Very few people enjoy getting their teeth stuck into reading contracts, but they're an essential part of working well, and protecting your business. We explore why.
When you're self-employed, it's likely that being a legal expert or thinking about contracts and paperwork is often the last thing on your mind, and possibly the least interesting or motivating part of your job.
However, having contracts in place with your clients is possibly one of the most important things you can do to support your project to run smoothly.
Let's have a look at why contracts are important, what a contract is, what sort of things you might include in a contract, and resources you might find useful when drawing up a contract.
Let's say you've started building a website for a client. You have a conversation about what features and functionality you should include, you spend a few weeks working hard on the project, deliver and upload all of the files, arrange a final call with your client, and then they turn around and say "oh, things have changed, we are going in a different direction now, and will build this inhouse".
All of your hard work and time, no longer required by the client. Without a contract, you'd struggle to invoice for your work. With a contract, and clear evidence that the client asked to you deliver the website, regardless of their change of hear, you'd still be entitled to being paid.
A contract is your safety net for if things go wrong. It's an agreement between you and your client to what you'll be doing for them, and what they'll be doing for you - i.e. paying your invoice.
A contract might exist in with different names within freelancing: terms of engagement, scope of works, supplier contract - but any verbal or written agreement between two parties can constitute a legal contract. Generally, they need to be enforceable (i.e. neither party is asking for something impossible or illegal), and both parties need to agree to what is being offered (i.e. your services) and what is being provided in return (i.e. payment), and accept the offer (i.e. a signature, or sometimes once the work has started happening).
Contracts may often have not just a list of things you are going to do, but also things you agree to not do (i.e. not work for a direct competitor during the course of the project, not steal confidential information, not use content you don't have the right to).
A verbal agreement is, as far as the courts are concerned, a legally binding agreement - however, you might find it hard to prove that your client said what they said, so using written contracts is generally more sensible.
Without a contract, there's no record of what you have agreed to deliver - so should there be a disagreement along the way, its entirely possible that you may end up doing work which doesn't get paid for. Having a contract in place ensures there is a clear agreement on the work to be done.
Whilst there's no single answer to this, your contract with a client is most likely to include:
Who you are - the legal entity you're registered as
Who your client is - the legal entity they're registered as, so you can be clear on the two parties who are entering into the contract.
The work you're agreeing to deliver - often called a scope of work, this details what you are comitted to doing under the terms of the contract.
The timeframe you're delivering it within - so there's an agreement on when the client can expect the work
The price they'll be paying for it - either by deliverable or as a project, or perhaps based upon hours or days you're working
Payment terms - when you'll get paid for the work delivered, and sometimes a schedule of payments
Who owns the work when it's done - sometimes you'll retain the intellectual property, sometimes it gets transferred to your client
What conditions are in place for the contract to be upheld - and what the client and you might be entitled to if someone goes against the contract
What you might need to do if something goes wrong - for example if there's a cancellation of the project, or a party cannot upheld their side of the agreement.
Depending on the type of work you do - you might want to also include some specifics about your process and approach, for instance if you're a web-developer, you might want to agree to fix any bugs within the first 90 days, but defects which occur after that period are no longer within the cost. If you're a copywriter, you might want to define the number of revisions or changes they're allowed to request within the body of work, or a period of time which you're willing to make changes.
It's not uncommon to have two documents, a general terms of engagement with a client, which describes how you'll be working together, any restrictions or rules on working together, liabilities and conditions which need to be in place; AND a scope of works which goes into detail on the project deliverables and payment terms.
This is really handy if you're doing lots of work with the same client - so you can agree to a standard set of terms, but then create a new scope of work for each project. So don't worry if your contract doesn't include what work you'll be doing - but do make sure there is a written agreement for both the way you work together and the work you're delivering somewhere.
Realistically, you will make mistakes over the course of your career, and wish you'd had included something in your contract. It's entirely likely you'll adapt and improve your contract over time to protect yourself and the way you work.
Sometimes you'll be providing a contract to your client, sometimes they'll provide their own contract to you.
If your client is providing you with a contract, it's really important to understand what you're signing up to - as you could be agreeing to a level of risk you're not comfortable with. Some contracts will have specific requirements about how you work together, for instance, confidentiality, non-compete clauses, liability if things go wrong. If you don't understand what you're signing - this is a really important moment to take a breath and get advice.
Many contracts from clients will be fairly generic, and be sent out to all suppliers regardless of the type of project or business you are - and often this means there may be things included in the contract which are not relevant or feel overly burdensome to you as a small business. It's entirely acceptable to ask for clauses in the contract to be removed or changed to make the agreement more relevant.
It's really important to ask for any clauses to be removed which prevent you from working as a freelancer. Some contracts will have overly restrictive clauses on working with other clients, for instance in the same sector.
For example, I was sent a contract which said I wasn't allowed to work with any other marketing agencies for a period of 12 months after completing a contract with the client. As a freelancer who worked almost exclusively at the time for agencies - this seemed overly restrictive. I asked for this to be removed, and it was.
Another time, a contract with an agency said I was not allowed to work with any of the clients of that agency for 12 months - they were a large agency, had many clients, and I was only going to work on one specific client. I felt it was fair that I shouldn't go chasing after the client that i'd worked on via that agency, but to prevent me from working with any of their other clients, which I had no connection with, was going too far. So the clause was removed.
Sometimes, it can take a little while to get contracts agreed, especially with larger companies, where their teams of lawyers need to review what you're sending to them.
Don't be tempted to start work before you have an agreement in place, as this can often muddy the water if an agreement does arise. This is especially true if they've sent you a contract - as starting work can often imply acceptance of a contract, and if you don't agree with what they've sent you, you don't want to be in that situation.
Likewise, it can be tempting to think "ah, they're only small, they're lovely people, i don't need a contract here" - being lovely people and small is exactly why you do need a contract in place, as it can be even harder to have a difficult conversation with a nice friendly client. Getting things on paper and agree before you work ensures there's no room for misunderstandings later.
It can feel like an overly formal process, but if you invest in getting a good contract, automate as much of the process as possible, and simply get into the habit of agreeing a contract before any work begins, even combining this with a deposit to start the work, you're in a stronger position should changes happen mid-project. Don't feel like you're being hard work by asking for a contract to be signed - there's no way your internet provider or gas company would give you their services without an agreement in place, and you can be sure that your client has an agreement in place with their customers too.
If a client is refusing to sign a contract, it's entirely fair to walk away from the project and not do the work. Where a client is not willing to enter into a written agreement is almost always a red flag, and could spell problems for the project at large.
Unfortunately, for many, dealing with legal paperwork and contracts can be stressful, and take its toll on your emotional wellbeing.
This can come from feeling overwhelmed dealing with long, wordy and complex documents, not feeling like you have the right skills to understand the legalese, it being a task that feels far away from your core competencies, or even just the frustration of getting the contracts signed.
In many ways, a contract with a client is also a way to protect your own emotional wellbeing. All too often, when a client raises an objection or issue, it can feel like a personal attack on the quality of our work or our trust being broken.
Returning to the written agreement that was signed all of those weeks back can be reassuring - to see what you both said you would deliver, to see the ink underlining the agreement, to remind yourself that you have done exactly what as asked of you, helps you to remember what as discussed, and not feel like you've done something wrong.
It can be easy to feel like you've under-delivered or if a client is asking for 'just one more revision', but not willing to pay for that time, having a contract helps things feel a little more black and white, a little more objective, and can give you the confidence to push back.
Both feeling stressed about getting a contract in place, and dealing with contract issues are reasons to have your contracts in place early on in your freelancing career. Of all of the things that are worth investing a little money into, a good contract is invaluable. Get used to writing them up, sending them over, getting them agreed, and relying upon them as part of your practice.
In the earliest stages of your freelancing career, there are some excellent free and low cost resources which can help you establish a contract and way of engaging with clients which we'd highly recommend. Some are tailored more towards certain types of work, for instance: Contract Killer has long been used by developers and designers as a fantastic starting point.
Some templates have wizards to help you complete the contract, by asking you a series of questions, it helps you complete a contract which is more relevant to you, such as the tools on the excellent RocketLawyer or simple plain English agreements on LawDepot.
There are templates and guides provided by many of the freelancing and self-employment bodies and communities too, such as IPSE and FSB who offer legal template and guidance as part of their membership fees.
There are lots of sector specific communities and bodies which offer advice and templates for specific types of work, for instance, the Association of Illustrators have excellent resources on contracts. Some of these are members only - but speak to peers, or have a google for industry bodies within your sector.
As with any 'off the shelf' template, it's really important to try and understand what you're signing or sending to clients - else when it gets challenged, you may not find you have the protection you thought you had.
Whilst it is not affordable for everyone, engaging a specialist in SME/Freelance contracts is highly recommended, so you can explain exactly what you do, how you work, and what you need in a contract, and ask lots of questions about each of the clauses in your own documents, so when you're sending the contracts out - you know exactly what you're agreeing too.
Likewise, going through the process of creating your own contract really helps you understand the clauses which appear in your clients contracts - helping you better know which to challenge, and which you're willing to accept and agree to. Use a platform like lawhive to find an affordable specialist, or speak to your fellow freelancers for a recommendation.
Contracts are not the simplest thing to understand or get your head around, but they are an essential tool and you should aim to get comfortable with using them as part of working effectively and well with your clients.
Invest in developing a contract which is right for you, and get used to reading any contracts your clients send you.
Don't ignore them, don't start work without one, and aim to recognise their value in helping you avoid bigger headaches.
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