Freelance Contract: What To Include [Guide]
Freelance Contract: What To Include In A Contract Or Statement Of Work
It’s no secret that the freelance world is booming. According to recent studies, freelancers now make up 35% of the U.S. workforce and that number is only expected to rise in the coming years. As a freelancer, it’s essential to have a well-drafted freelance contract in place before starting any project. This will help protect both you and your client in case of any disputes or misunderstandings down the road. In this blog post, we’ll discuss some of the critical elements that should be included in a good freelance contract or statement of work. So whether you’re just getting started as a freelancer or you’re looking for ways to improve your current contract, read on for tips and advice!
What is a Freelance Contract or Statement of Work?
In the world of freelancing, a contract is a king. A contract protects both the freelancer and the client and outlines the expectations for the work to be delivered. But what exactly is a contract?
A contract can be defined as a written agreement between two or more parties that creates an obligation to do, or not do, certain things. In the context of freelancing, a contract is typically between a freelancer and a client, and it outlines the terms of the working relationship.
For example, a contract might stipulate that the freelancer will deliver X number of blog posts by X date and that the client will pay the freelancer $X per blog post. Contracts can be simple or complex, but at a minimum, they should include information on services delivered, deadlines, compensation, and a termination clause.
Why Do You Need a Contract?
As a freelancer, it’s important to have a contract in place for each project you undertake. A well-crafted contract protects your legal rights and interests and can help avoid misunderstandings or disputes down the road.
Consider this scenario: you’re hired by a client to write 10 blog posts. You deliver the posts on time and under budget, but when it comes time to get paid, the client tells you that they only intended to pay you for 5 posts. Without a contract in place outlining the scope of work, you have no legal recourse and will likely end up getting paid less than you expected—or worse, not getting paid at all.
In short, a good contract ensures that both parties are clear on what is expected of them, and provides protection in case things go wrong. So if you’re doing any kind of freelance work, make sure you have a solid contract in place before starting any project.
How to Make Sure Your Freelance Agreement is Watertight?
When you’re hiring a freelancer, it’s important to have a clear and concise contract outlining the expectations for both parties. This legal document is often referred to as a statement of work (SOW). A well-written SOW will help protect both you and the freelancer by outlining the scope of the project, and establish clear ownership transfer, deliverables, timelines, and payment terms. Not sure what should be included in a freelance contract? Read on for a rundown of the key elements.
1. Project Overview
The first section of your contract should provide an overview of the project, including its objectives and deliverables. This will help set expectations from the outset and ensure that both you and the freelancer are on the same page. Be as specific as possible when outlining the project’s objectives so there’s no room for misunderstanding later on.
2. Scope of Work
The second section should outline the scope of work, or what tasks the freelancer will be responsible for. Again, be as specific as possible to avoid any confusion further down the line. This is also a good time to mention any deadlines or milestones that need to be met. If there are multiple stages to the project, make sure each one is clearly defined with its own set of deliverables and due dates.
3. Payment Terms
This section outlines how and when the freelancer will be paid, including milestone payments. It’s important to be clear about your payment terms from the start so there are no misunderstandings later on. Will you be paying hourly, per project, or at some other interval? When are payments due? What is the process for requesting invoices? Be sure to include all relevant details in this section of your contract.
4. Cancellation Policy
No one likes to think about what would happen if a project gets canceled, but it’s always best to have a contingency plan in place just in case. Your cancellation policy should outline what circumstances would allow either party to back out of the written agreement without penalty. It should also specify how much notice needs to be given in each case. For example, if you need to cancel due to financial difficulties, you may be required to give two weeks’ notice so the freelancer can find alternative work.
5. Milestones and deadlines:
Break down larger projects into milestones with payment for each milestone, and set due dates so everyone is on the same page.
6. Nondisclosure agreement:
Agree not to share confidential information or proprietary materials with anyone outside the client’s organization.
7. Termination rights:
Outline what happens if either of you needs to end the contract early.
8. Change order terms:
Decide how changes and additional work will be handled, including payment for any extra hours worked or materials used.
9. Dispute resolution:
Establish a process and timeline for resolving any disagreements.
10. Signature/Acceptance of Terms:
Both parties need to sign and agree to the terms of the contract before work begins.
These signatures should be notarized or witnessed as legally binding.
Now that you know what needs to be included in a freelance contract, it’s time to get started on drafting your own. Use this guide as a starting point, and make sure to tailor it specifically to your project and business needs. With a watertight contract in place, you can rest assured that both you and the freelancer are protected in case anything goes wrong.
Different types of freelance contracts
When you’re a freelancer, it’s important to have a clear understanding of the different types of contracts that you may encounter. Each type of contract has its advantages and disadvantages, so it’s important to choose the right one for the project at hand. Let’s take a look at four different types of freelance agreements.
1. Hourly Contracts
Hourly contracts are the most common type of contract for freelancers. With an hourly contract, you agree to work for a certain number of hours at an agreed-upon rate. The main advantage of an hourly contract is that it gives you a lot of flexibility in terms of how you manage your time. The downside is that it can be difficult to estimate how many hours you’ll need to complete the project, which can make budgeting difficult.
2. Fixed-Price Contracts
With a fixed-price contract, you agree to complete the project for a set price. The advantage of a fixed-price contract is that it can be easier to budget for the project. The downside is that you may end up working more hours than you anticipated if the project ends up being more complex than you thought.
3. Per-Project Contracts
A per-project contract is similar to a fixed-price contract in that you agree to complete the project for a set price. The difference is that with a per-project contract, you usually have more freedom in terms of how you complete the project. The advantage of a per-project contract is that it gives you more flexibility in terms of your workflow. The downside is that if the project ends up taking longer than expected, you may not be compensated for your additional work.
4. Retainer Contracts
With a retainer contract, you agree to work for a set number of hours each week or month at an agreed-upon rate. The advantage of a retainer contract is that it provides freelancers with a steady income stream. The downside is that retainers can be inflexible in terms of hours, and they may not be renewed once they expire.
5. Milestone Contracts:
This type of written agreement allows the client to break down the project into milestones and pay in installments as each milestone is completed.
6. Equity-Based Contracts:
This type of contract occurs when a freelancer agrees to take payment in equity instead of cash. These contracts are often used with start-ups, where there is no certainty of cash payments for a certain period.
No matter which type of contract you choose, it is important to make sure that you understand the terms and conditions before signing on the dotted line. That way, you can be sure that both parties are clear on the project requirements, timelines, and payment structure.
Benefits Of Setting Up a Freelance Contract
Freelance contracts offer flexibility for both parties as you can work at your own pace and tailor the project to suit your schedule.
2. Cost Savings:
You don’t need to invest in office supplies, rent an office space or pay taxes when working with a freelance agreement, saving a great deal of money in the long run.
3. Learning Curve:
Working with different clients and projects helps you to grow your skillset faster than with traditional employment.
4. Variety of Work:
With freelance contracts, you can work on a variety of projects that suit your interests and strengths instead of being confined to one type of job.
You are your boss and don’t need to answer to anyone else, giving you a great sense of independence.
6. Tax Advantages:
Freelancers have some unique tax benefits that traditional employees do not enjoy. For example, you can deduct certain business expenses like mileage and office supplies from your self-employment taxes.
7. Networking Opportunities:
Working with one client can provide you access to a network of other potential clients and customers.
8. Remote Work:
You don’t need to commute or even leave the comfort of your home to take on freelance agreements, saving time and money.
9. Global Reach:
You can take on freelance contracts from clients all over the world, giving you the ability to reach a much larger market.
10. Time Flexibility:
You can work when and where it suits you best without any restrictions from an employer.
11. Creative Freedom:
Freelance contracts give you more creative freedom than traditional employment as you are not bound by an employer’s rules or restrictions.
12. Quality Control:
You can control the quality of your work more directly by selecting clients, instead of having another person make that decision for you.
13. Professional Development:
Working on different freelance projects helps to build skills and experience that can be used in the future.
14. Higher Pay:
With freelance contracts, you can charge more for your work than with traditional employment as you are not tied to a fixed salary.
15. Personal Satisfaction:
Working on projects that you’re passionate about provides a greater sense of job satisfaction and personal achievement.
These are just a few of the many benefits of having a freelance contract with clients. With so many advantages, it’s no wonder why more and more people are turning to freelance as their preferred career choice.
Tips for creating Freelance Contracts that Work for Both You and Your Client
1. Get everything in writing.
A written contract is the best way to protect your rights and make sure everyone understands their role, obligations, and responsibilities.
2. Define the scope of work.
Be clear about what services you will provide and when they will be completed so there is no confusion later on.
3. Specify payment terms.
Include details about when and how you will be paid for your services, including any late fees or penalties for nonpayment of freelancer payment terms.
4. Address intellectual property rights.
Make sure to specify who owns the rights to any work you create so that there is no confusion down the line.
5. Include confidentiality clauses.
If you are working on sensitive information or proprietary data, include language in the contract that prevents you from disclosing it to others.
6. Include a termination clause.
Specify how either party can end the contract and what obligations must be fulfilled for that to happen.
7. Get everything signed and dated.
Make sure to get signatures from all parties involved to make the contract legally binding.
8. Have a dispute resolution plan.
It’s always best to avoid arguments and disagreements, but it is wise to include a plan for how to handle them if they do arise.
9. Check for mistakes before signing.
Before you sign any contract, make sure to read it carefully and look for any typos or errors that may need to be corrected.
10. Keep copies for your records.
Freelance Contract Template You Should Have As an Independent Contractor
As a freelancer, you are in control of your own business. You are your boss, which means you get to set your hours and work from anywhere in the world. However, being your boss also comes with a lot of responsibility. One of the most important responsibilities you have as a freelancer is ensuring that all of your contracts are airtight.
To help you out, we’ve put together five essential freelance contract templates that independent contractors should have on hand. From client agreements to nondisclosure agreements, these templates will help you protect yourself and your business.
1. Client Agreement Template
As a freelancer, you must have a solid client agreement template that you can use for every one of your clients. This agreement should outline the scope of work, deliverables, deadlines, payment terms, and more. Having a client agreement in place will help ensure that both you and your client are on the same page from the start and will help prevent any misunderstandings down the road. Plus, if any disputes do arise, having a well-written contract will give you the upper hand.
2. Nondisclosure Agreement Template
If you’re working with clients who will be sharing sensitive or confidential information with you, it’s important to have a nondisclosure agreement (NDA) in place. This agreement prevents both parties from disclosing any confidential information without prior written consent. NDAs are often used in situations where businesses don’t want their secrets getting out to their competitors. As a self-employed worker, an NDA can protect any confidential information that you come across while working with a client.
3. Independent Contractor Agreement Template
An independent contractor agreement is a contract between an independent contractor and a client that outlines the scope of work and stipulates that the contractor will complete the work as outlined in the agreement. This type of agreement is often used when clients need short-term or one-time services from an individual who is not an employee of their company. If you’re going to be working as an independent contractor for a client, having an independent contractor agreement in place is essential. Not only will it protect your rights as a contractor, but it will also protect the rights of your client.
4. Master Services Agreement Template
A master services agreement (MSA) is similar to an independent contractor agreement in that it outlines the scope of work and stipulates that the contractor will complete the work as outlined in the agreement. However, MSAs are typically used when clients need ongoing or long-term services from an individual who is not an employee of their company. If you’re going to be working with a client on an ongoing basis, having a master services agreement in place is key. Having this type of agreement will help streamline the contracting process and will save everyone time in the long run.
5. Letter of Intent Template
Unlike other types of agreements which are legally binding documents, letters of intent (LOIs) are nonbinding agreements that outline two parties’ intention to enter into negotiations for a future transaction. In other words, an LOI signifies that both parties are serious about agreeing but aren’t ready to commit just yet.
While LOIs aren’t legally binding documents, they can still help outline both parties’ positions at the start of negotiations.
Having an LOI in place before beginning negotiations can help ensure that both parties are on the same page from day one and can help prevent any miscommunication or misunderstanding down the road. Plus, if negotiations do break down, having an LOI can provide some protection for both parties involved.
Bonus Tip: Use eSignatures to Sign Your Contracts Online Nowadays, there’s no need to print out hard copies of your contracts and fax them back and forth. With e-signatures, you can easily sign contracts online—which means no more wasted paper! Plus, e-signatures are legally binding, so you can rest assured knowing that your contract will hold up in court. If you’re not already using e-signatures to sign your contracts online, now’s the time to start.
A Sample Freelance Contract Template
This Agreement (the “Agreement”) is made between ___________(hereinafter referred to as the “Freelancer”), and _________(hereinafter referred to as the “Client”). This Agreement will effect on the date of signature by both parties.
1. Services: The Freelancer agrees to provide the following services to the Client:
2. Payment: The Freelancer will be paid by the terms and conditions outlined in this Agreement. Payment shall be made as follows:
3. Term of Agreement: This Agreement shall begin on the Effective Date and shall remain in full force until completion of all services, or until terminated as provided herein.
4. Termination: This Agreement may be terminated at any time by either party upon written 30 days’ notice to the other of its intention to terminate this Agreement.
5. Confidentiality: The Freelancer agrees to keep all information related to the Client confidential, and shall not use any such information for personal gain or profit.
6. Disputes: In the event of a dispute related to this Agreement, the parties agree to seek resolution through mediation and/or arbitration by local laws and regulations.
7. Governing Law: This Agreement shall be governed by the laws of the state of _________.
IN WITNESS WHEREOF, both parties have executed this Agreement as a binding agreement on the Effective Date.
Freelancer Name: _____________________________ Date: ____________________
What to do if there is a dispute with your client over the terms of the freelance contract?
As a freelance worker, it’s important to have a solid understanding of your rights and responsibilities under your contract. However, even the best-laid plans can sometimes go awry. If you find yourself in a situation where there is a dispute with your client over the terms of your contract, here are some tips on how to resolve the issue.
1. Keep Cool: When emotions are running high, it can be difficult to think clearly and make rational decisions. If you’re feeling angry or upset, take some time to calm down before taking any action. Once you’ve had a chance to cool off, you can approach the situation with a level head.
2. Talk to Your Client: In many cases, contract disputes can be resolved simply by talking to your client and coming to an agreement that works for both parties. If you’re able to reach an amicable solution, be sure to put it in writing so that there is no confusion going forward.
3. Get Help from a Mediator: If you’re unable to come to an agreement with your client on your own, you may want to consider seeking help from a mediator. A mediator is a neutral third party who can help facilitate communication between the two parties and identify areas of agreement.
4. Take Legal Action: In some cases, legal action may be necessary to resolve a contract dispute. If you decide to pursue this route, it’s important to consult with an attorney beforehand so that you understand your rights and options under the law.
Whether you’re a new freelance worker starting on your own, or an experienced contractor with years of experience, having a freelance contract in place is essential to protecting yourself and ensuring that both you and your client are happy with the working arrangement. Here we have loads of helpful advice for freelancers on everything from setting up as self-employed to getting paid on time. So make sure you read our other blogs for a successful freelance journey.