Working with contracts is essential for running a reliable, functioning and secure freelance business. Not having one can leave both parties open to exploitation and misunderstandings. Contracts serve as a safety net for both you and your client in terms of legal and payment protection and work clarity. In this article we’ll explore what clauses are key in any contract, offer negotiation tips and examples and provide you with a downloadable template to help you get started.
- What is a freelance contract?
- Importance of having a contract for freelance work
- What should a freelance contract include?
- Common freelance contract mistakes to avoid
- Freelance contract: How to negotiate with clients
- Free freelance contract template to download
- Contract template for freelance work in Germany
- FAQs
- Conclusion
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 to read the “fine print”.
While it is generally good advice to contact a lawyer the first time you draw up a contract, one can eventually get the hang of it themselves.
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 this article. Keep reading to see all the information that the document should include and get tips on whether you should sign a contract.
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What is a freelance contract?
A freelance contract is a legal agreement between a freelancer and a client where both parties mutually agree on how a project is to be completed and what work is to be delivered.
This freelance agreement exists to protect both the freelancer and the client. The freelancer is getting a guarantee of the money they 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 counts as a freelance contract can vary depending on the context of the work but generally it includes:
- Written agreements with terms and deliverables
- Email threads with clear agreements
- Verbal agreements outlining work scope, payments and deadlines
- Platform-based agreements
While the above all count as freelance contracts, it’s good practice to have all details summarized in a proper contract document and have it then signed by both parties.
Importance of having a contract for freelance work
The importance of having a freelance contract before starting your work cannot be overstated. As mentioned above, not only does it protect both you and your client, it sets clear expectations right from the outset. Let’s take a look at why it’s so important to have a contract:
- Legal protection
A freelance contract acts as a legally binding document that clearly outlines the rights and obligations of both parties. This can help protect you in case there’s ever a dispute between you and your client. - Clear scope of work
A contract clearly defines what work will be done, how and when. This ensures that all expectations are aligned right from the start and helps avoid ‘scope creep’.
- Protection from false self-employment
Misclassification of false self-employment can have severe implications for both workers and employers, leading to loss of social security benefits for workers and legal and financial risks for employers. Using clear, detailed contracts helps outline the nature of the work and the independent contractor relationship.
- Clear payment terms
A freelance contract clearly states how much you’ll be paid and when. It should also include late payment penalties or project termination fees to help ensure you’re always protected.
- Deadlines, milestones and deliverables
Contracts set expectations for project timelines on both sides and can help manage expectations from clients. This helps prevent any misunderstandings and leads to better outcomes for you and the client.
- Liability protection
A freelance contract clearly states who will be held liable in what situations and can limit liability in case of unexpected issues.
What should a freelance contract include? General information and must-have clauses
A freelance contract should ideally include the following information:
#1 Contact information
First and foremost, a freelance contract should include the names, addresses and contact details of both parties.
#2 Project scope
Next, a comprehensive description of what services need to be provided should be included in the contract. This section outlines objectives and deliverables and should mention any tools or platforms that will be used during the project.
#3 Pricing and rates
A freelance contract should clearly outline the pricing strategy from the get-go. Are you going to charge a certain sum for the whole project or have an hourly rate for the hours you put in?
If you do decide to charge by the hour, think about adding a minimum and maximum working hours clause. This clause states that the project will take no longer than X hours 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 clause mentioning your hourly rate for extra work. For example, you can state that ‘any additional work will be charged at a fixed rate of $85/hr.’
Find out more about how to set your rate as a freelancer.
#4 Payment schedule and options
The payment schedule must be clearly defined and agreed upon in a freelance contract.
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 instalments, separated into 40/40/20 or 30/30/40. Others agree on two instalments: 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. This is because not only is it an easy and a quick way to avoid clients that don’t want to pay you, it’s also great for your cash flow – especially if it’s a long-term project.
Of course, not every client will be happy with paying upfront. This is why it’s important to make sure that you make it as clear as possible in the contract so that both parties are happy the payment schedule.
Your contract should also specify the exact method of payment. What is your preferred method to get paid as a freelancer? List all the payment options that you offer: Direct debit, PayPal, checks, bank transfers, credit cards, etc.
If you’re working with clients overseas, we recommend you check Wise. You’ll get instant international bank details to receive money from over 30 countries around the world with zero fees – perfect for freelancers.
Here’s an example of a payment schedule clause:
Once the payment method is decided, how much time does the client have to pay you? Are you good with receiving the payment 14 days after sending the invoice? Or would you prefer it to be 7 days? Make sure you clearly mention this in your contract and also cover what happens in case of late payments and include any fees that might occur.
Tip: We recommend you steer clear from Net 30 agreements
#5 Deadlines and timeline
The contract must also include a timeline clause. This should specify the project’s start date, end date and any relevant deadlines or milestones. Things like progress updates and reporting should also be mentioned under this section.
Here’s a simple example of a deadline clause covering deliverables and due dates:
Also, you might include information specifying that the days spent waiting for your client’s feedback are not to be 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” and are not included in the project timeline.”
#6 Ownership / Copyright
Copyright and ownership rights determine who 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 good practice. After the work is completed, your client will get the rights, and you will be obliged not to use or sell your work to anyone else. Once again, this clause should be composed in a way that is beneficial to both parties.
#7 Legal terms
A liability and legal dispute resolution section is also important in a freelance contract. It should detail the limits of each party’s liability and mention how any disputes will be resolved.
It should also clearly state which country’s laws will govern the contract.
#8 Kill fee and cancellation terms
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.
Your contract should 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 will need to be paid by the client.
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.”
#9 Signatures
Finally, the contract should end with both yours and your client’s signatures. This indicates that both parties have read and agreed upon all the clauses set forth in the contract.
If you can think of anything else that is specific to your field and that could potentially affect the work and your relationship with your client, make sure to include it in your contract.
Common freelance contract mistakes to avoid
Let’s take a look at some of the most common freelancer contract mistakes and how you can avoid them:
#1 Working without a signed agreement
Working on a project without signing a contract leaves room for serious misunderstandings like disputes over payment, scope of work, intellectual property rights, etc.
It is vital that you and your client both understand each other from the get-go and agree on everything, from project milestones and payment methods to the number of revisions and cancellation clauses. It is therefore wise to have a freelance contract to keep you both protected.
#2 Accepting vague scopes
Not being clear enough on what the scope of work is is another mistake that freelancers make when drafting their contract.
Make sure you clearly define deliverables, deadlines, milestones, and any other project specifics in your contract. Break down tasks in detail and specify what’s not inluded to avoid scope creep.
#3 Failing to define ownership of work
Ownership of work is another area that is often neglected when drafting a contract. Make sure your contract includes a clause that allows you to retain all copyright of your work until the project is completed and paid for in full.
#4 Skipping the termination clause
Without a clearly defined termination clause, you’re at risk of sudden project cancellations without compensation or being stuck in a contract that isn’t favorable to you.
Be sure to include a termination clause that specifies things like notice period, termination for cause vs convenience and payment for any work already completed. Also be sure to include a kill fee, if applicable.
#5 Not discussing revisions or rush fees
Revisions and rush projects also need to be clarified upfront. Not doing so can leave you working more without getting compensated for it.
Limit the number of free revisions you offer and make sure your client knows that there will be an additional charge for additional changes and tasks with a quick turnaround time.
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Freelance contract: How to negotiate with clients
Contract negotiation can be an intimidating process as a freelancer. You may be worried that you will lose the client if you do not agree to their terms, when in fact, negotiating is a natural course of any contract agreement.
Here are a few key things to remember when negotiating your own contract:
1) Have a solid idea of what you want
If you are not sure of what terms you want out of a contract, you could end up selling yourself short.
Clearly define how much you are worth, what kind of deadlines you prefer working by, and be sure to think about smaller factors such as the number of revisions you are willing to include in your agreed rates before requesting a higher fee.
Knowing what you want – and what you are worth – puts you in a far better position to negotiate fairly but firmly with your client.
2) Research industry rates and contract norms
Researching industry rates is essential for negotiating with confidence and avoiding underpayment. Check what others with your experience level in your industry charge clients. Look for hourly or project-based pricing and rates based on project type.
You should also understand contract norms before you negotiate – after all, knowing what’s negotiable will help you create a contract you’re happy with.
Key elements you need to check include payment terms, late fees, revision policies, kill fees, and ownership.
Look for freelance platforms and communities online to help you with your research.
3) Communicate clearly
Client communication is key.
A lot of contract negotiations are agreed via email, often over the course of several emails. While this is convenient for freelancers working from home or with no fixed location, it can also be incredibly easy for text-based communication to be taken the wrong way.
To avoid miscommunication, don’t be afraid to pick up the phone and talk to your client rather than allow email exchanges to continue to be read in the wrong way.
4) Don’t think about winning or losing
Don’t make the mistake of viewing contract negotiations as a ‘win’ or ‘lose’ affair. Putting a contract in place is purely there to protect both you and your client, and so finding a middle ground that suits both parties is the best approach.
The goal is to have a mutually beneficial contract in place that will allow you to start a trusting, reliable relationship with your client – and vice versa. This is the first step to building a long-term, trustworthy client for your freelance business.
5) Learn to push back respectfully
Most experienced clients expect some form of negotiation. Learning how to say no to specific terms shows that you’re professional and are serious about your work.
Avoid sounding defensive and confrontational when negotiating.
For example, instead of saying “No, that doesn’t work for me.”, you could say something like “I want to make sure this arrangement works for both of us. Here’s what I suggest instead…”.
You can also prepare scripts in advance for tough conversations. For example, if a client wants too many revisions included in the contract, you could push back with:
“I typically include two revision rounds for free but am happy to provide additional changes at my hourly rate of $X.
6) Know when to walk away
Last but not least, it’s important to know when to walk away. If a client won’t respect your terms or rates, it’s okay to say no. Saying no to the wrong client gives you time for the right ones.
Free freelance contract template to download
While this is a great (and free!) freelance contract template that you can use, we need to emphasize that we are in no position to offer legal advice, and this simple contract template should not be taken as such.
Additionally, we always recommend that you 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!
To make the whole process of signing your freelance contract smoother, you could consider using a service like Bonsai.
Instead of sending the client a Word document that they have to download, print, sign and send back, you could send them the contract digitally via Bonsai. The client will be able to sign with just one click so that you can start working ASAP.
Bonsai was created by freelancers, for freelancers. They also offer various freelance contract templates for different professions that you can directly use.
You can start with their free 7-day trial to see how you like it and upgrade then to one of their plans starting from $15 ($9 per month if billed annually).
Contract template for freelance work in Germany
Freelancers residing in Germany must comply with local laws and regulations when drafting a contract for freelance work. There are 3 main contracts you need to be familiar with if you’re a freelancer working in Germany. These are:
| Dienstvertrag | This is a service contract where the focus is on the execution of the service and not the success of the result. This means that the freelancer is paid for the service provided, regardless of the ultimate success or failure of the project. |
| Werkvertrag | This is a work contract where the freelancer is obligated to deliver a specific result or outcome. The focus here is on the successful result, not the work itself. |
| Honorarvertrag | This is a fee agreement between the client and the freelancer and specifies the fee payments and the services provided for a specific period or project scope. |
Get more information about freelance contracts in Germany and find templates you can download here.
FAQs
Should I always sign a freelance contract?
We cannot emphasize just how important it is for every freelancer to have a contract signed. A contract protects both you and your client and is essential for legal protection and establishing clear expectations between you and your clients.
A freelance contract is actually the first template we include amongst the most important templates for freelancers.
Can I use the same contract for every client?
While you may use the same contract for every client as a template, it’s important that you review and customise it for each specific project. Different clients may want different services and often rates and payment terms may differ.
Do I need a lawyer to create one or can I write my own freelance contract?
You can write your freelance contract and don’t necessarily need a lawyer to create one. This is especially true if you’re working on small and medium projects and are using a reliable template.
However, if you’re unsure about the legal strength of your contract or are dealing with high value and long-term commitments, you may consider consulting a lawyer.
How do I write a freelance contract?
Writing a freelance contract is simpler than it seems. It all comes down to you protecting yourself and setting and clarifying expectations between you and your client. Your contract should ideally be structured in the following way:
- Title
- A clear introduction including date of the agreement, names and purpose of the contract
- Scope of work
- Timeline including deadlines, key dates, and milestones
- Clear boundaries around revisions
- Clarity of ownership and rights
- Termination clause
- Dispute resolutions
- Signatures
Is an email agreement enough?
While what makes an email legally binding can vary depending on jurisdiction and specific circumstances, typically yes, an email is enough.
However, it should clearly include an offer, acceptance, mutuality (payment terms and considerations) and intent to be legally bound.
What if the client refuses to sign a contract?
If a client is refusing to sign a contract, make sure you first engage in a calm and professional manner to find out why they’re hesitant. You can try offering them a simplified agreement that is shorter and more concise.
If however, they still flat-out refuse to sign any form of written agreement, you’re better off walking away.
What happens if I don’t get paid?
Not getting paid as a freelancer is unfortunately not uncommon. However, there are steps you can take to resolve the issue. To start with, consider sending them a polite reminder. If you’ve not received a reply, send a formal past due notice and mention a late fee if it’s included in your contract.
If they still haven’t paid, make sure you hold off on sending in any more work and mention that you will need to take further legal action. Finally, let them know that you’ve now chosen to pursue legal action to enforce the contract terms.
Conclusion
Freelance contracts are essential when it comes to projecting yourself and your business. They’re a professional standard that sets clear expectations right from the start and ensures everything from you getting paid on time to avoiding scope creep and building trust with your clients.
Use our template as a guide to creating your own contract and make sure to regularly review and adjust current contracts to best suit your needs.
If you have any questions, feel free to ask us in the comments below!
Also check out more templates for freelancers (for free):
- Freelance Proposal Template
- Freelance Invoice Template
- Payment Reminders Templates
- Order Confirmation Template
