000 GBP). His first project ended badly: the vendor refused to release the code and the takeover cost 41,000 USD in partial rewrite.
This time he negotiates:
- Full IP assignment, at no extra cost.
- GitLab repo in the company's name: 0 USD.
- Exit plan of 15 person-days at 600 USD: 9,000 USD, reserved and billed only on transfer.
- Technical documentation: 2,600 USD included.
- Delay damages: 65 USD per day, capped at 6,500 USD.
Certain cost of protection: about 2,600 USD, 4% of budget, against 41,000 USD lost the first time.
FAQ
Does paying the invoice transfer ownership? No. In the US, copyright transfer requires a signed writing (17 U.S.C. 204). In the UK, an assignment must be in writing and signed by the assignor. Without it the developer keeps the rights.
What if the vendor's employees wrote the code? Employee work belongs to the employer in both countries, so the vendor must then assign it to you. Watch for freelance subcontractors, who must also assign their rights.
Is escrow useful if I already have the Git repo? Rarely. It matters when you use software the vendor still owns, for 600 to 2,000 USD a year.
Are late delivery damages enforceable? In the UK and most US states, yes, if they are a genuine pre-estimate of loss or protect a legitimate interest, not a penalty. A common level is 0.1% of price per day, capped at 5 to 10%.
Do open source components cause problems? Only if their licence requires you to publish your code, like some GPL versions. Require a dependency and licence list at each delivery.
Let's scope your project. Send us your specification: we will cost your app with full IP assignment, a client-owned Git repo and an exit plan built into the quote. Detailed quote within 48 h. WhatsApp +221 77 596 93 33.
Mohamed Bah
Fondateur, Kolonell
Passionate about digital and entrepreneurship in Africa, Mohamed has been helping Sénégalese businesses with their digital transformation since 2020. Founder of Kolonell, he believes every SME deserves a professional and accessible online présence.
