You can keep it, if you intend to keep working on it. But don't sign the crazy contract, and don't agree that what you're building belongs to your friend except as it pertains to his use as a school project. If you want to commercialize it (and maybe if he wants to be involved), you should retain all rights to do so...and it sounds like any contract that involves your roommates father isn't going to be acceptable--he's a lawyer who thinks his son farts rainbows...you need to set the terms. I don't mean "go over the 17 page contract of doom with a pen and make a few changes"...I mean start from a blank page, specify the terms, state your ownership position (100% unless you want to partner with this cat on a future business), and hand it over. It'll only be one page, so even his dad will be able to understand it.