Stefan Palios November 21, 2020 There’s nothing worse than relying on emails, phone calls, and hope when it comes to delivering work and getting paid as a freelancer. Not only does this spike anxiety (a key pitfall for freelancers), it also creates potential legal and client service issues. When you close a new client and are working on your freelance contract, make sure you do it right.
The fundamental use of a contract is to explain what each party owes to the other. In a freelance relationship, it’s usually one-way – you provide work and the client pays. In the contract, you cover the little details that help if the client gets mad, if you’re treated poorly, or if other circumstances arise outside of the ideal outcome.
A freelance contract also doesn’t have to be fancy. While it’s usually preferred to have them written by a lawyer, you can write a simple memorandum of understanding (MOU) that explains in plain language what you will do and how much the client will pay (for visualization’s sake, think about MOUs like a very descriptive line-item invoice).
Based on The 50 Laws of Freelancing, here are the 9 clauses you need to include in your freelance contracts. As a reminder: these are for advice purposes only. You should always get legal advice from a competent legal professional based on your unique circumstances.
1 – What you will do for the client
This clause may seem simple, but a lot of freelancers rely on email communication to identify who is doing what. If that’s your style, no worries. The trick is simply to copy and paste what you agreed to in email, into your contract. No matter what, this clause to be specific. You can choose how granular you want to get, but at the very least it needs to include the deliverables that the client will pay for.
Some other things you might include under the “what you will do” category: a specific number of hours you will put in, notes on quality levels, notes on anything you will explicitly not do, or any special arrangements you agreed to. If you are being paid for a specific set of inputs (and not just a deliverable), make sure each input is also listed.
2 – What the client will pay
Another thing that seems simple, but is often left vague. The contract needs to include two pieces of information about payment. First, it has to indicate the total cost of the package – the dollar value that will get charged. Second, you should include an itemized list if you are delivering multiple items. This pricing should line up perfectly to each item in the “what you will do” category of the contract.
Similar to identifying the scope of work, you can copy-paste the details from an email. The reason you should include it in a contract is so that the client signs their name to agreeing. While a written record like an email is helpful, having a signature on a contract is always the best way to clear up any misunderstandings before starting work. Further, a signature on a contract gives you ammo later if the client is trying to skip out on payment. In your clause, don’t forget to indicate that you will charge any applicable taxes, as you don’t want that to be a surprise come invoice time.
3 – Any additional fees
Sometimes, a contract will contain additional fees. These fees could come from a few areas, such as:
- A la carte offerings.
- Expansions to the scope that you’ve already agreed upon.
- Optional extras you talked about in the scoping process.
- Late fees.
- Any specific fees related to the project (such as expenses).
- Any travel fees for your work together that you pre-agreed the client would pay.
These kinds of expenses need to be ultra-specific and have triggers for what makes them applicable to the contract. For example, you can have in the contract that the client will pay for all eligible expenses, but you have to agree, in writing, ahead of time what “eligible” means before you can charge it. For most additional fees, having a clause of everyone agreeing before the expense is incurred is fairly standard.
4 – Recourse available to the client
While we all want every client project to go well, sometimes it doesn’t. You should anticipate this ahead of time and put details in the contract. The two most common recourse clauses are:
- Low satisfaction clause.
- Cancellation of contract clause.
What you offer as recourse is entirely up to you. Some freelancers have a “make it right” policy where they will simply do the extra work to make the client satisfied. Others give an instant discount or even do the work for free if the client is not satisfied. Usually, these clauses are there to help clients feel comfortable that they will get what they want. However, you’re not under any obligation to offer it – this is something that can be done on a client by client basis. If you offer no recourse, it might be a good idea to make that clear so there’s no misunderstanding down the line.
5 – Relationship of the parties
If you’ve ever read an employment contract, then you’re familiar with a “relationship of the parties” clause. For a freelance contract, the key is to indicate that you are not employed by the client and that you are an independent contractor. Some other standard things to note in this clause are: that you can set your own hours, that you are only obliged to do what is scoped in the contract, and that you can set your own vacation provided you complete the required tasks in a timely manner.
Adding a relationship of the parties clause helps clarify things legally, but also helps you with client management down the road. If a client gets too demanding or wonders why you didn’t show up to a team meeting (that was not part of your scope), you can lean on this clause to protect you and remind the client that you’re not an employee. This is also a clause most companies will likely demand to have included, so putting it in your contracts will help you avoid having to make the change later.
6 – Non-exclusivity and confidentiality
A common clause in employment contracts is that you are exclusively employed by your employer and cannot take on additional work or work for competitors. While the enforceability of this clause is dubious at best, with a freelance contract you have to clearly state that your work with the client is non-exclusive. This is especially critical for someone with niche subject matter expertise. For instance, if you have knowledge that is valuable to banks, you can’t take on a bank client that bars you from working with other banks. You need to be able to take on any client that’s a fit for you.
Clients might not like a non-exclusivity clause, but you can soften the blow by adding an iron-clad confidentiality clause. The basic principle of a confidentiality clause (or non-disclosure agreement – NDA) is that you will not repeat anything you hear about your client nor will you share anything the client shares with you. That’s about it. If you can offer that, then the non-exclusivity is likely to go over better.
7 – Intellectual property (IP) ownership and assignment
When you create something, you’re producing intellectual property. As a freelancer, you’re likely creating something tangible, like a website, a design, a blog post, or similar. But you may also be creating offshoots that are yours, not the clients. To avoid confusion, it’s critical to make it clear who owns what when it comes to intellectual property. In a freelance contract, this can be fairly straightforward, stating that everything the client pays you for is theirs exclusively.
Tip: you can put a clause that IP does not transfer ownership to the client until they pay you. This will give you a level of protection from a client that refuses to pay but starts to use what you’ve produced for them. With a clause that says IP doesn’t transfer until payment is complete, you could technically go after the client for IP infringement if they don’t pay you.
8 – Choice of law
Choice of law is a clause that indicates what legal code you will use to resolve disputes. While it’s common to use the state, province, or country you live in as a choice of law, sometimes a company will choose a geographic region where laws might be more favorable to their cause. As a freelancer, you probably don’t have to worry about this. However, if legal issues do arise, you’ll be thankful that you included a choice of law clause in the freelance contract.
9 – Severability
Severability clauses state that if a court of law strikes down any one element of your contract, the rest remains intact. Generally speaking, this will not apply to freelancers. However, including it will be a huge protection if something does happen and you end up in court with a client. Further, many legal teams at bigger companies will require this kind of clause for their own protection (it’s boilerplate standard in many legal contracts), so including one in advance gives you more credibility when working with larger businesses.
Contracts protect everyone
A big contract with a lot of clauses can make it seem like you don’t trust your client. That’s not the case at all. A well-written contract is not an indication of bad faith. A freelance contract is simply a way for everyone to get on the same page and to ensure everyone is treated fairly based on what they agree to. While the vast majority of the time you won’t have to enforce contract terms, they are beneficial to have just in case.
Disclaimer: You should get all legal documents reviewed by a competent legal professional. These tips are meant for informational purposes only and are not in any way legal advice.
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