1

I'm an Australian independent contractor. I have a hard-to-work-with European client who I'm happy to let go (and fire). We agreed to work on an app which had been delivered early last year. The client was satisfied with the works, and he's already selling it in the App Store.

There was absolutely no mention of source code, change in code ownership, etc. when the deal was made back in 2015. The project was a modified form of my existing app, which existed before the deal, and the client obviously has no ownership in it. There was no contract. The deal was something like this:

Client: Can you make a new app for me? I want the following features ...
Myself: OK. This is the price ....

Unfortunately, the client has been refusing to pay off the final installment which is about $42 AUD. I sent him my bank details on how much he had already paid, and how much he still owed. He agreed the transaction was not complete, but still refused to pay. The project is partially paid.

He is trying to negotiate and bargain with me for the final installment. He insisted I had to send him the source code, something never agreed. He also wants total ownership of everything, but without explicit written agreement (https://www.ipaustralia.gov.au/understanding-ip/getting-started-with-ip/ip-ownership), he'd only be given the non-exclusive rights to distribute the app.

Basically, he's bargaining for:

  • "Update" and "upgrade" the app whenever he wishes
  • Access the source code because he thinks he "paid" for it

Question

What's the best way to address this situation? I'm currently sending him overdue notices, and avoiding to negotiate for something that I should receive unconditionally. Every time he tries to negotiate, I simply reply with a payment notice (and nothing else).

It goes like this:

Client: I agree the transaction is incomplete, but you must hand over the source code ...
Myself: Dear xxx, this is the overdue payment notice. The overdue amount is $42.23 AUD ...

Should I negotiate and explain? Should I just keep sending him overdue notices? Should I ignore? What should I do?

  • 1
    I'm usually against the "Let it go and remember this as a lesson" approach. but I'm not sure this money's retrievable. from another user's question, I'm told that emails and strings of written communication do not constitute a legally binding contract in Australia (not sure on the truth of this). You can always try to bluff by sending letters showing an intent to take legal action, but if that fails, i'm not sure there's much else to be done in the short term. In the long term, some other answers mentioning holding the IP and waiting till he needs maintenance / further work, that seems viable. – lewis Feb 16 '17 at 9:03
  • 1
    The same already happened to me. When they had a major problem I told them I would not even talk about the problem without having the full payment. A couple of months forward their lawyer sent me an email asking the source code, I ignored the email and it was the last I heard of them – Rui F Ribeiro Mar 4 '17 at 23:19
  • I would like also to pinpoint, that unless the contract says otherwise, the client is able to open a court process in Europe, and not in Australia. – Rui F Ribeiro Mar 5 '17 at 1:02
  • @RuiFRibeiro I don't think so. I don't even have an European passport. – SmallChess Mar 5 '17 at 1:08
  • I am not saying he will do it, I am saying he can do it. The law lets me open a court case in my home town to settle any dispute unless otherwise stated by a standing contract ; the fact that you do not have an European passport is inconsequential. I know, because I already used that prerogative in the past. – Rui F Ribeiro Mar 5 '17 at 1:43
3

As stated on the IP Australia website:

In Australia, the IP created by a contractor is by law considered the property of the contractor unless otherwise stated in the contract.

So you should be under no obligation to hand over the source code if that was never agreed upon in a contract. But on the other hand, it would be hard to enforce payment without that same contract.

You may need to cut your losses because the cost of retrieving final payment through legal means would outweigh the $42 outstanding. Never a fun thing to do a freelancer but the more time and energy spend chasing this is less time spent on new projects.

  • If he tries to negotiate, should I explain why he can't negotiate? – SmallChess Feb 16 '17 at 4:25
  • 1
    Absolutely. Like @Jon said he's negotiating from a position of weakness. You have the power if you are prepared to walk away from the project. If he wants further support and updates he needs to pay what's owed. – Joshua Maher Feb 16 '17 at 4:38
  • 3
    Not only tell him he cannot negotiate, also tell him you won't negotiate! Tell him he is in arrears and agreed upon payments is non-negotiable, and that his acts are in bad faith. The AU IP has you covered. Furthermore, when he needs updates or changes to the app enforce that there be a written, binding, contract that includes details, and that all payment is to be made in advance of any work because of his prior bad faith acts. – Gypsy Spellweaver Feb 16 '17 at 5:03
1

Well, the first thing to remember is that your client is trying to negotiate from a position of weakness. You are the owner of the intellectual property and without access to the source code, your client cannot update the app or add new features.

If the app starts failing and requires a new version, he won't have a choice but to pay you to fix it because it's your IP and you have the source code. If a company wants to purchase it, it's yours to sell :) and be sure to remind him of all that when he needs your help.

There is also no guarantee whatsoever that you will receive any money after you hand over the source code since his credibility is quite underwhelming.

Personally, I think most project source code is probably worth more than $42. You can ignore him because he can't afford to ignore you.

In the meantime, move onto new projects.

  • If he tries to negotiate, should I explain why he can't negotiate? – SmallChess Feb 16 '17 at 4:25
  • The only thing you should be negotiating is a fine for late payment. Make it clear that you can only engage in further business and negotiations with him after he pays what he owes for your service. – Jon Feb 16 '17 at 18:11
  • Quite by the contrary, it is guaranteed you wont ever see your money if you hand the source code. – Rui F Ribeiro Mar 4 '17 at 23:53
1

If these other posts are correct about Australian IP law, then why don't you change the app name in the source, compile, and put it on the App Store yourself? You'll get your money, and then some. Don't waste your time over $42. You're in a great position.

  • I'm 100% sure the other posts about Australian IP law is correct. That's shown on the Australian government IP website. – SmallChess Feb 16 '17 at 21:20
1

As a contractor, your source code is yours, and yours alone, failing a contract biding you to hand it over. In Europe, I do confirm the laws are pretty much the same, so you have got your bases covered by law, either in Australia or in Europe.

If the client asks for the source, put a generous price tag on it, as it was not requested from the beginning. It really does not matter what the customer thinks, that is his problem, not yours. Furthermore, the law is in your side.

I would advise you being consistent on your communications. You fulfilled your side of obligations, the customer has to keep their side, sticking to the values arranged. Furthermore, you have also a vested interest on being consistent, that is having a proper trail certain things like handing over source code were never requested, failing having a proper contract.

For now, given their track record, I would not have much conversations with them besides having your money back, so I think you are on the right track dealing with a problematic customer. If they fail to pay the exact amount, they are not worth your time.

As for maintenance, I have no idea of the values involved. For projects where a fixed substancial amount of money were involved (several thousand), it would be courteous to provide a 6-month window of a "guarantee" only after all due payments are settled.

For lower values, and for time paid by month, or by hour it does not make sense at all, and it would be extra work, hopefully in a pre-fixed price.

As for getting your money back, bid your time and do not lose much sleep over it. The client will come to you when there is a major problem to be corrected if you keep the ownership of the source code.

-1

This is a topic I have contemplated and have a bit of experience in and upcoming with a Java project. Setting aside legal this and that I'll give you what I believe to be an honorable expectation.

  1. As a client, if I hire you to build an app for me, whether you have one similar already started or not, I would expect to have the source code given to me after the last payment unless you have stated otherwise. I think this is a reasonable expectation for the client to have, written or not. Otherwise you hold me hostage to any price you want to charge for updates and mods. If you discounted the project because you already have most of it built and want to keep the source code, you need to state that in the beginning.

  2. As a client I would expect any bugs, if discovered, to be worked out at no extra charge after final payment over a certain period of time.

  3. As a client I would expect to pay for updates and new features from your or another developer if I choose.

  4. As a client I would not expect to have exclusive use of the code but I would expect you not to make an app called Client2 and sell it next to mine. If you modified the code to do something else I get it.

  5. As a developer you should expect to get paid. And if you are not paid and have more demands (not requests) put upon the project, you would have no obligation to do any fixes or updates or provide the source code. I do think you should provide the source code if he pays the final. I think that would be honorable and be lesson learned for future jobs if you didn't think about it.

I don't know why anyone would expect not to have the source code after hiring someone to build a project. That's like a home builder not giving you the keys to your house. He built it for you, but you can't use/mod it unless you hire him again. It's a hostage situation.

  • I rejected the claim and now my client must pay m again for the source code. – SmallChess Mar 3 '17 at 0:33
  • Source code should not be given out because that would change the pricing. Giving out source code require more payment. – SmallChess Mar 3 '17 at 0:34
  • Quite wrong. If I am developing an app, I will charge you x, with the source code included, x times 5. Your choice. By law, if the crontact does not mention source code, the source code as a contractor is mine. Now, it I am a regular employee it is yours. The thing is, you have to mention upfront the app and source code will be yours, as the price surely is not the same. If you fail to ask it/put it in the contract, the law is not in your side in most countries, and it is not the obligation of the consultant to remind you of that. – Rui F Ribeiro Mar 4 '17 at 23:56
  • 1
    @StudentT I was suggesting that the client may have had the expectation of having the source code not necessarily that is is owed to him. Obviously it would cost more to provide it but as a professional yourself, I would have expected you to bring it up in your negotiations rather than assume he did not want it. $500 without $1500 with. Both sides of the deal are responsible (not legally) for omissions if they are aware of them. That is how you have a good result in the end for both parties. That is how we used to do things. – Entre Preneur Mar 5 '17 at 12:45
  • 1
    @EntrePreneur It's true he's not very happy, but the only delivery was only $1400 USD for a new custom app. That was how much he had for me. Now, you know why I'd rather fire him? There's no way source code is included in a $1400 USD delivery without prior agreement. – SmallChess Mar 5 '17 at 13:01

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.