Who Owns Your Code? AU Contract Clauses to Check First (2026)

The default position under Australian intellectual property law is the one that surprises most business owners. If you hire a contractor — including a web agency — to build something for you, the contractor owns the IP in what they built unless your contract specifically says otherwise. This is the rule IP Australia publishes plainly, and it's the rule that catches Australian businesses off-guard when they try to leave one agency for another and discover they don't actually own their website.

My position: any web build over $5,000 should have explicit IP assignment language in the contract, and the standard agency template usually doesn't include the right version of it. The clauses below are what to look for, what to push back on, and what to insist on adding if they're missing.

This isn't legal advice. It's industry practitioner perspective on what good contracts look like in this sector. Get a lawyer to review your specific agreement before signing.

The default rule and why it matters

Under common Australian contract law and IP doctrine, when a contractor creates a work for a client, the contractor owns the copyright in that work unless there's a written agreement transferring it. The client typically gets an implied licence to use the work for the purpose it was commissioned for, but the underlying IP — the source code, the design files, the database schema, the proprietary methods — stays with the contractor.

This is different from an employee relationship. Work created by an employee in the course of their employment is generally owned by the employer. But web agencies are contractors, not employees, which means the default flips.

The practical consequences of relying on the default:

• You can't take the code to another agency to modify or extend. The new agency doesn't have rights to derivative work.
• You can't open-source any part of the build. Not your decision to make.
• You can't sell the business with the website as a transferred asset cleanly. The IP isn't yours to transfer.
• If the agency goes out of business, the IP rights pass to whoever inherits the agency's assets — which could be a liquidator, a former director, or a buyer of the agency's assets in a wind-up.

Most businesses don't bump into these consequences until they want to leave the agency, at which point the conversation is awkward.

The clauses to look for

1. The IP assignment clause

The clause that flips the default. Plain-language version: "Upon payment in full of the agreed fees, the Contractor assigns to the Client all intellectual property rights in the Deliverables, including all copyright, design rights, and any other proprietary rights, on a worldwide, perpetual, irrevocable basis."

What to look for:

• Assignment, not licence. A licence gives you the right to use, not own. Assignment transfers ownership. If the clause says "licence" or "grants the right to use," that's not assignment.
• All IP, not specific elements. Some templates assign IP in "the website" but not in the source code, design files, or component library. The clause should be broad: all IP in the deliverables.
• Upon payment in full. The transfer should happen at the moment the contract is paid in full. This is standard and reasonable. What's not reasonable is "upon payment in full and execution of additional documents" — which leaves the agency holding bargaining power if a transfer document is conveniently delayed.
• Worldwide, perpetual, irrevocable. The assignment shouldn't have geographic limits, time limits, or any mechanism for the agency to reclaim the IP.

What to push back on:

• Any limitation by territory ("for use in Australia and New Zealand").
• Any time limit ("for the term of this agreement plus two years").
• Any reservation by the agency ("the Contractor retains the right to use the Deliverables in its portfolio").

The last one is common and often acceptable in a limited form — most agencies want to show your project on their portfolio site. Push for: the agency can show screenshots of the finished work in their portfolio, but cannot use the source code, design files, or proprietary methods in other client work without your permission.

2. The pre-existing IP carve-out

The honest complication is that almost no web build uses 100 percent new code. Agencies bring along their own component libraries, design system foundations, internal tooling, and sometimes proprietary methods they've refined over years. They can't realistically assign that to every client.

The clause that addresses this: a "Background IP" or "Pre-existing IP" definition that scopes what's the agency's versus what's the client's.

The reasonable version: "Background IP" includes the agency's pre-existing component libraries, internal tooling, generic design patterns, and methodologies. The agency grants the client a perpetual, irrevocable, royalty-free licence to use the Background IP as embedded in the Deliverables. All other IP — anything specifically created for this project — is fully assigned.

This balances the agency's legitimate ownership of its accumulated work with the client's right to operate, modify, and migrate the deliverables.

What to push back on:

• A broad definition of Background IP that captures most of the project ("anything the Contractor has used on previous projects").
• A licence to Background IP that's limited to "the website as delivered" — which would prevent you from modifying it later.
• Royalty-bearing licences for Background IP. The licence should be royalty-free.

3. The source code delivery clause

A common gap: the contract assigns IP but doesn't require the agency to actually deliver the source code in a usable form. The clause should explicitly require:

• Delivery of all source code on completion, in a git repository the client has full access to (typically GitHub or GitLab, under the client's organisation account)
• Delivery of all design files (Figma, Sketch, Adobe XD files) accessible to the client
• Delivery of all production credentials (registrar logins, hosting account access, DNS provider, third-party service API keys)
• Documentation sufficient for another developer to deploy, modify, and maintain the site

Without this, you can have IP assignment on paper and no practical ability to use what you own. The code lives in the agency's private repository, you have rights to it but no copy of it, and "give me a copy of my code" becomes an unanswered email.

4. The third-party licence disclosure

Most modern web builds use third-party software — open-source frameworks (Next.js, React, Tailwind CSS), commercial fonts, paid plugins, SaaS services for CMS, analytics, email. Each of these has its own licensing terms.

The clause should require the agency to disclose, in writing:

• Every third-party software dependency, with version
• Every licence (MIT, GPL, commercial)
• Every recurring cost (CMS subscription, font licensing, third-party API costs)
• Every credential that's required for the site to operate

Without this disclosure, you can inherit a website that depends on a $400/year commercial font, a $50/month SaaS the agency was paying for on your behalf, and an obscure paid plugin that's about to be deprecated. Surprises are expensive.

5. The transition and handover clause

The clause that governs what happens at the end of the engagement. Should include:

• A defined handover period (usually 30 days post-launch)
• A list of deliverables that constitute completion of handover
• The agency's obligation to transfer credentials and access within a defined timeframe
• The client's right to engage a successor agency without restriction

What to push back on:

• Non-compete clauses preventing you from hiring the agency's staff or contractors (these are usually unenforceable under Australian law anyway, but they shouldn't be in the contract).
• Restrictions on the successor agency's use of the deliverables.
• Termination fees triggered by the client moving the work to another provider.

6. The unfair contract terms compliance

Under Australian Consumer Law, standard form contracts with small businesses are subject to unfair contract term provisions. A term may be void if it causes a significant imbalance in the parties' rights, is not reasonably necessary to protect the legitimate interests of the party benefiting, and would cause detriment if relied on.

Common terms that may be unfair in web contracts:

• Termination fees that are disproportionate to the agency's actual costs of termination
• Unilateral price changes during the engagement
• Restrictive non-compete clauses
• IP licences with restrictive use terms

If a clause feels lopsided when you read it, it might literally be void. Get legal advice on specific clauses you're concerned about.

The clauses that are red flags

Some clause patterns I've seen in agency contracts that I'd refuse to sign:

"All IP remains the property of the Contractor"

The opposite of assignment. The agency keeps everything; you get a licence to use the deliverables. This is the worst possible outcome for the client and it's still in some templates.

"The Client receives a licence to use the website during the term of this agreement"

A term-limited licence. Means you have to keep the agency on retainer to keep using the site you paid to build. Hard no.

"The Client may not engage another agency to modify the deliverables"

A lock-in clause. Unenforceable in most cases but indicates the agency's posture.

"All disputes will be resolved in [some random jurisdiction]"

Forum-shopping clauses that try to force you into an inconvenient or unfamiliar court. The dispute resolution should be in the state where the work is performed or where the client is based.

"Fees may be increased at the Contractor's discretion upon notice"

Unilateral price variation. Any pricing change should require both parties' agreement, not just notice from one side.

What good looks like

A reasonable IP and ownership section in a web contract is two to four pages of text, written in plain English, with the assignment, source code delivery, third-party disclosure, and handover clauses clearly stated. It assigns IP to you upon payment, requires source code delivery in a usable form, discloses third-party costs and dependencies, and provides a defined handover process.

The agency should be willing to discuss and negotiate specific clauses if you raise concerns. An agency that refuses to negotiate any IP or ownership terms is an agency that's relying on those terms to keep you locked in later.

The negotiation, briefly

A few practical notes on negotiating these clauses:

• Agencies expect this conversation from larger clients. Asking detailed questions about IP assignment doesn't make you difficult; it makes you sophisticated.
• Most reasonable agencies will accept changes if asked clearly. The standard template is the starting position, not the only position.
• If an agency refuses to assign IP at all, that tells you something about how they see the relationship. Reconsider whether they're the right agency.
• Legal review is worth it on contracts above $20k. Australian commercial lawyers charge $400 to $800 per hour and a contract review is usually 2 to 4 hours of work.

The honest bottom line

The default rule under Australian law means the contractor owns the code unless the contract says otherwise. Most agency templates don't say otherwise clearly enough. The fix is a few specific clauses that you have the right to ask for and that any reasonable agency will agree to.

Separate but related: if you've already got a site and you want a baseline read on what you actually own — the rendered performance, SEO, and technical state of the asset — run a free audit on the URL. Knowing what your existing site is worth (and what it's costing you in lost conversions) is useful context for the negotiation you're about to have on the next one.