How to Write a Freelance Contract 101

How to Write a Freelance Contract 101

How to Create a Freelance Contract - 2016There are many benefits to freelancing: the freedom, the flexibility, and the feeling of being your own boss. In some cases, you can make more money, too!

But there’s a major drawback to being a freelancer as well—you’re on your own. When you work for a company, that company usually has a legal department (or a lawyer, at least) that has your back. You represent the company, and the company lawyer represents you.

Freelancers don’t have the legal experience or skill set of a company lawyer. And yet, somehow, they’re supposed to find work on their own and know how not to get taken advantage of.

You shouldn’t necessarily be intimidated by this prospect, though. By crafting a simple, yet exact contract, a freelancer can make clear what they expect and what’s expected of them, which improves communication and allows relationships with new clients to grow strong.

You don’t need a law degree to understand the basics of creating a freelance contract. Here’s how anyone can do it.  

The anatomy of a freelance contract

Let’s start with the basics. What exactly is a contract?

The simplest way to put it is that a contract is a legally binding agreement made between two parties. Here’s an even simpler description: it’s a conditional promise. It comes after the initial proposal has been shared with the freelancer, but before the freelancer is at a point where they’re sending invoices over.

There are ten parts that make-up a freelance contract.

1. Names, contact information, and dates

The full names of both parties should appear at the beginning, and also throughout, any contract. If your name is John Smith, don’t put J. Smith. Go with the full John Smith.  Likewise, companies should use their full names. For example, Coke doesn’t refer to itself as just Coke in their contracts—they go by the much longer title of The Coca Cola Company. Being exact prevents possible mix-ups with other people and companies.

Contact information (physical address, email address, phone number, etc.) should be included for each party as well.

Finally, make sure your contract is dated both when you write it, and when it’s signed by each party.

2. Your role

The proposal should give all the information you need in your contact here.

  • Start with the deliverables: It’s what will drive your work but will also be reviewed first if anything goes wrong. It’s also what should trigger the payments you’ll receive.
  • Follow with your responsibilities: List all of the responsibilities required to complete the work that’s detailed in the proposal, and nothing more.

That way, if the client tries to get you to do something that’s out of your wheelhouse (like provide remote customer support, when all you were originally asked to do is build an app), you can tell them, “hey, that wasn’t in our contract.”

That section could be tied or built with the payment section.

3. Payment information

"The freelance writer is a man who is paid per piece or per word or perhaps.”
Robert Benchley, as quoted by James Thurber in The Bermudian (November 1950)

To avoid being that freelance writer, you’ll need to include payment terms, method, and deadlines as explicitly as possible in your contract.

How

First, start by defining how you expect to be paid. Getting paid by the hour may make you a little more money, but unless you use some sort of online tracking system to log your hours, the client will probably prefer that you get paid by the job. It’s just easier that way.

In that case, it’s standard to receive a portion of the payment upfront (around 25 per cent—50per cent usually) and the rest when a job is done.

Whichever method you use to get paid, you need to put it in writing so that there are no misunderstandings about it later on.

You might also like: A Web Designer’s Guide to Pricing Strategies

What

Write down the total amount you should be paid in clear text, then break down in milestones, or however you see fit, depending on your terms.

If you have to take on any expenses to complete a project, then you may also want to stipulate that you expect to be reimbursed for those expenses.

When

When is a reasonable time for you to wait before you get paid? A week after you send an invoice? Two weeks? 30 days? Will you charge a fee if a payment is late? If so, how much will this fee be?

Remember, you don’t want to make these terms too friendly to yourself, as this may put a strain on your relationship with the client before you even start working together. They may even reject the contract entirely, and then you’re right back to where you started (assuming the client doesn’t move on to another freelancer who’s less of a hassle). So be reasonable. And this piece of advice applies to every item on this list, not just payment information.

Example of a work & payment clause

How to Write a Freelance Contract - Payment and Work

4. Deadlines

Another drawback to being a freelancer is that it can be hard to focus. With no boss to ride your back, and the infinite wonders of the internet at your fingertips at all times, it’s easy to get distracted. And that’s not to mention the TV in your house or any activity going on right outside your window.

Without deadlines, freelancers will often lose focus and push projects further back, while clients get anxious as they wait longer for work to be turned in. That’s not a healthy relationship.

Breaking up a project into different milestone achievements, rather than having it all due at once, is usually the smart way to go. This way, the freelancer is less likely put themselves in a situation where they have a huge amount of work due in an impossibly short amount of time. And procrastination aside, milestones just make it easier to keep everything organized, which should be a welcome benefit for both parties.

Example of adjusted payment clause with deliverables and deadlines

How to Write a Freelance Contract - Payment

5. Ownership

Since the client is the one paying you to do the work, in most cases they’re going to require the contract to grant them full rights to the fruits of your labor. That’s just the way these things work.

But sometimes you might be able to be credited for your work, even if you don’t own the rights to it. It never hurts to ask. Credited works look great in your portfolio—but you should confirm with the client that they don’t have a problem with you placing work you did for them in your portfolio, before you go around parading it as one of your personal creations.

In assigning ownership you should keep in mind the distinction between work product and non-work product:

Work product is the finished product, as well as drafts, notes, materials, mockups, hardware, designs, inventions, patents, code, and anything else that the contractor works on—that is, conceives, creates, designs, develops, invents, works on, or reduces to practice—as part of this project, whether before the date of this contract or after”

Non-work product is any third party word you have used to build your deliverable. We often refer to it as background IP.

Example of an ownership clause

How to Write a Freelance Contract - Ownership and Licenses

6. Confidential information

While working on a project, you might come across confidential information like customer lists, business strategies, website stats, etc. The client will want the contract to include a clause that forbids you from disclosing any of that confidential information.

You may also get access to third party information that the client has access to. This is something else you’ll have to promise not to disclose.

Example of a confidential clause

How to Write a Freelance Contract - Confidential Information

7. Independent contractor terms

As an independent contractor, there should be different expectations for your work than the work of an in-house employee.

A few of those differences:

  • The client won’t expect to provide you with the physical tools you need to complete a project.
  • You won’t expect the client to manage your day-to-day schedule.
  • You don’t represent the client.
  • They don’t represent you.
  • And you’ll be liable for your own taxes, too.

Example of an independent contractor clause  

How to Write a Freelance Contract - Independent Contractor

8. Limitation of liability

If there’s a breach of contract that neither party could have reasonably expected based on the terms of contract, then neither party is responsible.

One sentence, as simple as that, could work.

Example of a limitation of liability clause

How to Write a Freelance Contract - Liability

9. Termination terms

Every project comes to an end eventually. Unless you’re signing up for long-term, ongoing work, it will probably make sense for you to set a final date by which, if all the work isn’t done yet, you will stop working and the client will pay you for all the work that has been completed so far.

Example of a termination clause

How to Write a Freelance Contract - Termination

10.  Indemnity

If a third party ends up filing a lawsuit against the end result of a project, whether it’s an app, article, website, or whatever, who is at fault?

The client will want to confirm that you are at fault if you’re the reason why they’re getting sued.

Also, both parties will want to be reimbursed in some way if the other party breaches the contract.

Example of an indemnity clause

How to Write a Freelance Contract - Indemnity

Putting it all together

On top of the actual information that you will include in your freelance contract, you also have to consider the manner in which you will present all of this information.

Perhaps the best piece of advice you could ever receive on this topic is to be as clear and concise as possible.

Improving clarity

Watery legalese will confuse people and might lead to some serious disagreements down the road. All it takes is one disagreement to ruin a relationship with a client, and when you’re networking to improve your reputation and increase the amount of pay you can command, you need to strengthen relationships, not ruin them.

Taking the time to make your contact clear before you do any work will allow you to avoid all that mess. Explain everything that needs to be explained.

  • Define terms: While writing your contract, take note of any particular phrases that might cause confusion. Be liberal about it; even if you think it’s likely that the client will understand what you’re talking about, if there’s any chance at all that they won’t, make a note of it. Then, compile these potentially confusing phrases into a definition paragraph where you take all the space you need to describe each term in full detail. This should help clear up any confusion.
  • Use bullet points: Listing things makes it easier to go through terms quickly, and identify independent terms from conditional ones.

Conciseness is key

One thing that really helps clarity is conciseness. You may think that a big wall of text looks smart and official, but it can be a chore to read through. And this usually looks more pretentious than professional, anyway.  Long, twisted, conjunction-heavy sentences and paragraphs muddle up the message of what you’re actually trying to say. Rambling makes it hard to maintain a respectable style and tone.

  • Limit wording: Without dropping any key details, say what you need to say with as few words as possible.
    Also, while some relatively advanced terms are necessary for describing complex legal matters, the actual words you use should be simple, when they can be. Don’t write, “will be compensated to the total agreed amount,” when you could write, “paid in full.” As Mark Twain once put it, “don't use a five-dollar word when a fifty-cent word will do.” The simpler, the better.
  • Quantify as much as possible: Would you rather commit yourself to “working on weekdays” or “working Monday to Friday, from 9AM to 4PM”? Putting numbers on paper will not only improve your tracking, but it will also make you look more rigorous.

That just about covers it—follow these instructions and you’ll have a contract that protects you from being mistreated, and encourages healthy relationships with your clients. Happy freelancing!

About the Author

Matt is the founder of Bonsai, an automated contracts and invoices product used by 25,000+ freelancers. He lives in San Francisco, where he enjoys surfing, science fiction, and leafy green vegetables.

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