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Setting Up Contracts for Your Freelance Work

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I’m lucky. I’ve been freelancing for ten years, and have never had a client fail to pay, radically change the scope of a project, or otherwise mess me around. But I hear horror stories all the time from fellow freelancers.

The antidote to many of these nightmare scenarios is a good contract, but drawing one up isn’t simple. You’re a freelancer, after all, not a lawyer (if you're a freelance lawyer, you’re in luck, and don’t need to read any further!).

So in this tutorial I’m going to take you through the process for creating a solid contract that will set expectations clearly and protect you if things go wrong.

We’ll start by looking at what a contract does and why it’s important, and then I’ll take you through some key areas to focus on, and I’ll point you to some useful templates and resources around the web.

I’m a writer, not a lawyer, so I can’t give you specific legal advice. In any case, the details of what you should put in a contract vary greatly depending on the type of work you do and the particular nature of each agreement. What I can do is lay out some general steps that you can follow to create any freelance contract, whether you’re a freelance designer, photographer, programmer, or a freelancer in any other field.

1. What a Contract Does, and Why You Always Need One

The primary purpose of a contract is to set out the details of the work you’re doing, and to protect both you and your client if things go wrong.

Protecting Both Parties

If the client refuses to pay, for example, or claims that the rate you agreed is much lower than it actually was, you’ll have little opportunity to challenge it if there was no contract in place. With a contract, on the other hand, everything is clear. Even if you don’t actually take legal action, the threat of it can be enough to resolve most disputes.

From the client’s point of view, the contract states what work you’re expected to do, and gives them recourse if you don't do what’s in the agreement. Even though you will of course do a great job, you need to pay attention to this part of the contract, and make sure that what you’re committing to is reasonable and clearly defined. More on that later.

The contract also does things like making it clear who “owns” the work after it’s been created, i.e. who holds the copyright or other intellectual property rights on any work you create—again, more on that later.

Establishing Clarity

Although the primary purpose of a contract is to protect both sides in case of a dispute, a side benefit is that it provides greater clarity about what both sides are expecting.

This side benefit has actually been the main benefit of contracts for me personally. One of the main problems in freelance work is encountering clients with unclear or unrealistic expectations. A contract sets out in black and white exactly what the client wants, and what you expect. It can flag problems early on, saving you a world of pain later on.

So even if you never resort to taking legal action based on your freelance contract, simply having this greater level of clarity makes it worth drawing one up.

2. How to Create a Contract

So you know what a contract accomplishes, and why it’s so important to have one. How do you go about creating one?

Often, clients will hand you an agreement they’ve used before. But if it’s up to you to provide one, it can be hard to know where to start.

Types of Contract

First of all, you need to understand what type of contract you’ll be using. There are many variations, but three of the most common types are:

  • a contract for a single, one-off piece of work
  • a contract for ongoing work, with an agreed rate for each assignment completed
  • a retainer agreement

In the first case, you’ll want the contract to be very specific about what the project entails, what you’ll need from the client, what you’ll deliver, when you’ll deliver it, what the payment will be, and how it will be structured.

In the second case, the details may not be quite so specific, because both you and the client will want to leave some room for changes over time (more assignments or fewer, different types of work, different timescales). What’s important in this case is to decide which elements of the work will be fixed.

You may include rates for different types of work, for example. Or if the assignments vary a lot, perhaps set a minimum amount for each assignment, with rates to be agreed for longer projects. You may want to set minimum or maximum numbers of assignments (or hours of work) per week or per month. The idea is to leave room for flexibility, but also set some parameters on the things that are most important.

With a retainer agreement, you make yourself available to work for the client as needed, in return for a regular payment. If you’re a web designer, for example, and the client keeps coming back to you asking for lots of small changes to the site, you could push for a retainer agreement instead of charging for each change individually. So you get paid an agreed amount per month, and work on projects as needed. You get a regular, predictable income stream, and the client gets your continued availability.

The key here is to focus on scope. Exactly how much work is included in the retainer agreement? Set a limit in terms of hours per week, or whatever measurement makes sense in your case. It’s crucial to be clear on this limit, so that you don’t find yourself overloaded with more and more work for the same fixed retainer fee.

Decide on Your Approach

Once you’ve established what sort of contract you’re preparing, you need to decide what approach to take to create something suitable.

The best approach is to hire a lawyer to draw up a contract for you. Needless to say, this is likely to be expensive, and for many freelancers it will eat up too much of the fees you receive. However, you are more likely to end up with a rock-solid contract, especially if you choose a lawyer who specializes in your field. And if you can use this contract as a template for other assignments for years to come, the investment may be worth it.

If you’re looking for free options, there are plenty of templates available online that provide a good starting point. I’ll point you to some of them in a later section. The key here is to understand that these are just starting points, not the finished article. In most cases, it won’t work just to copy them in their entirety; you’ll need to adapt them to your particular circumstances and make sure you’re covering the points that are important to you. I'll cover that in the next section.

Another option is to adapt contracts you’ve already used for other clients. Again, you’ll need to do some work to make the contract relevant to the work you’re doing for the new client, but old contracts can be a great place to start. As you do more freelance work, you can build up your own library of templates to use as needed.

If you don’t have previous contracts, ask around. Find other freelancers who do similar work to you and ask if they can share the contracts they’ve used (with sensitive details omitted, of course). Or check a professional organization in your field. Many of them provide suggested templates you can use. For example, AIGA, the professional association for design, provides a standard form of agreement for design services on its website.

3. Key Areas to Focus On

Whichever approach you take, you’ll need to make sure that the contract covers certain key areas. You may have your own priorities based on the type of work you do and what’s important to you, but these things will be important to include in most freelance contracts:

Payment Amount and Terms

It’s natural to focus on the bottom line: how much you are getting paid. But there are many other details you need to include. When will you be paid, for a start? Is there an upfront fee? Do you get paid on the completion of milestones in the project? If so, how are they defined? For all payments, be sure to include a deadline, e.g. within 30 days of completion, so that clients can’t boost their own cash flow at your expense.

Intellectual Property

This one is crucial, no matter what type of work you do. You need to establish who owns the rights to what you create for the client.

In general, copyright belongs to the creator of the work, so you have two options here: either transfer those rights to the client, or create a license that allows the client to use your work. Standards can vary across industries, so do some research to find out what’s standard in your area. 

The important thing is to make sure you understand which rights you’re giving up, and if you’ll need to use any elements of the work in future (for example, as a case study on your website), specify in the contract that you have the right to do that. You may also want to specify that the client only has the right to use the work after payment has been made.

Project Scope

Clarity around project scope is essential. For example, a contract that says you’re due $1,000 on completion of a website design is no good. What exactly are you providing? What resources do you need from the client to get it done?  How much time do you have, and what happens if you miss the deadline because of delays in getting what you need from the client? How is the “completion” of the design defined? You need to insert as much specific language here as possible, to ensure that both you and your client know what’s included and what’s not, and to avoid the dreaded “scope creep”.

Provision for Cancellation

What if the client has a change of course and no longer needs your services? What if you have a sudden emergency and can’t fulfill your part of the bargain? Unexpected changes can happen, and a good contract makes provision for them. As a writer, I often include a provision for a “kill fee” in my contracts, so that if the assignment is cancelled when I've already started work on it, I receive a proportion of the fee (often 50%). If it’s an ongoing agreement or retainer, consider including a notice period on both sides for the cancellation of the agreement.

Liabilities

What happens if the work you produce creates a problem for your client? Maybe the code you produced has a glitch that causes the client to lose sensitive data. Maybe the logo you designed is too similar to another company’s, and your client gets sued for trademark infringement. Maybe that provocative statement you included in their website copy gets them sued for libel.

A lot can go wrong, and a freelance contract needs to establish what happens in that case. The important thing here is to be fair and to stand behind your work, without agreeing too much and opening yourself up to career-ending liabilities. The sample contracts we’ll look at in the next section contain some suggested wording.

4. Contract Samples and Other Help

If you want to start from a template, there’s lots of help available online. Just keep in mind that you’ll need to adapt the templates to your own circumstances. Many of them are also designed for use in particular countries, so may need to be worded differently in your jurisdiction. In any case, here are some useful resources.

A good place to start is Docracy, a completely free, open source collection of all kinds of legal documents. Bear in mind that anybody can upload documents, so you need to apply some judgment about which ones to use. There’s a useful set of contracts for freelancers.

Another great tool is the Freelancers Union Contract Creator. This time, instead of getting a template, you put in all your details using the web form, and at the end you get a contract all filled out and ready to use.

Then try your local trade or professional organization. I’ve already mentioned the AIGA template for designers in the U.S., but in different industries and different countries, there are plenty of other resources out there. To take a random example, if you’re a Swedish freelance photographer, you can find sample contracts at the website of Svenska Fotografers Förbund. So find a good trade association in your area, and either check the website or call to ask about sample contracts.

There are lots of other contract resources out there, so if you know of a good site that I haven't mentioned, please let me and your fellow readers know by leaving a comment.

5. What If the Client Has Already Prepared a Contract?

Many clients will have an agreement already prepared for you to sign. If that’s the case, you’re spared the work of creating one yourself, but you should still read it carefully and make sure that you’re happy with it.

Clients will often say that a contract is “standard”, but in reality the wording can always be altered if you push hard enough. It’s tempting just to sign it, especially if you really want the assignment, but keep in mind that if you’re at the contract stage, the client has already decided you’re the best person for the job, so they really want you too. Don’t be afraid to push back, and stand up for your rights.

Apply the methodology we've talked about here to assess the contract you've been offered, and make sure that it covers the important points in a way that you're happy with. Again, seek out help from the appropriate freelance association, or ask other freelancers in your field to get a second opinion on whether the contract seems fair. And if you can afford it, hire a lawyer to check it thoroughly.

Next Steps

You’re now in a position to create contracts for your freelance work. You know what a contract does and why it’s important, you’ve seen some different types of freelance contracts and different approaches you can take to create them, and you know the key areas to focus on. I’ve also pointed you to some contract samples and templates that you can use as a starting point.

With any legal matter, there’s no substitute for hiring a good lawyer. But with what you’ve learned in this tutorial, and the useful free resources available online, you can at least create a contract that covers the most important points, establishes the scope of your arrangement with the client, and protects you against some common problems.

Resources

Graphic Credit: Contract icon designed by Michael Wohlwend from the Noun Project.

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