This is general information, not legal advice. Have any software contract reviewed by a solicitor before signing. The sums involved almost always justify the fee.
Under UK law, paying someone to write software does not automatically make you the owner of it. By default, the person who wrote it owns the copyright — unless your contract says otherwise.
Most buyers assume the opposite. That assumption is where a significant amount of expensive trouble starts.
The default position
The Copyright, Designs and Patents Act 1988 governs this in the UK. Two rules matter:
Employees: work created by an employee in the course of employment belongs to the employer by default.
Contractors and agencies: work created by a contractor or an external agency belongs to the contractor or agency by default — even though you paid for it. Copyright does not transfer with the invoice.
That second rule surprises people, and it is the one that applies to almost everyone buying custom software.
Without an assignment clause, what you typically get is an implied licence to use the software for the purpose it was commissioned for. A licence is not ownership. It may not let you modify the code, hand it to another developer, or use it for something new.
What this looks like when it goes wrong
Four scenarios that follow from the default position.
You want to change supplier. Your new developer needs the source code. Your old agency owns it and is not obliged to hand it over, or will licence it to you for a fee. Rebuilding is the alternative.
Your agency goes out of business. Nobody has the right to give you the code. It sits in an estate alongside the other assets.
You want to sell your business. Due diligence asks who owns the systems the business runs on. “Our agency does” materially affects the valuation, and sometimes the deal.
You want to reuse it. You commissioned a booking system for one site and want it on a second. Your licence may not extend that far.
None of these requires anyone to behave badly. They follow from the default.
The clause you need
Your contract needs a present assignment of intellectual property, with a clear trigger.
Something equivalent to:
“All intellectual property rights in the deliverables, including copyright in all source code, documentation and designs, are hereby assigned to the Client absolutely, such assignment taking effect on receipt of final payment.”
The parts that matter:
“Are hereby assigned” — this assigns now, conditional on the trigger. “Shall assign” or “agrees to assign” is only a promise of a future action, which requires the other party to actually do something later. If they are unwilling or no longer exist, you have a claim rather than a copyright.
“Absolutely” — a full transfer, not a licence.
“Including source code” — say it explicitly. Ambiguity about whether you get compiled software or the actual code is a known dispute.
“On receipt of final payment” — a clear, verifiable trigger. Suppliers reasonably want payment before transferring; you reasonably want a trigger that is a fact rather than a judgement.
Why this is not the default
A reasonable question: if paying for something normally means owning it, why does software work differently?
Copyright law was not written for commissioned software. The Copyright, Designs and Patents Act 1988 protects creators, and a contractor is a creator. The commissioning party is a customer, not an employer. The rule is consistent with how copyright treats photographs, illustrations and written work — the photographer owns the photograph unless the contract says otherwise.
It also has a practical logic. Agencies reuse their own frameworks and components across clients. If every commission transferred everything automatically, a firm could not use its own accumulated tooling on the next project. Background IP needs to stay with the supplier, and the default errs toward that.
Where it becomes a problem is that most buyers do not know the rule, and a meaningful number of suppliers have no particular incentive to explain it. The ambiguity is rarely deliberate — it is simply never raised, and it only matters at the moment it matters a great deal.
What this means for you: do not treat an unclear IP clause as bad faith. Treat it as a gap, raise it plainly, and most suppliers will agree readily. The ones who will not have told you something important.
Four things ownership alone does not give you
An assignment clause is necessary and not sufficient. Owning the copyright is worthless if you cannot get the files.
1. Delivery of the source code. Specify that source is delivered to a repository you control, and when. Ownership of code you have never been sent is theoretical.
2. Documentation. Specify what: architecture, deployment, configuration, known limitations. Undocumented code is expensive for the next developer to pick up, and the gap is routinely used to make leaving impractical.
3. Infrastructure access. Hosting accounts, domains, certificates, environment variables, third-party service accounts. These should be in your name, on your billing, from the start. If your system runs on your supplier’s accounts, you have a dependency no contract clause removes.
4. Third-party components. Almost all software uses open-source libraries your supplier does not own and cannot assign. That is normal. What you need is a list of what is used and under what licence, so you know there is nothing with terms that conflict with your use.
Open source: the nuance that matters
Your supplier cannot assign you ownership of open-source components, and nobody expects them to. The issue is licence compatibility.
Most common licences — MIT, Apache 2.0, BSD — allow commercial use freely. Some, notably the GPL family, carry conditions that can require you to release your own source code if you distribute software containing them.
For internal business systems this rarely matters. If you plan to sell or distribute the software, it matters a great deal.
Ask for a dependency list with licences. Any competent supplier can produce one in minutes — the tooling generates it automatically. Reluctance is informative.
What to ask before signing
“Do I own the source code outright, and when does it transfer?” The answer should be yes, on final payment, with a clause you can point to.
“Is that an assignment or a licence?” These are different. Ask which word appears in the contract.
“Where will the system run?” Your cloud accounts, on your billing. If it is theirs, ask what happens if you leave.
“What exactly is delivered at handover?” Source, documentation, deployment instructions, credentials, dependency list. Get the list in the contract.
“Can another firm pick this up without you?” The honest answer tells you how the handover has been designed.
“Can I see the dependency list and licences?”
“What happens if you stop trading?” If the answer depends on their goodwill at the time, that is the risk.
Who owns what, in the common arrangements
Five situations, and what the default position usually is. Take advice on your own facts.
You hired an agency, no IP clause. The agency owns copyright. You likely hold an implied licence to use the software for the purpose it was commissioned for. Scope is a matter of interpretation.
You hired a freelancer, no IP clause. Same position. Freelancers are contractors, not employees, and the default favours them.
Your employee wrote it, in the course of employment. You own it. This is the one case where the default favours the payer.
Your employee wrote it at home, on a personal project that became useful at work. Murkier than people assume, and it depends on the employment contract and whether it was in the course of employment. Worth a clear contractual term rather than an argument later.
An agency built on top of their own existing framework. They keep the framework — that is their background IP and it is reasonable. You should own the parts built specifically for you, with a perpetual, irrevocable licence to the framework. Without that licence, owning your own code may not be enough to run it.
A contractor used open-source components. Nobody owns those; they remain under their own licences. What you need is the list and the licences, so nothing conflicts with how you intend to use the software.
The pattern worth remembering: in every arrangement except employment, the default is that you do not own what you paid for. The contract is the only thing that changes that.
Source code escrow
Escrow means a third party holds a copy of the source, released to you if defined events occur — usually insolvency or sustained failure to support.
Worth considering when your supplier hosts the system, the software is business-critical, or the supplier will not assign IP outright and you have accepted that commercially.
Usually unnecessary when you already hold the source in your own repository and run the infrastructure in your own accounts. Escrow solves a problem that proper handover prevents.
Costs typically a few hundred to a couple of thousand pounds a year through a specialist provider. Verify the deposit is current — an escrow holding a two-year-old version is close to useless.
If you are already in this position
Check the contract first. Look for “intellectual property”, “assignment”, “licence”, “ownership”, “deliverables”. You may own more than you assumed, or less.
If there is no assignment clause, you likely hold an implied licence for the original purpose. Scope is a matter of interpretation — this is the point to take legal advice.
Negotiate while the relationship is good. Asking for an assignment during an active, positive engagement is far easier than asking during an exit. Many suppliers will agree readily because the ambiguity was never deliberate.
Get the code and documentation now, whatever the ownership position. Possession is not ownership, but it is a great deal better than neither.
What to check in a contract you have been sent
A practical reading guide. Search the document for these words and read what surrounds each.
“Intellectual property” — the main clause. Does it assign, or licence? To whom? When?
“Assign” vs “licence” — the single most important distinction in the document. Assignment transfers ownership. A licence grants permission while someone else keeps it.
“Hereby assigns” vs “shall assign” — present assignment versus a promise of future action. The second requires the other party to actually do something later, which is a problem if they are unwilling or no longer exist.
“Deliverables” — is the source code named? Ambiguity about whether you get compiled software or the actual source is a known dispute.
“Background IP” — tools, libraries or frameworks the supplier already owned and brought to the project. They will keep these, which is normal and reasonable. What you need is a perpetual, irrevocable licence to use them in your system, so your software does not stop being usable if the relationship ends.
“Moral rights” — in the UK these are separate from copyright and are typically waived. Standard, not a concern.
“Termination” — what happens to the IP if the contract ends early. If assignment triggers on final payment and the project stops at 80%, what do you own? This should be addressed, and usually is not.
“Escrow” — present only if someone thought about it.
If “intellectual property” does not appear in the contract at all, that is the finding. Raise it before signing.
Four sentences worth asking for in writing
If you change nothing else about a contract, ask for these.
“All intellectual property rights in the deliverables, including copyright in all source code, documentation and designs, are hereby assigned to the Client absolutely, such assignment taking effect on receipt of final payment.”
“The Supplier grants the Client a perpetual, irrevocable, royalty-free licence to use any Background IP incorporated into the deliverables, to the extent necessary to use, maintain and modify them.”
“Source code shall be committed to a repository controlled by the Client throughout the engagement.”
“On termination for any reason, the Supplier shall deliver all source code, documentation, deployment instructions, credentials and a dependency list with licences, within 10 working days.”
The second one catches people out. Owning your own code is not enough if it depends on the supplier’s framework and you have no licence to it.
Frequently asked questions
Do I own software I paid a developer to write?
Not automatically. Under UK law, a contractor or agency owns the copyright in what they create unless the contract assigns it to you. Employment is different — work by an employee in the course of employment belongs to the employer by default.
What is the difference between assignment and licence?
Assignment transfers ownership to you. A licence grants permission to use it while someone else retains ownership. A licence can be limited in scope, duration or purpose, and may not allow modification or transfer.
When should IP transfer?
On final payment is the usual and reasonable position. It protects the supplier against non-payment and gives you a clear, verifiable trigger.
What if my contract says nothing about IP?
You probably have an implied licence to use the software for the purpose it was commissioned for. What that covers is open to interpretation, which is exactly why you want it written down. Take legal advice.
Can I get the source code if my agency has gone out of business?
Only if you already hold it or have an enforceable right to it. This is the main argument for taking delivery of source into your own repository during the project rather than at the end.
Do I own open-source components?
No, and neither does your supplier. Those remain under their own licences. What you need is a list of components and licences so you know nothing conflicts with how you intend to use the software.
Is source code escrow worth it?
It is worth it when your supplier hosts the system or will not assign IP. It is largely unnecessary when you already hold the source and run your own infrastructure.
Written by Jas Singh. Last updated 8 October 2026. General information only, not legal advice.
