| You have a contract at the point of agreement, not at the point of payment. The question is really whether it is IP transfer on final payment or not. If the contract specifies IP is transferred only on final payment, then the developer keeps all IP until that point. Now, something like building a website, it doesn't really make a whole lot of sense why this matters. If the person doesn't pay, they may not get the source code you've written, and they may not have the technical chops to deploy or use it. But think about a design agency instead. Client hires a design agency to come up with a brand identity, logo etc. Client agrees to their standard terms - 50% upfront, remaining 50% on completion. They start work and come up with a few ideas. Client asks for a few changes, but they soon broadly settle on a design style. Before the agency gets to the point of completing all the deliverables, the client cuts off contact and does not pay. They're now in breach. But, they think, we've got the logo, we don't need all the other stuff the agency were going to do. We're fine with the logo, and we're not going to pay. They can go to court, and the court might say "well, you paid 50%, you are entitled to the part performance before the breach". They might look at the design agency and conclude "they're not going to sue us, they're tiny and lawyers are expensive" and decide the risk of the breach makes it worthwhile. There's also completely innocent scenarios you could imagine that lead to the breach: perhaps the working relationship breaks down. Perhaps the design agency don't answer the client's emails for a week and they refuse to pay. But if the agency had 50% upfront AND IP transfer only on final payment, then if the company decide to reuse the work, they can't try and argue "well, part payment entitles us to part performance", plus you have a viable cause of action against them for breach of copyright violation in addition to breach of contract. IP transfer on completion makes it clear what happens in the case of breach (which reduces legal uncertainty), and it increases the cost to the client of breaching, which hopefully has something of a deterrent effect. |