Whether you plan to piece together a full-time-equivalent income through independent contractor gigs, or simply wish to earn side income, working as a freelancer is a great way to explore your personal creativity, pursue new professional relationships, boost your self-confidence, and build your soft skills.
Freelancing is also a great way to create professional headaches. Freelancers are independent contractors, meaning their client relationships are fundamentally different – and, in many ways, less secure – than traditional employer-employee relationships.
Every contractor-client relationship presents risks for both parties. However, you can greatly reduce the most serious risks associated with freelancing – including nonpayment and legal action – by negotiating and assenting to formal, written contracts for every project you take on.
Even if you’re not a lawyer and have no special knowledge of labor or contract law, it’s possible – even easy – to create a binding, enforceable contract for virtually any type of freelance relationship. That said, if you have concerns about a specific aspect of your work as a freelancer or a relationship with a specific client, or simply want to make sure you’ve taken all the necessary legal precautions during the contract drafting process, do not hesitate to consult an attorney. Legitimate legal advice doesn’t come cheap, but it can pay for itself many times over if it prevents even one serious client dispute.
Drafting and Formalizing a Freelance Contract
Modifying a Contract Template
Before drafting a freelance contract or agreeing to one presented by a client, look for and review contract templates online. Contract templates can provide a feel for the language and important points your customized contracts should include. If you find an example contract that explicitly permits free modification and use, feel free to use it as the basis for your contracts. You can edit as much or as little as necessary to suit your purposes – but at minimum, you need to change the names of the parties to reflect the people and entities that are actually agreeing to the contract.
These online contract examples are indicative of what’s out there. These belong to the public domain and can be customized, though membership or author attribution may be required in some cases:
- Freelance writing contract, California State University, Northridge
- General freelance contract, PandaDoc
- General freelance contract template, Freelancers Union (sign-in required)
- Contract Killer 3 (plain-language contract for web design and development, but can be customized), AStuff & Nonsense
Not all contract templates are suitable for use with minimal modification. If you plan to customize a contract template extensively and find yourself unsure about how to word a particular clause (or whether to include it at all), speak with an attorney. Likewise, if you’re uncomfortable creating or modifying a legally enforceable document in the first place, it’s best to err on the side of caution and seek legal guidance.
Using a Client-Provided Contract
Companies that regularly farm out tasks to freelancers often have pre-drafted contracts that can be customized and presented to new contractors in short order. For freelancers, using a client-provided contract is more expedient and convenient than drafting a contract from scratch or modifying an online contract template.
However, it’s never a good idea to exchange leverage for convenience. Client-drafted contracts are likely to be client-friendly – or, at least, not actively contractor-friendly. Always pore over client-drafted contracts carefully, taking as much time as you need, no matter how eager the client seems to get started. When in doubt, seek an attorney’s review.
Be prepared to ask direct questions of the client, request changes to ambiguous or unfriendly language, or negotiate specific points (such as payment and copyrights). And if the client is unwilling to budge on reasonable requests, don’t be afraid to walk away – it’s better not to get entangled in a relationship that seems likely to head south or turn out to be more trouble than it’s worth.
Freelance Contract Structure and Important Clauses
Even if no two client-contractor relationships are exactly alike, most follow predictable contours – and so too do the contracts that govern them. Keeping in mind the potential for unusual situations or relationships that require deviation from standard contract formatting, any freelance contract that you create or enter into should contain most or all of the important clauses outlined in this section.
1. Parties and Assignment
This is usually the first clause. It identifies the parties to the contract – usually one client and one contractor, though complex contracts for larger projects may include multiple clients or contractors. It may also explicitly define the nature of the relationship between the two parties, specifically that the contractor is operating on a contract basis and is not to be treated as an employee for any purpose.
In many contracts, one or both parties is a business entity, such as an LLC or partnership. To avoid ambiguity with potential legal consequences down the line, it’s very important to include the entity’s exact name, including the business suffix (such as “LLC” or “Incorporated”). It’s also advisable to include the entity’s business address.
The parties and assignment clause can include the contract’s effective date. If it doesn’t, the effective date usually follows in a short clause of its own, or in the duration or term clause.
2. Duration or Term
This clause outlines the contract’s effective duration. Common ways to describe contract duration include:
- Project. Contracts covering specific projects with fixed scopes of work typically last until the client has approved all project deliverables. Some project-based contracts don’t specify an end date. Others set a deadline by which all work must be submitted or approved.
- Fixed-Term. Fixed-term contracts remain in force for a set period of time – for instance, six months or one year from the effective date, with the option to renew if the relationship is to continue beyond the original term. Provided they contain language allowing for renewal, fixed-term contracts are more flexible for both clients and contractors, as they don’t limit contractors to specific projects.
- Indefinite. Some contracts have no specified end date. Instead, they can include general language indicating the agreement remains effective until one or both parties chooses to end it.
Regardless of the contract’s term, it’s a good idea to include a separate clause outlining the circumstances under which the client and contractor can cancel or end the contract prior to its set end date. That clause, described here as “cancellation and dissolution,” usually appears later in the document.
3. Budget, Payment, and Collection
This clause outlines payment rates or fees, acceptable payment methods, payment schedule, and contractor procedures for collecting payment. It is sometimes split into two: one defining payment rates and methods, the other defining schedule and collection.
It typically defines the time-frames under which payments can be considered late, conditions under which the contractor can charge interest on late payments, conditions under which the client can withhold payment (for instance, if the contractor submits incomplete or unsatisfactory work after multiple rounds of revision), and conditions under which partial payment is acceptable (for instance, if the contractor and client mutually agree not to complete the project and settle payment for work already completed).
It also often includes explicit instructions for invoicing. In many contracts, this clause further spells out clients’ responsibilities, if any, for contractor expenses such as travel and communications. Contracts covering specific projects can specify minimum and maximum hour counts, setting contractors’ revenue expectations and keep clients’ budgets within guardrails.
If the parties and assignment clause doesn’t explicitly define the nature of the client-contractor relationship, this clause usually does. That definition includes language indicating that the contractor is responsible for payment of all applicable taxes, and that the contractor is not to be treated as an employee under any circumstances.
4. Work/Scope of Work
This clause can outline the specific work products to be performed under the terms of the contract. If so, it must clearly and explicitly outline all of the deliverables for which the contractor is responsible, leaving as little room for interpretation as possible. It must also outline work for which the contractor is not responsible.
It can further specify that the client cannot add to the current or future (if not project-specific) projects’ scope without additional compensation, which can be spelled out relative to the rates described in the budget and payment clause. A tightly defined work clause prevents clients from making additional demands on the contractor’s time without adequate compensation, or adding new deliverables that the contractor isn’t qualified to take on.
Alternatively, this clause can outline a more general “scope of work” that defines the general duties that the contractor is expected to perform – for instance, front-end web design or contract writing services. Preceding the description of the work with “including but not limited to” helps reinforce the expansive nature of a general scope of work clause. And, to avoid foreclosing opportunities for additional work, a general scope of work clause can include explicit language indicating that the client is free to request additional deliverables (for instance, asking a web designer to create written content for a website), but that any proposed activities that would expand the contract’s original scope of work are subject to the parties’ mutual agreement.
5. Intellectual Property
This clause describes each party’s legal rights to the work produced under the terms of the contract. Many freelance contracts operate under the “work for hire” framework, under which the client receives unfettered copyright to all approved, compensated work.
The client’s control over the work is not always absolute: Freelance contracts commonly allow the contractor to retain noncommercial use rights to completed work – for example, to display the work in a personal portfolio or sample book. However, clients are not always amenable to noncommercial use carve-outs, particularly when they wish to represent the work (say, a ghostwritten autobiography) as their own original creation.
6. Choice of Law/Dispute Resolution
The clause outlines how disputes arising out of the contract relationship are to be heard and resolved. It typically defines the law governing the contract, usually the laws of the client’s or contractor’s state of residence or incorporation. It also outlines the procedures and schedules under which the parties are to notify one another of legal action, and the legal framework by which disputes are to be heard (usually adjudication, mediation, or arbitration).
This clause can further outline any rights waived by the parties, such as the right to a jury trial, as well as who is responsible for paying legal expenses – in many cases, the losing party pays the victor’s attorney fees.
A thorough freelance contract should include a confidentiality clause that limits the parties’ freedom to use or disseminate sensitive information gleaned during the course of the relationship. Confidentiality clauses typically outline the nature of the information that must remain confidential and the duration (often indefinite) for which confidentiality must be maintained.
Because the nature of confidential information can vary so widely, confidentiality clauses often list every type of information (supplier lists, product recipes, access codes, and so on) and physical media (disk drives, email, printed collateral, and so on) that the parties think to include. They also typically include boilerplate language covering all information types and media not listed. They may also include explicit prohibitions on discussing work with members of the press, client competitors, contractor colleagues, and other third parties without the client’s prior written consent.
Many clients require contractors to sign separate nondisclosure agreements (NDAs) that prohibit the disclosure of sensitive information for a specific length of time following the contract’s effective date or termination. Confidentiality clauses do not replace or supersede NDAs, which can cover different eventualities, so don’t be surprised to encounter both.
8. Points of Contact
This clause outlines the person or persons responsible for completing and approving work performed under the contract. It’s common to identify a single point of contact – one individual – for each party, regardless of the number of people involved in the project on each side.
For the contractor, hearing different – and possibly contradictory – voices on the client side quickly becomes overwhelming. Having a single point of contact simplifies the process of submitting, reviewing, editing, and approving work, particularly around complicated projects that involve lots of feedback and multiple rounds of revision. For the client, specifying a single point of contact frees up resources and ensures accountability – for better or worse, the point person “owns” the relationship with the contractor.
A single point of contact isn’t always necessary or desirable, especially when the parties are individuals or employees with generalized roles (often the case in smaller organizations). When a contract doesn’t explicitly spell out a point or points of contact, parties technically have unfettered access to one another.
9. Submission, Revisions, and Approval
This clause covers how work is to be submitted, revised or reworked, and approved by the client under normal circumstances. It usually specifies acceptable delivery methods, which vary based on the type of work (for example, a written assignment might be delivered via a Word or Google document, while a photo essay might be delivered via image files in a cloud storage folder). If not already spelled out, this clause also typically includes one or more deadlines.
On the matter of revisions, this clause spells out the number of revision rounds the client may request under the current rate or fee structure, the time-frame for revisions (for example, the first round must begin within one week of initial submission), and thoroughly defines “revision round” so that there is no confusion on the matter. Some contracts further specify a maximum number of revision rounds that the client may request, and may also define an excessive revision charge for each round requested above that number.
Additionally, this clause spells out the process by which the client formally approves submitted and revised work. It may include a sunset provision, such that work is considered to be approved if no revisions are requested within a specified time-frame. Additionally, the clause should outline the contractor’s responsibilities, if any, after approval – usually language indicating that the contractor is not responsible for any additional work after approval, and clarifying (or reiterating, if defined in an earlier clause) that the client owns the copyright to the work following approval.
Finally, this clause can discuss circumstances in which the contractor’s work is deemed unacceptable by the client. Such circumstances might include the contractor’s failure to adhere to client-provided guidelines, consistent failure to meet deadlines, failure to provide all agreed-upon deliverables, or failure to achieve reasonable standards of quality. It can further cover what the client is entitled to do after determining in good faith that the contractor is not in a position to produce acceptable work – for instance, to withhold payment entirely or release partial payment.
This clause covers a lot of ground, so it’s often broken up into separate clauses detailing submission, revisions, approval, or some combination thereof, and potentially other items too.
10. Kill Fees
Thorough freelance contracts typically spell out the circumstances under which the client is responsible for paying a kill fee for a canceled project or assignment on which the contractor has already started work. Kill fees typically apply only to projects canceled by the client for reasons beyond the contractor’s control. The cancellation and dissolution clause usually spells out what happens when projects or project deliverables are canceled by the contractor, or are canceled by the client for reasons perceived to be under the contractor’s control (such as refusal to meet deadlines or make requested revisions).
When a project is scaled back without being canceled outright, the kill fee may apply to a specific deliverable – for instance, if a developer partially completes the first three of six apps under contract and the client decides it doesn’t need the first two, it might pay a percentage of the first two apps’ agreed fees. When a project is canceled completely, the kill fee applies to the entire project.
The kill fee is often dependent on the amount of work completed prior to cancellation – for example, a client might pay a 50% kill fee for a project canceled as it neared completion, but only 25% for a project canceled before the contractor has reached the halfway mark. It’s permissible to include kill fee instructions in payment clauses, but thorough contracts tend to break them out in their own section, as unclear kill fee expectations can foment confusion and tension.
11. Cancellation and Dissolution
This clause outlines the circumstances under which the contract can be terminated without legal action. Generally, it allows either party to cancel the contract, or specific projects or assignments covered by the contract, with written notice prior to the completion of the work or the contract’s set end date. If payment responsibilities are not spelled out in prior clauses, this clause further outlines how much (and when) the client is required to pay toward partially completed work. It also typically describes the parties’ rights to partially completed work – usually, the client retains copyright to any submitted, paid-for work, and the contractor retains copyright to unpaid work.
If the submissions, revision, and approval clause hasn’t already covered it, this clause can discuss the client’s recourse in circumstances where the contractor’s work is deemed unacceptable.
Benefits of Managing Freelance Relationships With Contracts
Drafting and negotiating a written freelance contract, particularly one that borrows heavily from an existing template, isn’t intellectually overwhelming or inordinately time-consuming. Nevertheless, it can be tempting to save time and effort by falling back on verbal agreements or vague, unsigned agreements outlined by email or other media.
These key benefits of written contracts underscore the importance of resisting this temptation:
1. Much Easier to Enforce
Written contracts are easier to enforce than verbal agreements (oral contracts). This is not because oral contracts are unenforceable – per FindLaw, many types of oral contracts are actually enforceable in court, though agreements lasting longer than one year may need to be put in writing, per the Statute of Frauds. Rather, oral contracts are subject to a host of uncertainties (such as poor memories, unclear meanings, and willful ignorance) that can impede their enforceability and complicate any associated legal action. Legal disputes over oral contracts often devolve into “he said, she said” spats, leaving mediators to sort out the facts with imperfect information.
To be sure, “he said, she said” situations are less likely to occur when the oral contract is brokered in the presence of witnesses, and when there is concrete evidence of the contract’s terms, such as a detailed email chain. But if you’re going to go through the trouble of recruiting witnesses or writing out long emails, why not just modify and sign a written contract template?
2. Prevents “Scope Creep”
“Scope creep” is an all-too-common situation that finds clients gradually loading up contractors with additional work, often outside contractors’ professional wheelhouses, without commensurate increases in compensation.
An example: Two weeks into a two-month, flat-fee website development project, the client asks the developer to begin copyediting written content ordered for the new site, adding several hours of work per week with no additional pay. Even if the client entices the developer with, say, a verbal promise to give a glowing reference, this is still a bad deal for the developer, as the copyediting duties are likely to reduce the amount of time the developer can devote to paid development work for other clients.
Contracts with thorough work clauses or scope of work clauses can reduce or entirely prevent scope creep, protecting contractors’ most valuable resource: their time.
3. Clearly Defines Both Parties’ Obligations
Many contract disputes result from innocent misunderstandings, not malicious intent. Even the most thorough oral contracts leave room for interpretation and foment uncertainty around each party’s precise obligations. And the risk of such uncertainty rises as projects grow more complex. It’s much more difficult to misunderstand the particulars of an agreement made in clear, plain-English writing, no matter how ambitious or complex the work at hand is.
4. Opportunity to Upsell Services
Contract review is an excellent opportunity for enterprising freelancers to upsell clients on additional or expanded services. For example, a freelancer presents a contract explicitly outlining an agreement to develop a new client website, suggests including two associated mini-sites for an additional fee, and presents a second version of the contract with the additional work and fees included.
Never underestimate the power of suggestion – sometimes, all it takes for a client to agree to pay more is a tangible demonstration of what’s possible. In oral contract negotiations, it’s much easier for a confident client to say “no thanks” to a comparable offer.
5. Creates and Defines Legal Relationship
Written contracts formally and unambiguously define the legal relationship between client and contractor. Most importantly, from the client’s perspective, a written contract makes it clear that the freelancer works as an independent contractor, not as an employee. This is a critical legal distinction, as employers are not responsible for withholding federal or state taxes from contractors’ wages.
Freelance Platforms – Alternative to Customized Contract Relationships
Not every freelance relationship involves a customized contract, of course. Millions of business owners and freelancers connect on freelance platforms such as Upwork, a general-purpose ecosystem that helps freelance writers, coders, graphic designers, video producers, social media experts, and others find work. Platforms like Upwork handle the legalities of contractor-client relationships, including dispute resolution frameworks, so that both parties can focus on the work at hand, rather than what-if scenarios that probably won’t come to pass.
Freelance platforms are convenient, no doubt about it. However, they often charge clients fees, and usually take a cut of workers’ earnings. Thus, workers frequently earn less working through freelance platform intermediaries than directly with clients. Likewise, many freelance platforms rightly worry about clients using them essentially as recruiting pools, and then poaching promising workers (and circumventing platform fees) once they’ve established working relationships. Accordingly, many platforms tend not to be conducive to hands-on, collaborative relationships that require lots of back-and-forth between clients and freelancers.
For these and other reasons, customized, contract-based client-freelancer relationships are preferable in many cases to platform work, and remain common across the professional spectrum.
I’ve worked as a freelancer for much of my adult life. I haven’t received an employer W-2 form in years. I know what it’s like to scrounge for work, scrap for pay, and feel as if I’m perennially getting the short end of the stick in terms of compensation, tax liability, job security, and professional recognition.
On the other hand, my work entitles me to a great degree of creative freedom and an unusually flexible lifestyle – two major benefits that are far harder to come by in traditional employment settings. Whatever the downsides of freelancing, and there are plenty, I’m not sorry I chose this path – and I’m not planning to change course anytime soon.
Do you work as a freelancer? How do you keep your clients honest and accountable?