How To Make a Freelance Contract: 10 Clauses To Include
As a freelancer, it’s always beneficial to have a written contract with your clients. A well-written contract provides the protection and security that freelancers and clients need. A contract can help you build trust with clients, set expectations in advance, and lead to higher satisfaction with project outcomes and client experience. If you don't have a contract for your freelance work, you should consider creating one.
In this article, I will review 10 clauses that other freelancers have found worthwhile to add to their freelance contracts, and that you can include in your freelance work contract to help protect your business and allow you to focus on doing the work that you love. I have found the tips below helpful in my own business but, as always, this is not legal advice and you should have a lawyer review all contracts and legal documents to make sure that they protect your best interests and are legally enforceable.
Why should freelancers have a contract?
Starting a freelance work relationship without a contract is a mistake. Having a contract is in your best interest and your client's, and there are many benefits of having one. A contract is a legally binding agreement between two or more parties. Contracts allow you to specify what you're doing, how much it's worth, and each party's responsibilities. Below are a few of the many reasons to have a contract:
- Reduces disagreements or misunderstandings and outlines how to handle them if they arise.
- Both sides acknowledge and agree in advance to payment, time, and deliverables.
- Legally binds the parties to the terms of the contract.
- A contract can protect both parties, including the contractor.
Common issues freelancers face without a contract
If you are a freelancer or a self-employed person, you may already know that having a contract is essential. Yet, many people say that they don't need one because they've never had problems. Unfortunately, most freelancers don't even think of having a contract until they run into issues. Regardless of your past experiences, freelancers can face many potential issues without an agreement such as:
- Projects with no bounds and scope creep
- No way to enforce what was discussed
- Additional legal ramifications and liability
- Long and unnecessary legal battles
How to write a freelance contract: 10 elements to consider
There are certain things you'll want to include in your freelance contract to maximize its value. Even if you have an existing work contract, it may be worth reviewing the list below to ensure you don't overlook any worthwhile contract clauses. This article is not a comprehensive list of clauses every freelancer should include in their contracts. I am not a lawyer, and this is not intended as legal advice. I am simply sharing some of the elements that I use with my clients—your mileage may vary. Below, I've listed out 10 clauses for freelancers to consider including in their freelance contracts.
1) Description of work and services
Establishing a project scope within the contract is crucial to setting the work expectations during the project. Effective freelance contracts list what you're going to do for the client and when. The more detail and specific you can be in listing the activities covered in the contract, the better. Without a description of work, many freelancers experience scope creep, the amount of work within the project increases without a change in budget or payment. Below are some specific things to consider including in the project scope:
- Start date
- Scope of service (detailed description of the project and milestones)
- Deadline and contract end date
- Payment rate and schedule
2) Payment terms
Once you have completed all of the tasks specified within the contract's description of work and services, you have finished a crucial part of the freelance contract. After completing a project, there's nothing worse than not receiving prompt payment for the work you delivered. That is why it is essential to include detailed payment terms in your freelance contract. This section of the agreement can detail more than just your hourly rate or fixed-project rate. Below are a few questions to consider when adding your payment terms to the contract:
- Will the contract be paid according to an hourly rate or a fixed price?
- Is there a minimum or a maximum number of hours that will be billed?
- When will you get paid? On delivery, 30 days after delivery, at specific milestones?
- Will you receive a portion of your total fee as an upfront deposit?
- If your client doesn't pay on time, will there be a late fee?
- Who is responsible for project expenses and material costs?
3) End product ownership rights and licenses (copyrights)
Freelancers often include this clause to establish who owns the work. Since the client is paying you to do the work, in most cases, they're going to require the work contract to grant them full rights and ownership of all aspects of the project deliverables. If the ownership rights are transferred to the client, they get to decide what they want to do with your work and how they want to use it.
On the other hand, if you retain ownership of some elements of the work, such as proprietary software that you developed, you'll need to establish the client's rights and their usage terms. The standard practices for end product ownership rights and licenses can depend on the type of work and industry. For example, freelance photographers may be more likely to license an image, while freelance writers often give up all ownership to the client.
This clause could also address showcasing the project in your portfolio. Before including any client work in your portfolio, it is crucial to get permission, and establishing that permission at the start of the project can make that conversation more straightforward.
Copyright law is complex and specific. You may want to speak to a lawyer to create your copyright clause and review your entire contract.
4) Terms and termination
Including a termination clause or right to terminate in the contract creates a process for ending the freelance contract if the relationship is not working. Throughout the agreement, either party could recognize that things aren’t working out due to poor communication, missed deadlines, or any other reason. In this section, you can outline the grounds for termination and the expenses or penalties associated with ending the contract early.
Freelancers often consider this section vital to include, even if you have a specific deadline and contract end date. It becomes even more critical for ongoing work because it provides both parties the ability or time to prepare for the loss of income/work product when the contract is terminated.
5) Competitive engagements
As a freelancer, it is important to communicate to clients the exclusivity of your services. Your client may not want you working with them while also helping the competition. In contrast, your experience working with a client in the same industry with a different geographic service area may be seen as a benefit. It would be best to outline your policy on working with clients that may have overlapping services or business areas. Here are some questions to consider when creating the competitive engagements section of your freelance contract.
- Will you engage in any business or activity that competes with any business or service of the client?
- How will conflicts of interest be disclosed for overlapping clients?
- Is the geographic area restriction for clients limited to the same type of business?
- What is the exclusivity duration? Does your contract allow you to work for competitive businesses after the work is completed?
A non-solicitation provision or a non-compete provision could be an extension of the limitations of your work with competitive businesses. You may want to consult an attorney to determine if agreeing to such a clause is a good idea for you and your business.
6) Non-disclosure, right to disclose, and confidentiality
To protect both parties, it is crucial to include a clause covering the mutual non-disclosure of any confidential information. As a freelancer, you may receive information related to your client's business that must remain private and confidential. This information could be client lists, business strategies, proprietary processes, secret recipes, financial information, and more. The client will want to prevent you from disclosing any confidential information. This clause may standalone, or it may be necessary to have a separate and more detailed non-disclosure-agreement (NDA). NDAs are legally binding agreements that establish a confidential relationship and outline how sensitive information will not be made available to competitors or any others.
7) Changes and revisions
Creative work can be subjective. This clause outlines how many (if any) revisions are included for the project. This can protect a freelancer's time from excessive scope creep caused by clients wanting many rounds of time-consuming edits and changes.
In this section of the contract, you can specify the rate you will charge for additional edits or revisions. It may be necessary to define what constitutes a "round", "edit", or a "revision," so that all parties are on the same page about changes to the project deliverables.
8) Indemnity clause
If something goes wrong, who is responsible? In this unfortunate situation, both parties will want reimbursement if the other party breaches the contract. Indemnification, also known as a hold harmless provision, is a clause used to shift potential costs or responsibility from one party to another in the event that certain circumstances occur. The main benefit of an indemnity clause is that it can protect the indemnified party from losses or third-party claims related to the contract or outcomes resulting from the work or deliverables of the contract. In a mutual indemnification, both parties may agree to compensate the other party for losses caused by the indemnifying party's breach of the contract.
9) General clauses
A general clause is used as a catch-all for any additional items added to the contract. This section can include legal disclaimers, protections, and other statements.
One example that can be added to the contract is an arbitration clause. Arbitration is an out-of-court process used to settle disputes in which a neutral third party decides the matter.
It may be that the majority of freelance projects reach successful conclusions, but disagreements and disputes can arise on occasion. Upwork has a Dispute Assistance Program that helps resolve many of these issues and provides additional protection for freelancers and clients. If conflicts cannot be quickly resolved, Upwork has an escalation process of mediation and arbitration that provide additional opportunities to resolve the matter fairly and impartially.
10) Party signatures
In order to have a legal contract, both parties must agree to it. This is most commonly and easily demonstrated by having both parties sign the contract. So, make sure that both you and the client sign the document before starting your next project.
While both parties generally come to transactions expecting a positive outcome, a solid contract that outlines the terms of your agreement with your client is one of the best ways to protect your business should a dispute arise. A freelance contract is an essential part of building and running your business. Without it, you can lose your clients' trust and their business.
To make sending and signing contracts even easier, Upwork offers Direct Contracts for freelancers and clients. With Direct Contracts, you can create and send contract proposals to your clients and get security that your payment will be held in escrow to ensure it’s ready when the work is done. Upwork offers additional Hourly Payment Protection for freelancers to get paid quickly for projects completed on Upwork’s Talent Marketplace. Get started by sending a Direct Contract to a new client today.
The views and opinions expressed in this article represent suggestions and opinions of the freelance author who is sharing their own views based on their experience and is not legal advice, nor does this article address all contract issues and options for freelancers. As the needs and circumstances of each individual business may differ, the information provided in this article may apply to some businesses and not others. This is only intended as general information for educational purposes. Upwork does not provide any legal advice, and as always, independent professionals remain responsible for their own compliance with all laws and legal requirements in operating their freelance business.