What a contract should include
Your contract is the place to set expectations about what you’re both agreeing to. This includes the service you’re offering and the obligations your client is agreeing to.
The exact terms of your contract will depend on lots of factors: industry, type of work, etc. There are so many variables, it’s impossible to cover everything.
That said, here are some common things to consider including in your contract.
It
should be obvious, but it’s worth stating: this is not legal advice or a
comprehensive set of terms. Consult a legal professional to make sure your
contract is fit for purpose.
Who the contract is between #
The contract will be between you (or your company) and the client.
If your client is a company, you’ll want to make sure that the client is listed as the company, rather than the individual hiring you. This means that the contract should still be valid if the individual leaves the company.
What’s included #
Your contract defines what the client will receive from you. What you stipulate here will depend on the service you offer and the project goals.
It might be a specific deliverable (e.g. a website) or it might be your time/availability. The latter could be appropriate for some types of retainer, consultancy or projects where a freelancer is hired to work in an existing team.
Whatever the setup, you’ll want this to be as specific as possible. In time-based projects, that might include your working days/hours. For projects with clear deliverables, that could mean a detailed outline of what has already been scoped during initial discussions.
This is a good opportunity to outline what is not included as well. If you’re not sure what to include here, look at some contract templates. These can help identify common exclusions, particularly if you can find contracts from your sector.
This an area of the contract that is likely to be updated as you refine your services.
Show off your process #
My contract talks through the creative process and explains what’s involved at each stage. These are things I discuss with clients, but it’s good to recap and put it in black-and-white.
It also provides a friendly opportunity to talk about what is or is not included at each step, without presenting exclusions in a long list.
If your process involves rounds of feedback, this is a goodtime to talk through the practicalities of that, too. For instance, you might specify how quickly feedback is expected and what form it should take.
This section makes my contract longer but if it’s written in plain English. On balance, I think it’s useful to reiterate what I’ll be doing and reassure client that they will be guided through the whole process.
Everyone’s obligations #
We’ve already touched on this, but contracts should talk about obligations on both sides.
For the freelancer, that means doing everything they’ve agreed to when they’ve said they’ll do it. But what about clients?
This will vary from freelancer to freelancer, but it might include:
- Providing feedback within a specified number of days
- Paying on time
- Collating feedback before presenting it to you
- Providing files/documents in a specific format
- Agreeing acceptable methods to contact you
There are likely to be consequences for not adhering to these, too.
For instance, late feedback might mean pushing back the overall deadline. Files presented in the wrong format might incur additional costs to reformat etc.
Some freelancers include professional conduct clauses, too. In other words, a project might end if a client behaves poorly.
You can take a view on these things and decide what you want clients to agree to. You hope not to have to rely on this – most clients will do everything they can to help a project go smoothly – but it’s useful to agree on these things upfront.
Kill fees & pause clauses #
A ‘kill fee’ is there to protect you from a client pulling out of a project that you’ve already started, or set aside time for. It puts the onus on them to keep in contact with you.
The kill fee in my contract states:
If, after project commencement, you stop communicating with me for a period of 30 days, the project can be cancelled, in writing by me, and ownership of all copyrights shall be retained by me. In this scenario, I reserve the right to charge a cancellation fee for the work completed, with the fee based on the stage of project completion. The fee will not exceed 110% of the total project cost.
I’ve only had to rely on this clause once or twice, but it’s useful if a client disappears when you’ve set aside time for their project. After all, you may not have availability at a later date.
Pause clauses #
An alternative to a kill fee is a Pause Clause, as highlighted in this Bureau of Digital blog (hat tip to Derek Long):
If a client deliverable — such as input, approvals, or payment — is late more than 10 business days the project will be considered “on hold.” Once the deliverable is received and the project is re-activated it will be rescheduled based on nGen Works’ current workload and availability. Just to say it loud and clear, it could be weeks to get you back in the system if the project is put on hold.
This is a softer approach that might be more appropriate. It doesn’t protect against time lost when a project has been booked in, but it might work better if that isn’t a concern.
Payment terms #
It’s no surprise that this is quite an important part of the contract. Here you’ll be agreeing the payment terms, dates and frequency with your client.
I’m a big advocate of short payment terms and set seven-day or on receipt terms for my work. I don’t start work without a deposit and don’t release work until the balance is completed. I appreciate I’m lucky to work in a sector where I have a bit more control over releasing work.
However, most freelancers have more control over receiving payment that we might think. Generally, I would suggest the following:
Set the shortest terms you can #
Seven-days or on receipt is a good starting point. There may be situations where this is impossible, but there’s often room for negotiation.
If a client demands very long terms – e.g. 60 or 90 days – ask to invoice every week or two. That means you only wait for the 60/90 day period once before starting to receive income at regular intervals.
Many newer freelancers are disappointed when clients don’t accept short or on receipt due dates on invoices. If it’s agreed in the contract, you have a much stronger case.
Always take a deposit #
On project-based work, I invoice as follows:
- 50% commencement deposit
- 40% at an agreed midway point (usually before development commences)
- 10% when the project is complete before it goes live
I used to invoice 50% on commencement, 50% on completion. I lost count of the number of final payments that were delayed down to things that were out of my control (e.g. content).
There’s a longer article explaining this on the main Work Notes site, but after switching to this method I haven’t looked back.
For projects based on a day rate, I calculate the initial deposit as follows:
- Estimate the number of days involved
- Invoice 50% of the lower estimate
Subsequent invoices are sent when each block of time is used.
Invoice retainers upfront #
If retainer work is invoiced after the work is completed, there’s a danger of:
- Completing the work and not being paid
- Setting the time aside, not receiving work and not being paid as the retained time “wasn’t used”
I’ve seen many freelancers report the second of these scenarios. Charging retainer invoices upfront is a key point of a decent retainer.
Quote in your local currency #
And add conversion fees on top for international clients.
If this isn’t possible, use a service like Transferwise to minimise fees. I also add a small percentage on top of the direct conversion rate to account for fluctuations in currency.
Late payments #
In the UK, there are statutory late payment fees for businesses. These are useful with a couple of caveats:
- The late fee percentage is very low
- Clients aren’t always aware of them
I’d advise setting your own late payment fee in your contract: that lets you set a higher fee and highlights the late fee to clients upfront.
A note on late fees #
If you’re charging late fees, these should be sent as a separate invoice, as highlighted on GOV.UK. Adjusting and resending the original invoice could cause issues if it goes to court.
Intellectual Property #
Your contract needs to state who owns the work, for how long and – if it transfers to the client – at what point they own it.
For many freelancers, ownership will transfer in its entirety when final payment is received. If there are licensing conditions, or more specific terms, these should be stipulated here.
For graphic designers and illustrators who have more complex terms, check out Jessica Hische’s Dark Art of Pricing.
The contract I use – from Andy Clarke’s Contract Killer – states:
I’ll own any intellectual property rights I’ve developed prior to, or developed separately from this project and not paid for by you. I’ll own the unique combination of these elements that constitute a complete design and I’ll license its use to you, exclusively and in perpetuity for this project only, unless I agree otherwise.
This clause means:
- The client doesn’t own (and can’t use) the design until it’s paid for
- The design can’t be replicated to create new sites with the same design
Termination #
You may want to include a clause on how you or your client can cancel the project.
Though you wouldn’t hope for this to happen, it might be a favourable outcome in a several scenarios:
- You can’t reach agreement about the best direction for the project
- The client no longer needs the work to be completed
- Poor behaviour on either part
When a project needs to be cancelled, you’ll want to outline:
- How either of you can cancel
- What happens regarding payment
- Who owns the Intellectual Property in this scenario
You may want to adopt something similar to the Kill Fee above.
Portfolio #
A common freelance conundrum is whether freelancer’s can include work in their portfolio. It’s normally possible to contact clients and request permission, but that can involve a lot of work.
The Contract Killer suggests adding this clause to your contract:
I love to show off my work, so I reserve the right to display all aspects of my creative work, including sketches, work-in-progress designs and the completed project on my portfolio and in articles on websites, in magazine articles and in books.
As a web designer, I also add:
I’ll also include a subtle credit link to my website in the footer of your site. I’m happy to remove this if you prefer, just let me know.
Both of these are negotiable.
Legal bits #
The areas above are common territory for freelancers, but the contract will also need some legal bits that are trickier to cover here.
For instance, the contract needs to state which legal jurisdiction it’s a legal document under. This dictates where legal proceedings would occur, so it’s simpler to keep this to your country of residence.
The contract should also indicate that you can’t guarantee your work will be error-free and limit your liability.
Check out Andy Clarke’s Contract Killer in full to see how all of these parts might be stitched together.
Other considerations #
One of the best things about contracts like Andy Clarke’s is the use of plain English. This makes it easier for everyone to understand what they’re agreeing to.
It’s just as important for you to understand what you’re asking clients to sign as it is for them to understand what they’re receiving, along with their obligations. No-one enters a project hoping for it to go wrong, but if it does, you don’t want them to feel tricked by the contract.
It can be helpful to talk clients through the contract, particularly for complex parts like Intellectual Property clauses. I usually send clients the contract and offer to talk through it if anything is unclear.
One last thing: in my view, much of the contract is negotiable. There are things that aren’t negotiable, but I’ll accommodate requests wherever I can.
