A friend of mine, a very kind and trusting person who happens to be a freelance software developer, agreed a few years back to write some code for a young, charismatic pair of startup founders. The job was only supposed to take a month, and he agreed to it on a handshake.
Four months later, the job still wasn’t finished, and my friend still wasn’t paid half of what he was owed. The founders were constantly changing their minds about what they wanted, sending my friend additional “specs” long after he had started the work. Eventually, realizing that he had already spent more time than it was worth, my friend wrote the project off, never collecting the rest of his fee.
Having a contract with the founders about the project probably would have helped things turn out better for my friend. His story is a reminder that while dealing with contracts may not be the most fun aspect of being a freelancer, the pain is nothing compared to what can go wrong without one. And a contract not only protects you if something goes wrong – it helps things from going wrong in the first place by clarifying expectations and preventing misunderstandings.
Putting together a contract can seem intimidating, but it doesn’t have to be. While it would be great to be able to hire an attorney to draft or review every contract, that’s not an affordable option for most people. The good news is that even a basic agreement that you write yourself is better than having no written agreement at all, provided that it’s clear, unambiguous, and covers the essentials of your business arrangement.
Here are a few tips that may help:
1. Clearly define the Scope of Work
As a creative freelancer, you’re probably accustomed to sending clients proposals that scope out your project, including your timeline. It’s not uncommon for clients to simply sign these proposals and send them back, with the proposal itself becoming the contract (or an attachment to the contract). Regardless of how you format it, your contract should clearly and specifically state what you’re going to do for your client, and when. You need to not only list what is being delivered, but also its contents and expected delivery dates. For example, if you’re a freelance writer, a Scope of Work that reads “500 word article due in two weeks” is less helpful than one like this:
“Scope of Work: An article, written for a general audience, 500 words long, about emerging trends in mobile phone technology. Due within 10 business days of the signing of this agreement.”
2. Nail down everything related to money
Contract-related disputes almost always come down to money, so it’s especially important to get this right. It’s not just about specifying how much you’ll be paid. Some other 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?
Here’s an example of a payment provision that addresses these questions:
“Client will pay Designer a fixed fee of $500. Of that fee, $250 is due at the signing of this Agreement. At the completion of the project, Designer will invoice Client for the balance, with payment due within 10 days of the invoice date. Any payment not received by its due date will accrue interest at 1.5% per month. Designer will be solely responsible for her own expenses. If Client cancels the project after Designer has begun work, Designer is immediately entitled to a “kill fee” of $250, less any fees already paid to Designer.”
3. Make sure you’re clear on who will own your work
When you make and sell widgets, there’s no doubt who owns a widget – the customer who buys it. But when you’re a graphic designer who creates logos, or a writer who contributes paid guest posts to a blog, it’s less clear who owns the work and what rights are associated with it. That’s why, especially in contracts for creative work, it’s important to include a clear statement on ownership of work.
Generally, you can go in one of two directions when it comes to the ownership of your work. One option is to “assign” (give) ownership to your client, and the other is to grant your client a license to use the work in certain ways, in which case you retain ownership and control over its use. If you go with a license, then your contract should clearly lay out the license’s terms, which can mean addressing questions like:
Where and how can your work be used? For what length of time?
Is the license exclusive to this client, or can you license the same work to others?
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?
Regardless of whether you license or assign the work, if you plan to use the work yourself, say as part of your portfolio or an exhibition, your contract should clearly specify that. Here’s an example of a very basic assignment provision that does this:
“Designer hereby assigns to Client all right, title and interest in the work produced under this Agreement, except that Author retains display rights in the work, i.e., for use in portfolios, exhibitions and other self-promotion channels.”
4. Address how changes to the project will affect your fees
Even when you’ve clearly defined the scope of work, clients will sometimes change what they originally asked for. This can lead to them expecting you to do additional work for no additional money, a situation where a clear written agreement can really help. State in your contract that changes to the scope of work will lead to additional fees, the process for doing so, and also how many rounds of revisions, if any, are included in your base fee. You can even specify what you will charge for additional rounds. If you think there’s any room for doubt in your client’s mind about what constitutes a “round” or a “revision,” spell out what those terms mean to you. Here’s a basic example:
“Designer’s Fee includes 1 round of revisions, provided that such revisions do not require work exceeding the Scope of Work as defined in this Agreement. Designer may decline, or charge additionally for, work that Designer reasonably deems to be beyond the Scope of Work.”
5. Be clear that the written agreement is the whole agreement
You want to be clear that the written agreement you have with your client is the last word on the deal that you’ve made. Otherwise, it’s easy for memories to differ on what you actually agreed to (“I thought you promised me over the phone you would also do X as part of this deal.”). This is especially important when you’re doing creative freelance work, because you and your client might brainstorm a number of different ideas before you start the work — and you both need to be certain that the actual project will be limited to what you agreed on in writing.
To address this, you can include in your agreements a provision called a “merger” clause (also sometimes called an “integration” clause). In its most basic form, a merger clause simply says that the written agreement is the entire agreement between the parties. For example:
“This is the parties’ entire agreement on this matter, superseding all previous negotiations or agreements.”
6. Specify the process for changing the agreement
It’s part of the reality of doing business that sometimes the terms of a deal will need to change after a deal has been signed. People often amend agreements orally, by picking up the phone or talking in person until they come to a new agreement. The problem with oral amendments, though, is that any disagreement over them can quickly devolve into a he-said/she-said argument, because there’s no written record.
A better option is to include in your written agreement a clause saying that changes to the agreement can only be made in writing, with the consent of both parties. A simple version of this would be:
“This Agreement can only be changed by mutual written consent.”
Keep in mind that an exchange of emails can qualify as mutual written consent – as long as it’s clear from the emails that both parties are agreeing to the change. You generally don’t have to sign an amendment unless the contract specifies that you do (i.e., “This Agreement can only be changed by the signed consent of both parties.”)
These tips are by no means an exhaustive list of things to include, but they will help you capture the key business terms of a project, which in itself goes a long way to minimizing the chance of a dispute. And, if you do get in a disagreement with your client, don’t panic — you have options. Remember, when you’re putting an agreement together, your job is to try to look into the future. Think about things that could cause confusion or misunderstanding, or could go wrong, and include language that eliminates the potential for confusion and lays out what will happen when things don’t go as planned.