A lot of people are freaking out about the refund term in their new App Store contract. If you don't know, it says that users can get a refund from Apple, and that they'll be refunded the full price—and that all of that falls on the developer. That is, if someone buys Converter, I get 70¢, but if they then complain to Apple and get a refund, I lose 99¢. This policy is causing fear and loathing as App Store developers imagine a world in which everybody returns their apps and they end up losing money.

This policy is also nothing new.

Me.

Hopefully some of the people reading this have never heard of me. I'm Brent Royal-Gordon, and I run Architechies. My products include the unit converter Converter, the IOU tracker Bank of Me, and the note-taking app Margins.

I am not a lawyer. I don't even look like a lawyer—I have long hair and an untidy beard and my only suit doesn't fit very well. Don't take this article as legal advice.

Okay, that's enough from our sponsor. Back to the program.

Crazy like a fox.

Back in July, when Apple first offered me contracts fundamental to my business, I took two crazy steps.

1. I read them.
2. I saved copies.

If you don't know me, no, I'm not one of those people who reads EULAs. But these seemed like important contracts to understand properly, so I printed out copies and made myself sit down away from my computer to read them before I agreed. It took an hour or two to get through them, taking notes in the margin the whole way, but once I had I was glad I knew exactly what was required of me and exactly what was required of Apple.

When Apple offered a new contract a week or two ago, I left it alone until I could read and analyze the amended contract, which I did yesterday. There are a few terms, and some of them even say interesting things, but none of them are terrifying.

The API diff that wasn't there.

Method: I copied and pasted the two contracts from Preview to SubEthaEdit, then removed extra newlines caused by page breaks. Finally, I ran them through diff -u to pick out the differences.

So without further ado, I'll present my findings.

--- contractA.txt	2009-03-26 11:36:54.000000000 +0000
+++ contractB.txt	2009-03-26 11:35:31.000000000 +0000
@@ -1,3 +1,9 @@
+By Your clicking to agree to this Schedule 2, which is hereby offered to You by Apple, You agree with 
+Apple to amend that certain iPhone Developer Program License Agreement currently in effect between 
+You and Apple (the ŇAgreementÓ) to add this Schedule 2 thereto (supplanting any existing Schedule 2).  
+Except as otherwise provided herein, all capitalized terms shall have the meanings set forth in the 
+Agreement. 
+ 
 Schedule 2 
  
 1. Appointment of Agent and Commissionaire 

This new preamble simply states that the new contract replaces the old one.

@@ -8,7 +14,8 @@
 Licensed Applications to end-users located in those countries listed on Exhibit A, Section 2 to this 
 Schedule 2, during the Delivery Period.  You hereby acknowledge that Apple will market and make the 
 Licensed Applications available for download by end users through one or more App Stores, but for, and 
-on Your behalf. 
+on Your behalf.  For purposes of this Schedule 2, the term "Licensed Application" includes any additional 
+functionality or content sold by You from within a Licensed Application using the In App Purchase API. 
  
 1.2 In furtherance of AppleŐs appointment under Section 1.1 of this Schedule 2, You hereby authorize 
 and instruct Apple to: 

This changes the contract so that In-App Purchase items are treated just like apps. Interestingly, this means that a user might be able to get a return on an In-App Purchase—or at least that Apple reserves the right to grant a return if they see fit.

@@ -8,7 +14,8 @@
 Licensed Applications to end-users located in those countries listed on Exhibit A, Section 2 to this 
 Schedule 2, during the Delivery Period.  You hereby acknowledge that Apple will market and make the 
 Licensed Applications available for download by end users through one or more App Stores, but for, and 
-on Your behalf. 
+on Your behalf.  For purposes of this Schedule 2, the term "Licensed Application" includes any additional 
+functionality or content sold by You from within a Licensed Application using the In App Purchase API. 
  
 1.2 In furtherance of AppleŐs appointment under Section 1.1 of this Schedule 2, You hereby authorize 
 and instruct Apple to: 

Second verse, same as the first.

@@ -89,13 +96,15 @@
  
 3.1 You acknowledge and agree that Apple, in the course of acting as agent and/or commissionaire 
 for You, is hosting the Licensed Applications, and is allowing the download of those Licensed Applications 
-by end-users, on Your behalf.  All of the Licensed Applications shall be marketed by Apple, on Your 
-behalf, to end-users at prices established by You, in Your sole discretion, based on the pricing schedule 
-attached to this Schedule 2 as Exhibit C.  You may change the price for any Licensed Application at any 
-time, at Your discretion, in accordance with the pricing schedule set forth on that Exhibit C, using tools 
-provided on the iTunes Connect site.  As Your agent and/or commissionaire, Apple shall be solely 
-responsible for the collection of all prices payable by end-users for Licensed Applications acquired by 
-those end-users under this Schedule 2. 
+by end-users, on Your behalf.  However, You are responsible for hosting and delivering content sold by 
+You using the In App Purchase API unless Apple notifies You that Apple will host and deliver such 
+content, in which case You agree to provide Apple with any such content as requested by Apple.  All of 
+the Licensed Applications shall be marketed by Apple, on Your behalf, to end-users at prices established 
+by You, in Your sole discretion, based on the pricing schedule attached to this Schedule 2 as Exhibit C.  
+You may change the price for any Licensed Application at any time, at Your discretion, in accordance with 
+the pricing schedule set forth on that Exhibit C, using tools provided on the iTunes Connect site.  As Your 
+agent and/or commissionaire, Apple shall be solely responsible for the collection of all prices payable by 
+end-users for Licensed Applications acquired by those end-users under this Schedule 2. 
  
 3.2 In the event that the sale or delivery of any of the Licensed Applications to any end-user is 
 subject to any sales, use, goods and services, value added, or other similar tax, under applicable law,

Here we see one of the weaknesses of diff: it gets confused by line wrapping. The new material seems to be:

However, You are responsible for hosting and delivering content sold by You using the In App Purchase API unless Apple notifies You that Apple will host and deliver such content, in which case You agree to provide Apple with any such content as requested by Apple.

So it's not clear from this whether you have to distribute In-App Purchase content or whether Apple does; the contract allows for both.

@@ -105,15 +114,15 @@
 goods and services, value added or other tax or levy, and any penalties and/or interest thereon. 
  
 3.3 In furtherance of the partiesŐ respective tax compliance obligations, Apple requires that You 
-comply with the requirements listed on Exhibit D to this Schedule 2 depending upon (i) Your country of 
-residence and (ii) the countries designated by You in which You wish Apple to allow access to the 
-Licensed Applications.  In the event that Apple collects any amounts corresponding to the purchase price 
-for any of Your Licensed Applications before You have provided Apple with any tax documentation 
-required under Exhibit D to this Schedule 2, Apple will not remit those amounts to You, but will hold those 
-amounts in trust for You, until such time as You have provided Apple with the required tax documentation.  
-Upon receipt of all required tax documents from You, Apple will remit to You any amounts held in trust by 
-Apple for You, without interest, under this Section 3.3, in accordance with the provisions of Section 3.4 of 
-this Schedule 2. 
+comply with the requirements listed on Exhibit D to this Schedule 2 or on iTunes Connect depending 
+upon, among other things, (i) Your country of residence and (ii) the countries designated by You in which 
+You wish Apple to allow access to the Licensed Applications.  In the event that Apple collects any 
+amounts corresponding to the purchase price for any of Your Licensed Applications before You have 
+provided Apple with any tax documentation required under Exhibit D to this Schedule 2, Apple will not 
+remit those amounts to You, but will hold those amounts in trust for You, until such time as You have 
+provided Apple with the required tax documentation.  Upon receipt of all required tax documents from 
+You, Apple will remit to You any amounts held in trust by Apple for You, without interest, under this 
+Section 3.3, in accordance with the provisions of this Schedule 2. 
  
 3.4 Apple shall be entitled to the following commissions in consideration for its services as Your 
 agent and/or commissionaire under this Schedule 2: 

The new language here seems to be:

requirements listed on Exhibit D to this Schedule 2 or on iTunes Connect depending

Apple can now give us tax information through iTunes Connect. I assume this is to make it easier to add new countries.

depending upon, among other things, (i)

This is just lawyerly weasel words because Apple doesn't want to be responsible for you not doing your taxes properly.

provisions of Section 3.4 of this Schedule 2

This broadens the terms a little bit. Nothing major.

@@ -147,7 +156,13 @@
 remittance currency agreed between Apple and You, the purchase price for that Licensed Application 
 shall be converted to the remittance currency, and the amount to be remitted by Apple to You shall be 
 determined, in accordance with an exchange rate fixed for the Delivery Period, as reflected in Exhibit C 
-attached hereto. 
+attached hereto.  Apple may provide a means on iTunes Connect to enable You to designate a primary 
+currency for the bank account designated by You for receiving remittances (ŇDesignated CurrencyÓ).  
+Apple may cause Apple's bank to convert all remittances in any remittance currency other than the 
+Designated Currency into the Designated Currency prior to remittance to You.  You agree that any 
+resulting currency exchange differentials or fees charged by Apple's bank may be deducted from such 
+remittances.  You remain responsible for any fees (e.g., wire transfer fees) charged by Your bank or any 
+intermediary banks between Your bank and AppleŐs bank. 
  
 3.6 In the event that any price payable by any end-user for any of the Licensed Applications is 
 subject to (i) any withholding or similar tax; or (ii) any sales, use, goods and services, value added, or

You can now tell Apple which currency you want your money in and Apple will pre-exchange it. Yay. (Or rather, Apple reserves the right to add this; they might not actually do it.)

@@ -205,6 +220,7 @@
 any patent, copyright, trademark, trade secret or other intellectual property or contractual rights of any 
 other person, firm, corporation or other entity; (c) each of the Licensed Applications is authorized for 
 distribution, sale and use in, export to, and import into each of the countries designated by You under 
+ 
 Section 2.1 of this Schedule 2, in accordance with the laws and regulations of those countries and all 
 applicable export/import regulations; (d) none of the Licensed Applications contains any obscene, 
 offensive or other materials that are prohibited or restricted under the laws or regulations of any of the 
@@ -252,7 +268,7 @@
 commission on the sale of that Licensed Application, notwithstanding the refund of the price to the end- 
 user. 
  
-6.4 You shall indemnify and hold Apple harmless against any and all claims, suits, liabilities, losses, 
+6.4 You shall indemnify and hold Apple harmless against any and all claims, suits, liabilities. losses, 
 damages, costs and expenses arising from, or related or attributable to:  (i) the Licensed Applications; (ii) 
 Your failure to fulfill or perform any of Your obligations under the EULA for those Licensed Applications; 
 (iii) Your failure to fulfill or perform any of Your obligations under this Schedule 2, including, but not limited 

The first bit is a page break I missed. Ugh.

The second one is actually a typo in the contract! Apple accidentally put a period after "liabilities". Oops.

@@ -319,11 +335,18 @@
 Chile 
 Colombia 
 Costa Rica 
+Dominican Republic 
+Ecuador 
 El Salvador 
 Guatemala 
+Honduras 
+Jamaica 
 Mexico 
+Nicaragua 
 Panama 
+Paraguay 
 Peru 
+Uruguay 
 Venezuela 
 United States 
  
@@ -345,6 +368,8 @@
 Croatia 
 Czech Republic 
 Denmark 
+Egypt 
+Estonia 
 Finland 
 France 
 Germany 
@@ -356,10 +381,16 @@
 Ireland 
 Israel 
 Italy 
+Kazakhstan 
 Korea 
 Kuwait 
+Latvia 
 Lebanon 
+Lithuania 
 Luxembourg 
+Macau 
+Malta, Republic of 
+Moldova 
 Malaysia 
 Netherlands 
 Norway 
@@ -397,6 +428,7 @@
 Canada 
 Czech Republic 
 Denmark 
+Estonia 
 Finland 
 France 
 Germany 
@@ -404,7 +436,10 @@
 Hungary 
 Ireland 
 Italy 
+Latvia 
+Lithuania 
 Luxembourg 
+Malta, Republic of 
 Netherlands 
 Poland 
 Portugal 
@@ -427,22 +462,32 @@
 Colombia 
 Costa Rica 
 Croatia 
+Dominican Republic 
+Ecuador 
 El Salvador 
+Egypt 
 Guatemala 
+Honduras 
 Hong Kong 
 India 
 Indonesia 
 Israel 
+Jamaica 
 Japan 
+Kazakhstan 
 Korea 
 Kuwait 
 Lebanon  
+Macau 
 Malaysia 
 Mexico 
+Moldova 
 New Zealand 
+Nicaragua 
 Norway 
 Pakistan 
 Panama 
+Paraguay 
 Peru 
 Philippines 
 Qatar 
@@ -456,30 +501,26 @@
 Thailand 
 Turkey 
 UAE 
+Uruguay 
 Venezuela 
-Vietnam  
+Vietnam 

New countries. Yay, we have more customers now.

  EXHIBIT C 
 Customer 
-Price 
-Customer 
+Price Customer 
 Price 
 Proceeds, 
 Net of 
-Commission 
-Customer 
+Commission Customer 
 Price 
 Proceeds, 
 Net of 
-Commission 
-Customer 
-Price 
-Customer 
+Commission Customer 
+Price Customer 
 Price 
 Proceeds, 
 Net of 
-Commission 
-Customer 
+Commission Customer 
 Price 
 Proceeds, 
 Net of 
@@ -573,19 +614,14 @@
 85 999.99 10500 700.00 999.99 700.00 1199.99 1249.99 763.63 115000 80500
  
 Customer 
-Price 
-Customer 
-Price 
-Customer 
-Price 
-Customer 
-Price 
-Customer 
+Price Customer 
+Price Customer 
+Price Customer 
+Price Customer 
 Price 
 Proceeds, 
 Net of 
-Commission 
-Customer 
+Commission Customer 
 Price 
 Proceeds, 
 Net of 

Changes in the formatting of the table headings.

@@ -682,17 +718,19 @@
 currencies are USD, CAD, AUD, JPY, Euro and GBP, depending on the currency of the Customer Price, 
 as indicated in this Exhibit C.  Customers are charged the following currencies in the following countries: 
  
-- USD:  Argentina, Brazil, Chile, China, Colombia, Costa Rica, Croatia, El Salvador, Guatemala, Hong 
-Kong, India, Indonesia, Israel, Korea, Kuwait, Lebanon, Malaysia, Pakistan, Panama, Peru, Philippines, 
-Qatar, Russia, Saudi Arabia, Singapore, South Africa, Sri Lanka, Taiwan, Thailand, Turkey, UAE, United 
-States, Venezuela, Vietnam 
+- USD:  Argentina, Brazil, Chile, China, Colombia, Costa Rica, Croatia, Dominican Republic, Ecuador, El 
+Salvador, Egypt, Guatemala, Honduras, Hong Kong, India, Indonesia, Israel, Jamaica, Kazakhstan, 
+Korea, Kuwait, Lebanon, Macau, Malaysia, Moldova, Nicaragua, Pakistan, Panama, Paraguay, Peru, 
+Philippines, Qatar, Russia, Saudi Arabia, Singapore, South Africa, Sri Lanka, Taiwan, Thailand, Turkey, 
+UAE, Uruguay, United States, Venezuela, Vietnam 
 - MXP:  Mexico 
 - CAD:  Canada 
 - AUD:  Australia 
 - NZD:  New Zealand 
 - JPY:  Japan 
-- Euro:  Austria, Belgium, Czech Republic, Finland, France, Germany, Greece, Hungary, Ireland, Italy, 
-Luxembourg, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain 
+- Euro:  Austria, Belgium, Czech Republic, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, 
+Italy, Latvia, Lithuania, Malta (Republic of), Luxembourg, Netherlands, Poland, Portugal, Romania, 
+Slovakia, Slovenia, Spain 
 - DKK:  Denmark 
 - NOK:  Norway 
 - SEK:  Sweden 

Again, more countries.

@@ -866,8 +904,9 @@
 States: 
  
 3.1 If You are not a resident of the United States for U.S. federal income tax purposes, You will 
-complete Internal Revenue Service Form W-8BEN and provide Apple with a copy of the completed form 
-W-8BEN as instructed on the iTunes Connect site. 
+complete Internal Revenue Service Form W-8BEN and any other required tax forms and provide Apple 
+with a copy of such completed form(s), and any other information necessary for compliance with 
+applicable tax laws and regulations, as instructed on the iTunes Connect site.   

 3.2 If Apple, in its reasonable belief, determines that any state or local sales, use or similar 
 transaction tax may be due from Apple or You in connection with the sale or delivery of any of the 

The new language here is "and any other information necessary for compliance with applicable tax laws and regulations". In other words, it's just another "we are not the IRS" clause.

And that's it. Every other line—including the refund clause—was already in the contract.

What to do now.

If you didn't read the contract to begin with, you are an idiot. This one contract is the basis of your entire business. It's not like your typical Microsoft EULA, where you know basically what it says, you know whether you're going to comply with it or not, and half of it's probably illegal anyway. So slap yourself on the wrist and then print out all your iPhone-related agreements with Apple and read them. Now.