If you’re freelancing then you need a contract, full stop. If there’s only one thing you take away from this article, take that.
But read on to learn the basics of what each contract should include and why.
Freelancing without a contract is surprisingly common for new and experienced freelancers alike. Whether you don’t know how to create one or have been working with a client for a while and think it’s unnecessary, there are tons of excuses. But it doesn’t matter if it’s your first or fiftieth time working with a client – use a contract.
Contracts have the benefit of protecting you against bad clients and bad situations. But they also help set proper expectations with good clients.
Don’t think of a contract solely as a complicated legal document to help you if you get sued.
Think of contracts as a critical tool for building a strong client relationship. A contract should clearly define the client’s expectations of you and your expectations of them, as well as what happens in these various scenarios.
Remember, contracts don’t need to be hundreds of pages of unreadable legalese. At their core good contracts focus on three critical parts that we’ll go through here.
Scope of Work
What work are you going to do for the client? Detail matters here, and ambiguity is your enemy. You can describe what you’re going to do as “design a landing page for the client’s new product”, but the devil’s in the details.
Poorly defined scope of work is the most common cause of scope creep and missed guidelines, which arise from mismatched expectations.
This is probably a clause you should care about a lot. And you should! It’s strongly related to the scope of work. Like the scope of work, the devil’s in the details here and disagreements can arise when you’re not too clear about how much, how, and when you’ll be paid. Get these things explained clearly and in writing upfront.
One common gotcha, especially for larger companies, is their Net 30 or even Net 90 payments. This means they have 30 or 90 days to pay you after you submit an invoice. Remember that all parts of the contract are up for negotiation so if this is your only client and they expect Net 30+ terms, you can rearrange other terms. For example, ask for a certain payment upfront or say you won’t begin work on the next milestone until the previous milestone’s invoice was paid.
This is another very important part of your contract, and one that’s often glossed over because it can be confusing. Regardless of how small or large your work, make sure your IP ownership is spelled out clear. This means being crystal clear about who owns what at each step in the process of your work.
Generally speaking, when you begin working on something copyright belongs to whomever created the work (likely you). That means you have two options: you can transfer the IP to the client, or allow the client to use your work with a license. The standard does vary across industries and geographies, so talk to other freelancers to see what’s best for you.
Another important point related to payments: if you transfer IP ownership to the client, make sure it doesn’t transfer until your final invoice is paid. This not only provides them an incentive to pay you faster, but also gives you more leverage if they don’t pay you at all and use your work anyway. Believe me it happens!
Contracts should always be used for all freelance work, and they can be rather simple if done effectively. Think of them as tools to help maintain your relationship with clients by setting clear expectations.