Working with contracts is essential for running a reliable, functioning and secure freelancing business. Contracts serve as a safety net for both you and your client. But, what should this contract include and is it necessary to sign one?
Many freelancers are reluctant to draft their own contracts for freelance work, whether because they believe that they can’t master the legal language or are afraid of forgetting the “fine print”.
While it is generally good advice to contact a lawyer the first time you draw up a contract, one can get the hang of it by him- or herself as well.
If you’re not sure where to start, we’ve prepared a contract template that you can use as a guide that you will find at the end of the article. Keep reading to see all the information that the document should include and whether or not you should actually sign a contract.
What is a freelancer contract?
A freelancer contract is a legal agreement between the freelancer and the client where they agree on the project to complete and work to deliver.
This simple contract exist to protect both the freelancer and the client. The freelancer is getting a guarantee of the money their will receive for the work delivered and the company is getting a guarantee of the work and deliverables they can expect. As it’s a legal document, it could be used in court in case something went wrong.
A contract for freelance work should include as much information about the project as possible to avoid misunderstandings in the future.
What should a freelance contract include?
- Contact details from Freelancer and Client
- Project scope
- Pricing and rates
- Payment schedule and options
- Deadlines and timeline
- Ownership / Copyright
- Legal terms
- Kill fee and cancellation terms
- Plus, anything else that affects the freelancer-client relationship
Should I always sign a freelancer contract?
We really encourage every freelancer to have a contract signed. The freelancer contract is actually the first template that we include amongst the most important templates for freelancers.
It’s true that on the current digital age you’ll probably discuss the project details per e-mail and that’s also a written agreement. But we think that having all details summarized in a contract and having it signed by both parties is a much better alternative.
Must-Have Clauses in a Freelancer Contract
If you are still wondering how to write a freelancer contract, we have comprised a list of contract clauses which should be an inseparable part of a freelancer contract.
1) Price and work rates
First and foremost, a freelancer contract should leave no doubts whatsoever regarding how your payment is determined. Are you going to charge a certain sum for the whole project or for the hours you put in?
Depending on the kind of work you do as a freelancer it’ll be better to get paid by project completed rather than per hour of work. However, sometimes it’s not easy to foresee how long the work might take. In those cases, it might be more interesting to get paid per hour.
Ultimately, you want to make sure that you’re getting paid.
Additionally, a minimum and maximum working hours clause is recommended if you charge by the hour. It states that the project will take no more time than X and no less than Y, serving as a safety net for both you and the client.
For project-based payments, you can add an extra line mentioning your hourly rate for extra work. Something like:
“Any additional work will be charged at a fixed rate of $85/hr.“
2) Payment schedule and methods
Secondly, you should decide on a certain payment schedule.
Receiving all the money at once might not be the best idea, especially if you are just starting out. Some freelancers prefer getting paid in three installments, separated into 40/40/20 or 30/30/40. Others agree on two installments: 25/75 or 50% upfront and the rest – 50% – by completion of the project.
Asking your client for an upfront payment or a deposit can be beneficial for your freelance business. Why?
- Easy and quick way to avoid clients that don’t want to pay you
- Great for your cash flow – especially if it’s a long-term project
- More feedback from clients as they are already paying (investment)
- Cash for you to cover project expenses, e.g a tool that you need
Of course, not every client will be happy with paying upfront and it’s entirely up to you.
Just make sure that you make it as clear as possible in the contract so that both parties are aware and happy working with that payment schedule.
What is more, a freelance contract should specify the exact method of payment as well.
What is your preferred method to get paid as a freelancer? List all the payment options that you are offering: Direct debit, PayPal, checks, bank transfers, credit cards, etc.
If you’re working with clients overseas, we recommend you check Transferwise. You’ll get instant international bank details to receive money from over 30 countries around the world with zero fees – what’s perfect for freelancers.
Here’s an example of a Payment schedule clause:
Once the payment alternatives are decided, how much time does the client have to pay you? Are you ok receiving the payment 14 days after sending the invoice? or would you prefer just 7 days after?
Tip: We recommend you to run away from Net 30 agreements
3) Deadline and timeline
Generally speaking, every freelancer contract has a deadline and a date when the contract begins.
On the one hand, it helps you plan out the project tailored to your own time schedule, on the other it can even help with motivation.
The client, of course, benefits from the inclusion of a deadline clause as well. Try to negotiate the deadline clause with the client and find a middle ground that suits you both.
Here’s a simple example of a Deadline clause covering deliverables and due dates:
Also, you might include a few lines specifying that whenever you are waiting for your client’s feedback are not considered in the timeline of the project. For example:
“The days waiting for you to provide feedback or any resources requested (images, contact details, logos, etc.) are not considered “business days” nor are included in the timeline.”
4) Kill Fee or Cancellation Fee
If you happen to have bad luck with your clients, a kill fee (also known as cancellation fee) is the contract clause that will save you from not getting all the money you have earned.
A kill fee is exactly what it sounds like – if the project is terminated for whatever reason (client goes bankrupt, cancels the project, etc.) the client is obliged to compensate you financially for the time already put into the project.
You could specify that the already paid deposit is non-refundable and will serve as the kill fee in case of termination plus any additional expenses for the work already done.
Here’s a kill fee clause example:
“Either party (“The Freelancer” or “The Client”) has the right to terminate this contract at any point. Upon termination of any work given by The Freelancer:
– The Freelancer will immediately provide The Client with any and all work in progress or completed prior to the termination date.
– The Client will pay The Freelancer an equitable amount as determined by The Client for the partially completed work in progress and the agreed to price for the completed Services and/or Deliverables provided and accepted prior to the date of termination.
The initial 30% down payment is non-refundable.”
Last, but not least, don’t forget the importance of copyright and ownership rights – they determine who actually owns the work.
There are some particularities to most freelancing professions with regards to this copyright clause, though. For example, designers might want to retain their rights on sketches, which weren’t used for the project. Freelance writers could include a clause that allows them to reuse their content after a certain time has passed.
For the majority, including a clause that retains all copyright of your work until the project is completed and paid for is very good general advice. After the work is completed, your client will get the rights and you will be obliged to not use or sell your work to anyone else. Once again, this clause should be composed in a way beneficial to both parties.
The copyright clause in a designer freelance contract could say something like:
“Once the work is completed and the payment has been received, the Client will own the rights to the design.“
Freelance Contract Template (Word)
While this is a great (and free!) Freelancer contract template to hit the ground running with, we must emphasize that we are in no way positioned to offer legal advice and this simple contract template should not be taken as such.
It is a good starting point – so download the contract template, personalize the contract as needed and start sending it to clients.
Additionally, we always recommend freelancers enlist the help of a legal expert to go through any contract you use with a client. This ensures you’ve covered all your bases!
More templates for freelancers:
- Freelance Proposal Template
- Freelance Invoice Template
- Payment Reminders Templates
- Order Confirmation Template
Did you find these tips helpful? Can you think of other clauses that freelancers must include in every freelancer contract? Feel free to discuss anything we might have missed in the comments below.