Working without contracts as a freelancer is risky business. The informal nature may seem convenient at first, but can quickly lead to miscommunications, confusion, and even payment issues down the line. Having clear, written freelance contracts in place protects both you and your clients by defining the terms of your working relationship, scope of services, and financial expectations in a legally binding way.
Here are ten compelling reasons why using contracts consistently is essential as a freelancer:
1. Clarifies Project Scope in Granular Detail
Well-crafted contracts clearly outline the project scope and key deliverables expected from you in granular detail. This prevents scope creep down the line or doing extra unbilled work caused by vague specifications.
For example, a contract for writing services would detail:
- The number of articles or word count per article
- Subject matter and target audience
- Tone, formatting, and stylistic requirements
- Research required
- Image sourcing expectations
- Review and revision process
- Any administrative work involved
Both parties understand exactly what is included. You can also specify what is not included, like conducting extensive interviews or providing stock images. The more detailed the scope, the better.
2. Sets Exact Payment Terms and Schedule
To avoid late payments or chasing invoices, freelance contracts should establish exact payment terms:
- Total project fees or hourly/daily rates
- Payment schedule including instalments, deposits, and milestones tied to deliverables
- Any expenses billable to the client like materials, travel, or stock images
- Methods of payment accepted and due dates
- Late fees if applicable and when they take effect
With formalised payment details in writing, you can hold clients accountable and are far more likely to get paid fairly and on time. Never start work without an initial payment. Utilizing software for your invoices can be a reliable choice. A free invoice maker acts as an asset to freelance contracts, converting pre-determined payment conditions into professional invoices, thus enhancing billing clarity and uniformity. This integration with payment terms enables freelancers to create invoices effectively, reflecting project costs, payment timelines, and any chargeable expenditures, promoting open client communication and reducing payment hold-ups.
3. Defines Usage Rights and Licensing
Freelance creators retain rights to their work by default, but clients need licenses to use it. Contracts specify exactly how the client can use your content, designs, photos, etc.
For example, you could grant:
- A one-time use license for a social media graphic
- A limited 2-year license for an infographic
- Exclusive commercial rights for a photograph
- Full transfer of copyrights for commissioned content
Clear usage terms prevent unauthorised use of your work. You can charge higher fees for broader licensing rights. Define restrictions like alterations, derivatives, or transfers.
4. Outlines Cancellation Clauses and Kill Fees
Your contracts should establish fair cancellation policies should you, the client, or other factors lead to terminating the project mid-stream.
Common provisions include requiring written notice within X days, partial payment for work done, transferring rights to work in progress, and kill fees if cancelled after a certain point without cause.
Kill fees ensure you get fairly compensated for any nearly completed work the client opts not to use. This protects you from unfair cancellations.
5. Establishes Ownership Provisions
Without a contract, clients may wrongly assume they own all aspects of the work product by default, which is incorrect. Freelance contracts should clearly specify who owns and retains rights to all portions of the work.
Key elements that contracts can define ownership around include:
- The final deliverables – You should retain ownership and copyright by default unless rights are explicitly transferred. The client only has the right to use the deliverables under the usage terms.
- Concepts, ideas, and preliminary work – These should remain your exclusive property as intellectual capital, separate from usage rights of final deliverables. This allows you to reuse concepts or sell them to others.
- Stock elements – If your work incorporates stock images, fonts, templates, etc. contracts should specify the client only has usage rights to the final deliverables incorporating them, not direct rights to the stock elements themselves.
- Revisions and derivatives – You retain ownership of unused revisions as well as rights to prepare derivative works. Clients can’t necessarily take revisions in new directions without your involvement or permission.
- Confidential information and trade secrets – Non-disclosure provisions should prevent any confidential information or processes from being shared or leveraged without your approval.
Defining these ownership boundaries prevents contentious situations down the line and protects your intellectual property and copyrights. Without defined ownership, clients may feel entitled to more than they’ve rightfully paid for. Clear contracts set proper expectations.
6. Confirms Deadlines while Allowing Flexibility
Including project timeframes and deadlines in contracts makes expectations clear on both sides. However, you should also allow some flexibility for unforeseen delays through deadline extension provisions.
Force majeure clauses list events like illness or external events that allow reasonable delays. Contracts put you on firmer ground for late fees if clients cause excessive delays past new dates.
7. Details Revision Limits
Clarify the revision process and scope in your contracts, like the number of revision rounds included and any differences for minor vs. major revisions that impact scope, deadlines, and price.
Adding procedural details ensures clients understand what to expect in terms of feedback cycles and changes. It also protects your time from endless revisions. Limit revisions to stay on track.
Outlines Termination Protocols
Having an outlined termination process makes ending the contract orderly, if necessary, rather than abandoning a project. Make sure to include provisions for payments for portions completed.
Clearly defined termination protocols typically include:
- Notice Period – Include how many days written notice must be provided by either party to terminate early for any reason. 30-60 days is common.
- Payment for Work Completed – If terminated, you should receive payment for all work satisfactorily completed up to the termination date.
- Incomplete Compensation – Define fair compensation for work partially completed that can’t necessarily be utilised as-is. This is often hourly rates or percentage-based.
- Transition Period – You may allow for a defined transition period for the client to find someone new and have you tie up loose ends.
- Early Termination Fees – Some contracts include fees if a client terminates prematurely without adequate notice or cause. This compensates for lost work.
- Final Payments – Clearly state when final payments owed must be paid after termination. e.g. Net 30 days.
- Transfer of Work/Rights – Detail how to transition ownership of work completed at the time of termination.
Having termination protocols specified prevents a client from simply disappearing and leaving a project unfinished without recourse. You should be fairly compensated for work done in the event of any termination.
9. Specifies Legal Protections
Contracts allow specifying legally binding terms and conditions beyond just project details. Common sections include liability limits, indemnification, confidentiality, arbitration procedures, and more.
While no one expects issues, having legal protections provides recourse if problems emerge. You can limit liabilities through well-crafted contracts. Consult a solicitor when creating templates.
10. Professionalises Your Freelance Business
Using official contracts elevates your freelance business to come across as an established professional service provider rather than an informal gig worker.
Signed contracts signal that you take your business seriously and are savvy with your practices. Investing in contract best practices makes clients take your work more seriously as well.
Bonus Note: Send Contracts as a PDF File
PDF files, by intention, are unable to be edited, so it pays to send contracts via this format instead of a basic Word document. However, when emailing clients signed contracts or large deliverables, file sizes exceeding 10MB can get blocked by inboxes. You can use a PDF compress tool to deal with this.
SmallPDF is a PDF compressor that reduces file sizes by up to 99% without negatively impacting quality. This allows sending professional proposals, reports, presentations and more via email without hassle.
Do Yourself a Favour
While contracts may seem tedious, they provide immense protection and peace of mind to make freelancing less stressful. The professionalism of using formal contracts earns client confidence.
Create template contracts you can reuse as a starting point then customise for each project and client. Review them with a solicitor to ensure they comply with local laws and best practices. Investing in solid contracts pays dividends.
