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How to Create a Freelance Contract

Pretty much every freelancer comes across problem clients. They’re the ones that work on their own schedule, expect more for less, delay a project, then expect things to be done on a tight budget. No freelancer wants to deal with a client like this. You became an entrepreneur because you wanted to control your own schedule, not spend your time pleasing clients who don’t respect what you do.

That’s where freelance contracts come in. Here’s what you need to know about creating a freelance contract and what to include. 

Why do so many clients take advantage of freelancers?

Contracts are often made in favour of the party writing or defining them, and some companies use them to take advantage—intentionally or unintentionally—of freelancers. It’s not uncommon for clients to underpay, overwork, and allow the scope of the project to creep well beyond what it’s supposed to be.

As a freelancer, it’s hard to get out from under this, especially when you’re first starting out—you want the work, you may need the money, and you need a few projects under your belt. You want to be easygoing and adhere to the “client is always right” mantra.

This can often be chalked up to a lack of open communication and clear guidelines. Having your own contract in place is one way to ensure your interests are taken care of. You don’t have to sign a client’s contract simply because they have one. As the vendor, you have every right to propose your own.

What is a freelance contract, and why do you need one?

A freelance contract is a document that outlines the deliverables, responsibilities, and expectations for any project you undertake with a client. They help to clearly define expectations in terms of a specific project for both you and the client. 

Many new freelancers may receive contracts from prospective clients to sign. However, as a freelancer, you’d benefit a lot more by taking ownership and responsibility for defining your own contract terms. 

But just because a client sends you a contract doesn’t mean you have to sign it. Freelancers can create their own contracts, and there are several reasons that you might want to consider creating your own. 

Benefits of a freelance contract

Whether you are a freelance writer, marketing consultant, graphic designer, voice actor, or offering some other service on a contract basis, there are clear benefits to creating your own contracts for clients to sign. Set out payment terms.

The number one benefit to using a contract is to ensure you are paid fairly. You can agree on a project, complete the work, send an invoice to a client and get paid, all without a contract. It’s not an actual requirement—but it sure helps.

Contracts help to ensure that the scope of the project, deliverables and deadlines are all clearly set out and understood by both you and your client. This can help to clear up any confusion and hopefully avoid future misunderstandings. 

But a contract also outlines specifically what you’re doing, so if a client approaches you halfway through the project with a major scope change you can either reel them back in with the original set out terms, or clearly explain why the extra work is going to cost more money.  

This is the same if a client cancels halfway through a project you’ve already completed work on. Having terms outlined clearly in a contract helps to ensure that you get paid for the work you did, even if it never gets completed.

Look more professional

Contracts help bolster your professional image with clients. If you’re not prepared to fill out a scope of work and send a contract to a client, and instead expect them to do the heavy lifting, it can look a little amateur.

Likewise, if your potential client balks at the fact they have to sign a contract to get work done by you, it can be a huge red flag. Those indications to RUN before you end up with a problem client on your hands are gold. 

Legal protection

Even though everyone hopes it will never happen, sometimes legal issues can arise. It could be a disagreement over who owns intellectual property, a lawsuit because of the work product, or some other reason entirely—that’s where a contract comes in.

Contracts help outline the details of the project and agreement you have with your client. This can help clear up things like who owns the intellectual property beforehand. They also make sure that you get paid (and can dictate how that happens), and give you legal backing if it ends up that you don’t get paid.

When do you need a freelance contract?

It’s a good idea to sign a freelance contract anytime you start a project with a client—preferably before you start working on it. It doesn’t matter if you’re managing their social media pages daily or delivering a single blog post, contracts help you define your role and protect your business. 

It’s important to note that you can sign multiple contracts with a single client, or sign a contract that will handle a larger business arrangement. Some freelancers work on a recurring basis and sign a single contract for an entire year, while others choose to sign one for each project or deliverable.

What to include in a freelance contract

The best, most sound legal advice on freelance contract clauses will always come from a lawyer or legal professional, but here is a general overview of what you should include in a freelance contract: 

1. Names, dates and contact information

At the most basic level, a freelance contract should include the first and last names of both parties, along with their physical address, email address, and phone number. 

If your freelance business operates under a different legal name than your own or either parties use a DBA, you should make sure that the legal company name is included in the contract. You can sign as yourself on behalf of the business, so long as you have the authority to do so. 

Speaking of signing, contracts need to be signed and dated by both parties to be official. This usually happens on the final page before any appendices or additional documents are tacked on.  

2. Scope of work

A well-written scope of work clearly outlines the project, any deliverables, milestones, deadlines, and expectations. This information should all be included in the contract, as simply and clearly written as possible.

Scope creep happens all the time. Clients get excited about projects or get middle-of-the night epiphanies that can result in freelancers doing more work for the same pay. A contract helps mitigate this scenario.  

Clearly defining the scope of work in a freelance contract is one of the best ways to prevent a project from snowballing and taking on a life of its own. Spelling out your deliverables in the contract helps to ensure everyone is on the same page. 

This way, if you do see the scope creep happening, you can reign it back in. Or you can modify the contract to include the new work along with additional compensation. This ensures everyone is happy, and the clients’ expectations are realistic. 

3. Copyright and ownership

Defining the details of copyright and ownership goes a long way to ensure everyone gets what they need. They can also help you build your portfolio if needed. 

In most cases, when you’re paid to do work, the client will receive the work product. “Work product” usually refers to the finished product, as well as anything else that you work on in relation to it—such as drafts, notes, mockups, patents, and codes. 

This section is also where you outline whether you receive credit for the work you produced or the client adopts it as their own. Likewise, it outlines whether you can use the final product as part of your portfoliothat way there are no issues down the line.

4. Confidential information

Contracts also cover confidential information. Namely, that you won’t spill any company secrets you’re privy to while completing the work. Freelancers are sometimes given access to confidential information like business strategies, customer lists, website metrics, and other like material that your client doesn’t want everyone to know about. 

5. Payment information

If you want to get paid—and it’s assumed you do—your contract’s payment information is crucial. This section defines how and when you will be paid, and it can also cover what happens if payments are delayed or missed.

You want to define the following in your freelance contract:

  • How you will be paid—by project, per word, an hourly rate, or something else entirely.
  • Whether you will get any up-front payment—it’s not uncommon for freelancers to require a 25 to 50 per cent upfront payment or initial deposit.
  • When you will be paid—including the different milestones (or payment schedule) throughout the project. It should also include the time frame for receiving payment after your invoice has been sent. 
  • Means of receiving payment—you can define how your client can pay you. For example: PayPal, Interac eTransfer, or credit card via your Stripe account.
  • Late payments—what happens if payment is late and whether you charge interest on late payment fees. 

Laying out these details ahead of time helps ensure you get paid on time, and all parties involved are clear on expectations. 

You also want to ensure the payment terms you set out are fair and attainable for everyone involved. So, if your client is a big company with an extensive accounts payable department, including a 7-day payment term into your contract is probably unrealistic.

6. Limitation of liability

A limitation of liability clause is there to protect you from transactions that carry a risk of liability arising from things like:

  • Breach of contract
  • Negligence
  • Misrepresentation
  • Infringement of intellectual property (IP) rights

It aims to limit the amount and type of compensation that one party can receive from another. Including limitation of liability in a freelance contract doesn’t mean that you can head out and breach a contract willy-nilly. Instead, it’s there to deal with circumstances that neither party could have reasonably foreseen and help keep compensation amounts reasonable. 

7. Indemnity

Indemnity clauses are often overlooked by freelancers, but they’re incredibly important. 

An indemnity clause deals with what happens if a third-party ends up filing a lawsuit based on the end-result of a project—whether that be an article, website content or app—and determines who’s at fault. Many publishers try to shirk this responsibility on to the contractor, so it’s important to outline these for yourself.

This section of the contract also deals with who gets reimbursed what if the other party ends up breaching the contract. 

8. Termination clause

Termination terms are important in freelance contracts. They define how you can go about cancelling a contract, and what happens when clients decide to terminate a contract, but you’ve already started the work.

Beyond that, sometimes projects get stopped in the middle of work and the client may think because  the work was never completed, they don’t need to pay you for anything. But that’s certainly not the case. This is where termination terms come into play.

Your payment terms should define whether a client needs to pay you for finished work to date if they decide to cancel a contract early. You might also want to include a notification timeframe for long-term or ongoing contract cancellations—such as 30 days’ written notice is required to cancel a contract. 

Getting the contract signed

Your contract will need to be signed by both parties, preferably before you get started on work. 

The standard option for signing contracts is simply having a hard copy signed by both parties and filed somewhere. But paper can get messy, not to mention it’s time consuming and inconvenient if your client is elsewhere in the world.

Luckily, you can get a contract signed online without having to print a document or get a pen out. Software like HelloSign, PandaDoc, and even Adobe Acrobat Reader can help you get the job done.

Accessing a freelance contract template

We’re here to help! Small businesses that incorporate with Ownr get access to tailored legal agreements that can include contracts. Ownr also offers other important documents designed to keep your business runninglike your website privacy policy page.

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