What Happens to Your IP When a Contractor Quits

A contractor builds your core feature, then leaves. You assume you own it — you paid for it. But in most countries, that assumption is wrong. Without a written IP assignment clause, the work they created belongs to them, not you. Employment law transfers IP by default for employees. Contractor law doesn't. That distinction has ended companies that tried to raise a round or sell.

Here's how IP ownership actually flows when a contractor is involved. The contractor creates the work. At that point, ownership is an open question — it goes two ways depending on what's in the contract. If there's no assignment clause, ownership stays with the contractor. If there is one, ownership transfers to the company. That fork is the only thing that matters. The payment, the invoice, the Slack messages, the GitHub commits — none of that transfers IP. Only a written assignment clause does.

This is what an IP assignment clause actually looks like. Line one establishes the relationship. Line two defines what "work product" means — everything created during the engagement. Line three is the operative line: the contractor assigns all right, title, and interest to the company. Line five adds moral rights waiver — important in the UK and EU. Line six covers pre-existing IP the contractor brings in — they keep it, but you get a license to use it. Line seven addresses work product created after termination if it relates to the engagement scope. Line eight is the clause that makes it enforceable: contractor agrees to sign any further documents needed to confirm the assignment. That last line is often missing, and it's the one you need.