11 key points to writing a freelance contract agreement
Freelancing

11 key points to writing a freelance contract agreement

By
Derek Abram
|
CEO of Prio
|
6 min read

Being a freelance contractor can make you feel incredibly independent and fulfilled, while at the same time filling you with uncertainty. 

On one hand, you are your own boss, in complete control of the work you do, your schedule, and your earnings. On the other hand, you do not have the legal safety shield guaranteeing your best interests, something an employee of a large organization is protected by. 

Well, a freelance contract agreement can definitely help set your mind at ease. And in most cases, a legally binding freelance agreement does not necessarily need to be drafted by a lawyer. 

You could do it yourself using these essential tips on how to make a contract for freelance work.

What is a freelance contract agreement?

If you’ve just started out as a freelancer and are pitching your first projects to prospective clients, chances are you are raring to go make a mark for yourself in the world. 

In a lot of ways, being a freelancer is like being an entrepreneur. You decide how many hours a day you want to work, how much work you want to take up week on week, and what your efforts are worth.

However, when you’re done negotiating the terms of the projects you’re going to be working on, be sure to execute legally binding freelance contract agreements between you and your clients, ensuring all the parties involved are aware of exactly what to expect from each other. 

Why freelance contracts are important

A contract essentially protects your interests and the interests of your clients by clearly stating what your role is in the project that both of you are involved in, what your clients’ roles are, what you will get paid for the work done, and other important details. 

Here are the reasons why a freelance contract agreement is important.

  • It is a legally binding document that both parties involved need to adhere to.

  • It offers clarity as to what is expected of both parties.

  • It clearly states important aspects such as terms of payments, deliverables expected and timelines to be adhered to.

  • It reduces the chances of conflicts between the parties involved and often outlines conflict resolution solutions. 

From your perspective as an independent resource, a freelance contract agreement protects you in multiple ways by giving you a legal framework to operate within.

  • Your clients cannot change what is expected of you on the fly and ask either more of you or demand that you do anything out of the scope of work defined in the agreement.

  • You are guaranteed to be paid what you are owed when you deliver what was expected of you.

  • It protects you from unnecessary legal liabilities and lawsuits. 

Key points every freelance contract agreement should have

We’ve put together a “must-have” list of points that we feel every freelance contract agreement should have. However, keep in mind that these tips are to help steer you in the right direction and that you may need to change or modify certain aspects of the agreement based on the nature of your business.

1. Basic information

Every contract should have the following basic information as a premise upon which to build the rest of the contract on.

To begin with, the contract should clearly mention the parties involved in the project, i.e., your client and you. Be sure to mention both parties by their full names without using any short forms or abbreviations.

For example, if your name is David Jones, mention your full name instead of D. Jones. If the project you’re working on is for an organization, mention the registered name of the organization and not the name of the signatory. 

That way, even if the person who signed the document leaves, the contract is still valid.

The contract should also include the contact information of both parties, including phone numbers, physical addresses, and email addresses.

Another bit of basic information you ought to make sure is included is the date on which you made the agreement and the dates on which you as well as your client signed the agreement. 

2. Project details

The contract you draw up should include details of the project you will be working on, as well as the scope of work.

The first thing you ought to define in this section is what deliverables you will be responsible for. This will give you a clear picture of what your final goal is, and what your clients will be looking for or judging you by.

You also ought to state the scope of work, or exactly what you will do to achieve that end goal. Not only will this work as an outline of the process you will follow, but it will also protect you against demands from your client outside of the scope of work.

For example, if you have agreed to build a website for a client and they want you to build them a payment gateway as well, outside of the agreed-upon scope of work, then you can either charge them an extra fee for the job or turn the request down outright. 

3. Setting deadlines 

Sticking to delivery timelines is one of the most important aspects of efficient project management. While working as a freelancer may offer you unprecedented freedom, it also becomes very easy to lose focus and miss out on deliverables.

To avoid this, be sure to include deadlines as a part of the freelance contract. Depending on the type of service you provide, you may even want to break down the task into multiple milestones and link them to different stages of payment as well. 

That way, not only will you have multiple short-term goals to focus on, but the payment you receive for achieving each milestone will also help keep you motivated to stick to the agreed-upon schedule.

4. Payment details

There are three important aspects that you will need to cover under the payment details section of the agreement.

First, mention how you’d like to get paid. Are you charging your clients an hourly rate? If so, the client is likely to want some way of tracking the number of hours you actually spend working on the project.

Freelance writers often tend to charge a per-word rate, which makes it easy for the client to calculate what is owed when the piece is written.

However, most other freelancers charge a flat fee for the project. If you are charging a flat fee for the project, it is prudent to ask for an advance of 25% at the time of beginning the project.

Next, you will need to specify how much you are getting paid. In addition to stating how much you will be paid for the project as a whole, you may also need to state whether you will get paid in parts when you hit certain milestones in the project, or whether you will be paid in full once the project has been completed.

You will also need to decide when the client will pay you. Will you get paid on the day the project is closed? Or will the client pay you 15 days or a month after the project has been completed?

The generation of invoices that tie in with payments is a very important aspect, especially for freelancers. Invoices not only help you track payments from clients easily; they are also extremely handy when you need to file your taxes.

Prio offers freelancers a free invoice builder designed to help you create professional invoices in three easy steps.

5. End product ownership or copyrights 

This is a very important inclusion in freelance contract agreements, especially in some fields of work. 

Very often, because a client commissions you to do some work, or pays for you to do it, you do not retain any ownership of that work once it is handed over. The client can decide what they want to do with it from that point on.

However, if you retain ownership of some parts of that work, such as proprietary software developed by you to execute a part of what the client asked for, the two of you will need to arrive at a consensus about the rights and terms of usage.

Again, this differs from industry to industry. A freelance blog writer, for example, does not claim ownership of any content written for a paying client. 

On the other hand, a photographer may license an image, allowing different people to use it for a fee. 


6. Confidentiality

As a freelancer, you may be privy to a lot of aspects of your client's business operations, ranging from business strategy to technology, works in progress, and more. 

Similarly, the client often has an intimate view of the way you operate as well.

A non-disclosure or confidentiality clause should be added to every freelance contract to ensure both parties involved are protected from the leakage of sensitive information. 

7. Terms for competitive engagement

It is not uncommon for clients to demand that you not engage in any projects with their competitors, at least in the same geographical location, while you are working with them. 

However, not being able to work with similar businesses may impact your income considerably. 

This makes it important for you to declare the terms of competitive engagement in your freelancer agreement. 

Here are some points you ought to definitely address under this section.

  • First off, make it clear if you intend to work with organizations engaged in similar businesses as your clients during the duration of your project with them.

  • If you do work with similar businesses, it may be ideal if they are at least not in the same geographical area.

  • You will also need to include exactly how you intend to avoid conflicts of interest from arising.

  • Ideally, if the pay justifies it, have a period of exclusivity while working with a client from a particular industry in a geographical area. 

Some clients may insist on a non-compete clause, preventing you from doing business with similar organizations for a certain period of time. 

We’d advise you to seek legal counsel as to how such a clause might affect your business before you sign on the dotted line.  

8. Independent contractor terms

Independent contractor terms are essential to differentiate your role in your client’s organization as opposed to that of a full-time employee. 

Here are some important terms you ought to include.

  • Your client is not expected to provide you with the tools to complete your work unless you are working on their premises and the job requires it.

  • You do not represent the client, nor do they represent you.

  • The client does not have the authority to dictate your working schedule.

  • Your client is not responsible for your taxes, nor will you be eligible for any benefits their employees may qualify for. 

9. Limitation of liability clause

A limitation of liability clause protects both parties from the damages caused by a breach of contract that neither party could have foreseen when the contract was executed. 

10. Terminating an agreement

There are plenty of reasons why an agreement between two parties may not work out, ranging from inefficient communication to missing deadlines and delays in payments. 

The terms for terminating an agreement will often save you the trouble of dealing with unprofessional clients.

This section ought to include the various reasons that justify either party terminating the contract prematurely, as well as any penalties and remuneration due as a result of the termination. 

For example, if your client wants to terminate the contract due to delays from their end, you ought to at least get paid for the work you have already put in. 

11. Indemnity clause

While this clause is not really beneficial to freelancers, a lot of businesses insist on it being a part of the contract. 

An indemnity clause basically states that if your client gets sued after you complete their project as a direct result of your work for them, then you will be held responsible for the financial and legal expenses arising as a result of the case. 

Pro tips for writing a freelance contract agreement

Now that you have an idea of what some of the important inclusions ought to be in your freelance contract agreement, here are some writing tips to help you frame it correctly.

1. Make sure it has clarity

Words like “contract” and “agreement” may make you want to pull out a thesaurus and write in the best business English possible, but that is not really required. 

Keep in mind that you do not want to overwhelm or confuse your clients. The purpose is for them to clearly understand every aspect of the agreement.

However, if you have used words that may seem difficult to understand, be sure to add a separate section at the end of the document explaining those words or terms.

2. Keep it concise

Keep in mind that no one likes reading long, drawn-out essays. To get through easily, stick to concise and clear bullet points instead of word-heavy paragraphs.

Also, try to make use of numbers and statistics as much as possible. 

For example, saying you work from 9-6 from Monday through Friday makes you sound a lot more professional than just saying you work five days a week. 4

3. Keep your best interests in mind

While framing the freelancer contract agreement, be sure to keep your best interests in mind. 

For example, commit to timelines that you know you can adhere to without having to overwork yourself.

However, keep in mind that your reputation as well as future earning potential depends entirely on how efficient you are as a freelance service provider. 

Slack off, and you may find yourself without consistent work. 

Conclusion

An ideal freelance contract agreement ought to protect your interests while at the same time setting your clients at ease. You want to show them you are a professional freelancer who is an easy and cooperative asset to work with. 

If you are new to the world of freelancing, we’d suggest you use the suggestions above to write a clear, concise, and effective freelance contract agreement to protect you, allowing you to start off on your new ventures by putting your best foot forward.

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