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As a business owner, it is vital to protect your rights when engaging with other parties. Your freelance contract ensures that both sides understand expectations and how to meet them. This strategy will help you maintain fruitful, productive business relationships.

Keep reading for everything you should know about freelance contracts:

What is a Freelance Contract?

Freelance contracts, also known as independent contract agreements, consulting agreements, and service contracts, are legal contracts that set the terms and conditions between a company and a freelancer. A freelancer is a legitimate business professional who provides specialized services beyond the ordinary course of the company’s business. Companies find freelance contractors through headhunters and labor marketplaces.

Should Freelancers Use Contracts?

Freelancers should use contracts to protect their rights and business when engaging with other companies. If you question whether you need one or not, consider this scenario:

You are working with a client who disputes your work. Ask yourself the following:

  • Do you have proof the relationship exists?
  • Could a reasonable person find the terms between the two parties?
  • How could you prove to a judge that the other party agreed to the terms?

If you only work on a verbal contract, then the answer to the above-referenced questions is “no,” at least not initially. Business relationships that lack contracts are far more expensive to dispute or litigate than written ones in some cases. Ensure that you put your agreement in writing.

Other benefits of freelance contracts include:

  • Easier to prove enforceability versus verbal contracts
  • Offers both parties a chance to understand their obligations
  • Protects your rights when navigating contract disputes
  • Creates a formal and engaged legal relationship
  • Prevents “mission creep,” which can create new liabilities
  • Gives proof of past due debts in civil court

The benefits of a freelance contract are numerous. However, a contract is only as lock-tight as the person who drafted it. For this reason, many freelancers choose to work with an attorney to help them prepare the initial iteration.

It is a strategy that can help you avoid legal and financial mistakes in the future. This result produces peace of mind for years to come. Always work with employment lawyers when drafting your contracts.

Examples of Freelance Engagements

Freelance engagements typically involve those that are short- and long-term projects. However, companies generally contract with freelancers due to the highly specialized nature of their skillset. Most state labor laws require companies to only work with freelancers that offer services outside of their usual business offerings.

Examples of freelance engagements include:

  • An artist creates a commissioned pottery piece
  • A freelance journalist writing articles
  • Web designers completing a website
  • An independent contractor completing home repairs
  • Film editors contracting with producers of a documentary

If you provide freelance services, the client must abide by the terms of the contract. They must also avoid exerting managerial control. Otherwise, they risk violating contractor law that protect independent contractor rights and freedoms.

Here is an article about the difference between Independent Contracts vs. Employees .

Important Terms in Freelance Contracts

Freelance contracts should include terms that both parties can understand. They should consist of the core provisions and clauses that are unique to your business and industry, including deliverables and consideration. Although the terms will vary on a case-by-case basis, there are some must-have clauses you should include in your freelance contracts.

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Must-Have Clauses

Every contract is different. The terms that you include ultimately depend upon the project you are completing and more. However, there are a few standard provisions that every freelance contract should have.

Eleven must-have clauses in freelance contracts include:

  1. Names of parties and companies
  2. Recitals and definitions
  3. Scope of work
  4. Payment terms and schedules
  5. Governing Law
  6. Enforceability
  7. Arbitration Clause
  8. Guarantees
  9. Warranties
  10. Liability limitations
  11. Third-party liability

This list is a terrific place to begin when writing your freelance contract. Some projects may be more or less intensive than others, which means that your specific agreement may require additional provisions. Employment lawyers can help you determine which sections and clauses should go in your contract according to state and federal laws.

Mistakes to Avoid

Freelance contract mistakes can result in time and profit losses. Since your business reputation and legal exposure is on the line, you should comprehensively negotiate the terms and conditions of your contract, including obligations, limitations, and more. Otherwise, you could be left on the hook for liabilities that weren’t originally intended.

Seven mistakes to avoid in freelance contracts include:

  1. Not detailing the terms and conditions of payment, such as an hourly vs. flat fee
  2. Forgetting to include attorneys’ fees in disputes
  3. Signing an unreasonable non-compete agreement
  4. Failing to define the scope of work for the project
  5. Forgetting a kill fee or cancellation fee
  6. Not considering state labor laws vs. contractor laws
  7. Not defining intellectual property rights of each party

Freelance professionals generally hire an employment lawyer to draft and negotiate their contracts. Doing so will ensure that it is appropriately written and enforceable under state and federal laws. An attorney understands how to craft an agreement that meets your objectives while closing potential loopholes that can stress your contractual relationship.

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How To Write a Freelance Contracts

No two freelance contracts are alike, which means that a boilerplate template generally does not work well for the specialized nature of freelancing. You should write a freelance contract that reflects the specific relationship you share with your client and must have clauses applicable to your situation.

Follow these 11 steps when writing freelance contracts:

  • Step 1. Negotiate the terms and conditions with the client
  • Step 2. Hire employment lawyers to help you draft a contract
  • Step 3. Identify the parties and their address
  • Step 4. List the project deliverables to avoid mission creep
  • Step 5. Establish a rate and payment schedule
  • Step 6. Specify which state laws your contract recognizes
  • Step 7. Determine how you will handle disputes
  • Step 8. Present the initial freelance contract draft to the other party
  • Step 9. Renegotiate the freelance contract if necessary
  • Step 10. Arrange for a freelance contract signing
  • Step 11. Provide hard and/or digital copies to each party

The above-referenced list is not always the same process for every freelancer or client. Your approach may be more intensive than others. However, a freelance contract is a surefire way to ensure that everyone is on the same page and aware of the limitations when working under a contractual agreement.

Getting Help With Freelance Contracts

Freelance contracts will set the tone for the rest of your relationship regardless of which side you’re on. Employment lawyers in your state are best-suited to guide you through the process and provide legal advice. They can also help you answer questions on the fly as you work with the other party.

A customized contract for your freelance engagements will ensure that you are meeting your business objectives while protecting your legal rights. If a client presents you with one, always have employment lawyers review the agreement for accuracy, enforceability, and lawfulness.

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