Contracts are the bread and butter of a successful freelancer/client relationship. In spelling out the terms of your agreement in writing, you protect yourself against nonpayment, scope creep, and key miscommunications. A contract is also an opportunity for the client to ensure that their needs are covered for the appropriate cost.
Even if your relationship with the client is casual, it’s important to formalize any professional agreement. Not only does it show that you know your worth, it also minimizes the risk of interpersonal conflicts that can arise when, say, a friend or family member wants to hire you.
But if you’ve never used a contract before, it can be difficult to know where to begin. As usual, a good place to start is with a simple contract template. This will give you a base upon which you can build a contract tailored to your needs.
Once you’ve secured a contract template and adjusted it to your particular industry, follow these 8 best practices to optimize your contract:
1. Put the agreement under your company’s name – not your own
A contract legally binds the two entities identified at the beginning of the document. If you contract as “Samantha Jones, PR consultant” you will personally be responsible for all the legal obligations in the contract. This means that if something goes wrong, you carry all the liability, which could be bad news for your personal finances or belongings.
Instead, convert your work into a separate entity like an LLC and only enter contracts under that name.
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2. Clearly outline the scope of work
Some freelancers opt to use their proposal – which outlines the scope of the project as well as the timeline – as an addendum to the contract and have the client sign-off. Others choose to put the scope of work in the body of the contract itself.
Whichever way you do it, be sure to err on the side of detail. This will help prevent scope creep and any confusion regarding your responsibilities.
Pro-tip: Don’t forget to include all the things for which you’re NOT responsible!
3. Get their address (not P.O. box)
In the event that your client reneges on the contract, you’re going to want more than a P.O. box address. If you want to take legal action against your client, even in small claims court, you need to know where they’re located. Most states require you to serve a lawsuit face-to-face – and with a P.O. box, you won’t be able to do that.
4. Make anything related to money crystal clear
Most contract disputes come down to the cash, so prevent nasty arguments up front by explicitly outlining the how, when and for what of your payments and expenses.
Some questions to consider:
- Will you receive a portion of your fees up front?
- Will you be paid at delivery, according to set milestones, or for your time?
- Will there be a “kill fee” or some other compensation for you if the client cancels the project after you’ve started?
- Will there be a late fee if your client doesn’t pay on time?
- Will you be reimbursed for expenses?
- How will changes to the scope of work, as outlined in the contract, affect your fees?
5. Get the copyrights in writing
Heads up, creatives, this one’s especially for you. Generally, you have two choices when it comes to ownership of the logo, blog post, or photos you created: You either give your client ownership over the work or you give them a license to use it and retain ownership.
If you choose to use a license, clearly outline its permissions such as:
- Where and how can your work be used? For what length of time?
- Does the client have exclusive rights to the licensed work or can you license the work to other clients?
- May your client modify your work or create other works based on it?
- Is the client required to credit you with the work?
- Will you be paid royalties upon use or sale of the work?
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6. Limit your liability
Typically, if a promise or statement you make in a contract turns out not to be true, you’ll pay the harm your client suffered as a result. These clauses are called indemnification promises – and they make sense, to an extent.
Your contract should cap your liability at a reasonable amount, typically the amount you make under the contract or some multiple of that amount. Capping your liability will ensure that you don’t get hit with suit for an amount you can’t cover.
7. Be clear that the written agreement is the whole agreement
In all likelihood, you’ve had a few conversations with this client in which you both spitballed ideas for the project at hand. When it comes to drawing up the contract, however, it’s important to include language that states that the contract represents the whole agreement. This will help both you and your client understand what work you’re agreeing to perform – and what you’re not.
8. Specify the process for changing the agreement
Things change. It’s a fact of life – especially for freelancers. Flexibility may be one of your selling points, but take a moment to amend any changes to the project in writing and get your client to sign off. Better yet? Include a clause in your original contract that stipulates all changes must be confirmed in writing. That way your client can know what to expect when he changes his mind… again.
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