Structuring client contracts for freelancers
How to not get screwed by savvy clients
Whether or not a client asks you for a contract or asks you to sign their standardized contract, there are a few things you really need to make sure are included to protect yourself.
A client contract is everything, a well structured contract will stop any disputes down the line. There are some aspects you should make sure you have.
- Very clear scope of work
A scope of work is generally in the appendix of a client contract. Clients will always try to get more work out of you, so the scope of work should be extremely clear about the structure of deliverables (e.g., list of 50 potential prospects, completing a 10 page presentation, managing social media for 10 days 9–5, etc.) and the timelines for these deliverables. Where possible, you should also be explicit about the number of revisions a client is entitled to, as this can spiral out of control.
2. Length of contract
The contract should have a place for you to put the dates that you will be engaged working for the client, but make sure that the contract is valid for at least one year after the project starts so that you can enforce terms if there are any issues. Depending on the project you should also specify the hours you will work, so that this is a clear expectation for clients.
3. Jurisdiction of enforcement
Generally, better to have this in the US, so you can easily enforce the contract if needed.
4. Indemnity
Below is some language that makes sure you won’t be held financially responsible for any bad outcomes that come to the client as a result of your work. Below is sample language you can use.
[Company name] makes every effort to ensure accurate work but cannot guarantee that work will be completely error-free and so [Company name] can’t be liable to you or any third-party for damages, including lost profits, lost savings, or other incidental, consequential, or special damages. If any provision of this contract shall be unlawful, void, or for any reason unenforceable, then that provision shall be deemed severable from this contract and shall not affect the validity and enforceability of the remaining provisions.
5. Payment schedule and method
You want to be extremely explicit about how and when you’ll be paid. Let’s say have a $5,000 contract over six weeks. It is probably best to structure the contract so part is paid up front, ideally 30% — 50% of the contract, so $1,500. The remaining amounts should be phased over the products — E.G. $1,750 will be invoiced after Week 3 and after Week 6.
You should also be explicit on how many days the client has to pay after receiving the invoice (ideally 15 but can be up to 30), and what happens with overdue payment (see below).
Where possible, avoid payment timelines out of your control (e.g., when your client gets paid by their client or when a piece is published). Also, be explicit about what currency you will be paid in, how that exchange rate will be determined (if relevant), and the mode of payment (e.g., wire transfer, PayPal, etc.).
6. Late fees
Almost every freelancers face late payment at some point, the key is to be explicit in the contract and follow up communication. To protect yourself, explicitly include late fees in your contract. Recommended language is “If this invoice is unpaid by the due date, a non-compounding late fee of 5% accrues monthly on the outstanding amount.” This provides an incentive for your client to pay.
The key to invoice collection is clear and consistent communications — when sending an invoice you should say on the email — “this is due to be paid in 15 / 30 days, if not paid within this time period an updated invoice will be issued including the late payment charges as outlined in the contract.” A week before payment, and again on the day it is due, a similar reminder should be sent — this means clients can’t dispute the charges or claim they didn’t know.
7. Dispute resolution
Typically, this clause will say that you will try to work it out amongst yourselves and, where necessary, try arbitration. Ensure that the arbitrator must be approved by both parties, rather than is appointed solely by your client.
8. Copyright
US copyright law has a clause about work for hire, which states that if a client contracts a freelancer to produce work, and nothing is said about copyright ownership in any agreement, then the copyright actually belongs to the creator, not the person who pays for the work to be done. Therefore, you can have a clause that hands copyright over to the client, but you should be explicit about whether or not you have the right to share your work with the client’s permissions with others to have a portfolio to share with potential clients and whether or not you have the right to license this material to other mediums.
Shake has some great templates to get you started. To sign contracts, you can use Shake or, our favorite, Hellosign, which is free for three documents a month and costs $13 a month for unlimited documents. This is cheaper than the lead competitor, Docusign, which charges $10 per month for five documents.
Another benefit of using e-signatures is you have a library of all your signed contracts that you can access as needed, and you don’t need to try and find that new printer cartridge!
