Documentation for app development

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Gannons drafted the intricate documentation required for an app development group to create a new mobile app.

Our client was an app development group. The company sought our advice on the creation and exploitation of the app they were creating, which targeted 11 to 18 year-olds. Users can create their own group of characters and place them with other users. Users also interact with one another through an online messaging platform.

Our client was quoted £80k for the app development, and did not wish to invest this sum. Thus we advised the company to create a new limited company and seek Seed Enterprise Investment Scheme (SEIS) investment for the app. We also advised them to employ individual developers to create the app.

You can now download the App from any smartphone’s app store. The company is now creating a sequel app.

Documentation we compiled

We ensured the company complied with SEIS investment requirements, thus enabling the company to raise investment. We protected the company’s intellectual property rights, using our tailored employment documentation between the company and each developer. The special terms and conditions we also compiled reduced the company’s liability to each user.

Company formation

We incorporated the new company. We then applied to HMRC for advance assurance for the SEIS share issue, which HMRC granted. The new company sought £90k investment.

The company enrolled six investors. We prepared an investment agreement to regulate the relationship between the company, its investors, and directors. The investors required the company to provide warranties.

Warranties

Firstly the company would own the app and all intellectual property rights in the app. They would not issue shares to other outside investors without first offering the existing shareholders the right to acquire additional shares. They also would not grant any rights in the app without all the investors’ consent. Finally, they would also have each individual developer sign an agreement confirming they had no intellectual property rights in the app.

Employment documentation

We created employment agreements for each app developer. Each employment agreement was different, as each developer was responsible for a distinct area, for example graphic design/images, user interface, coding, and wording. This meant that they reported to different “team leaders” who oversaw the app creation and had different and defined duties and responsibilities. This required the clarification in the individual agreements of the division of responsibilities.

Each employment agreement was fixed for 9 months, which was the expected development period. In addition, the employment agreement contained various other terms. These included express waivers, that each developer acknowledged, understood, and agreed that they had no intellectual property rights in the app. They also gave the details of the fixed fee. Finally they confirmed that the developer’s fees would not increase, even in the event of the app’s exploitation.

Limiting liability

Many users download the app, which runs on smartphones. A key risk was the app could damage the user’s phone. Our bespoke “terms and conditions of use” limited the company’s liability in the event that this happened. If the app required updates, the company could withhold access.

The terms also confirmed the company had no liability for any message received through the messaging platform. Additionally they were not liable for any damage suffered from advertisements, such as advertisements resulting in downloads which incur fees.

The app stores accepted these terms.

The return on investment

The company is now valued at £750k. It receives royalty payments from the app stores for each download. Currently, the company seeks additional finance to create a new, complementary app.

Summary

Mobile applications can be valuable, and generate significant returns. However, they can be downloaded by anyone, anywhere, on myriad devices. Thus there is risk. Our commercial expertise reduces your risks, avoids disputes, and streamlines your business processes.

John Deane heads the creative sector team at Gannons. John deals with a variety of matters, from the terms and conditions of use, to the ancillary investment agreement drafted to compliment the corporate structure. 

  • Superb job by the Gannons team. They cannot be faulted