I'm sure he is still under 2 year contract, unless he just bought himself out. However give it a few months (if not already) and people will be able to pick up an iPhone without signing up for a service for an extra premium (usually an additional $250) which is about the same as buying out the contract.
To avoid the iPhone contract, simply enter 999-99-9999 as your social security number. That will cause the credit check to fail and they will offer you a pre-paid, no-contract plan.