Research shows that 58% of freelancers have experienced not being paid for their work. Yet 79% of small businesses don’t charge for overdue invoices, according to the UK Federation for Small Businesses. Having a contract in place before you start freelance work may help protect you from non-paying clients and many of the other risks associated with being freelance.
A freelance agreement will also help you to:
- Set clear expectations before you start work.
- Overcome client objections about payment, deadlines, revisions, etc.
- Charge for any extra work that wasn’t in the original project scope (often called “scope creep”).
In this article, we’ll introduce you to freelance contracts by covering:
- Does every freelancer need a contract?
- What to consider including in your freelance contract
- Freelance contract tips
- Free freelance contract templates
- Tips on how to handle a breach of contract
Note: This post gives general tips but does not constitute legal advice. Be sure to check your local rules and contact a legal expert when necessary.
Does every freelancer need a contract?
You don’t necessarily have to have a contract before you take on freelance work. But without one, there’s a risk that you or your client could end up out of pocket if a project doesn’t go to plan.
You might not need a freelance contract if:
- You’re freelancing as a hobby.
- You don’t rely on your freelance income to pay the bills.
- You mostly take on small, short-term projects that don’t cost a lot of money.
It’s recommended you have one if:
- Freelancing is your full-time job.
- You rely on your freelance work to pay the bills.
- You work on high-value projects that can take weeks or months to complete.
What to include in your freelance contract
What you put in your contract depends on the kind of work you do. For example, do you need a contractual agreement for each one-off project you work on, a retainer contract for recurring clients, or Terms and Conditions that you ask clients to agree to before you start work? Here are the top clauses to consider including in your freelance agreement. (For more specifics, be sure to consult with a legal expert).
Freelance contract essentials
1. Your fees and payment terms
This section defines how much you expect to be paid, and when. Do you require a deposit on booking, full payment upfront or will there be multiple payment milestones? For example, it’s common for freelance writers to take a 50% deposit when they book a project and the remaining balance on completion. This helps with cash flow and gives you a buffer if a client backs out of a scheduled project for any reason.
“Why should I pay upfront?”
This is a common objection to get from clients or accounts departments, who aren’t willing to pay for work you haven’t delivered yet. Think about this when you respond: When you’re a freelancer, your time is the product your clients are paying for—and there’s a finite supply of it. Taking a deposit or full payment upfront lets clients reserve a slot in your schedule. If a client doesn’t book their space in advance, there’s no way for you to guarantee that you’ll be able to work on their project when they need you. Because you’ll have allocated that availability to someone else.
2. Late payment penalties
What happens if a client doesn’t pay on time? According to the UK Federation of Small Businesses, a third of payments to small businesses are late. Charging interest on late payments can help protect your cash flow and encourage clients to pay promptly. For example, a 5% charge added for every 14 days the invoice goes unpaid. Before you can start charging late payment fees, your clients need to know about them in advance. So state them clearly in your contract and make sure they are reasonable—eg. don’t apply a $50 fee to a $100 project. You could also consider offering a discount to clients who pay early.
3. Additional work (scope creep!)
If you’ve agreed on a flat fee for a project as opposed to an hourly rate, what happens if the work involved changes? “Scope creep” is when the requirements of a project exceed the original plan. For freelancers, this usually means your client expecting more work for the same fee. Clearly defining the project deliverables in your initial agreement gives you something concrete to refer to if your client tries to push for more work. Remember to include how you will handle additional work—will you charge it at an hourly rate or quote a new project fee?
4. Copyright and ownership
Who owns the rights to your work? As an employee, your employer will usually own the rights to all the work you do for them—whether that’s photographs you take or ideas you share in meetings. When you’re freelance, you own your work until you transfer that ownership to your client. It’s up to you to specify if and when this transfer will happen in your contract, eg. when you submit your final draft, once the client has paid in full or at another point. Remember to specify exactly what your client will own too, for example, will they own the rights to your final draft or all the ideas you’ve proposed during the project? Check the copyright laws in your country and get legal advice if you’re not sure.
5. Using work in your portfolio
Showcasing your previous work is the best way to win new clients. But if you want to use client work to market your business then you’ll need permission first. I have a clause in my contract that confirms I reserve the right to use extracts from projects I’ve worked on for clients for marketing and self-promotion purposes. I still check with my clients on a case by case basis, though, just as a courtesy. This shouldn’t come as a surprise to clients, because most will have hired you after seeing your portfolio.
6. Cancellation policy and kill fee
What happens if a client cancels unexpectedly, either before or during a project? Your contract should clearly state if you allow cancellations and if so, within what timeframe, and whether or not clients will lose their deposit if they cancel. If you have a retainer agreement, make sure you include how much notice is required if either party wants to cancel, eg. up to six months’ notice for long-term retainers or thirty days for a rolling contract.
Less eerie than it sounds, a “kill fee” is chargeable when a client cancels a project you’re already working on despite your best efforts. It’s usually a percentage of the full project value and covers some (or all) of the time you’ve invested in the project to date. If a client cancels a project at short notice and you can’t replace that income gap right away, you’ll still get some of the money you expected to earn in that time.
7. Illness or injury policy
What happens if you have to take time off unexpectedly? No matter how healthy you are, the chances are, you’ll have to take unplanned leave at some point in your career—for example, if you are sick, have a bereavement or need to care for a loved one. The last thing you want to think about at times like these is work, so it’s important to have a process in place and explain it in your contract. For example, you might reserve the right to outsource work to another contractor, postpone the job for a set period of time or offer a full or partial refund.
Outwith your contract, you can prepare for a rainy day by getting into good habits now. Like a little paying into your own “sick day fund” every month or taking out income protection insurance, which will pay you a certain amount each month if you’re unable to work. Be aware that some policies won’t cover your full income.
8. Changes and revisions
We’ve all submitted work only to have our client come back with endless requests for edits or amends. Without a clause in your contract, it’s easy to get caught in the “Trap of Infinite Tweaks.” Specify how many rounds of changes you will carry out within a set project fee and how much changes beyond this threshold will cost. For example, it’s common for freelance writers to include one round of edits in the project price, then charge an hourly rate for additional changes. Remember to include a time limit within which revisions must be submitted. This will help keep momentum going and stop clients coming back weeks later when you’re busy with other work.
9. Your status as a contractor
As a freelancer, you are not an employee—you aren’t entitled to the same benefits, like sick pay and holidays—but some clients might still be tempted to treat you like one. Your contract should define what it means to be a contractor, eg. you’re free to work on your own schedule, set deadlines, take on work from other clients, and choose which projects you take on. Check the regulations in your country if you’re not sure.
10. Your main point of contact
Last but not least, this isn’t necessarily a contractual clause but will certainly make your life easier: Who will be your main point of contact for this project? Having one person on the client side who is ultimately accountable for responding to your queries, processing your invoices and reviewing your work will help you get things done and stay on schedule. This is especially important if you work with larger organisations or will be dealing with multiple stakeholders.
Freelance contract tips
- Write in plain English. Nobody likes reading long, confusing contracts. It’s much easier to get buy-in from your clients when your contract is written in plain English and is easy to understand, but be sure to have all of your legal bases covered.
- Get professional help. There are lots of freelance contract templates online and articles like this one will certainly help you get started. But there’s no substitute for professional advice. Once you’ve drafted your project, have a legal professional look over it.
- Update your contract regularly. Running your own business is an adventure, and you’ll come across new pitfalls along the way. When you run into a problem, consider how you could better protect yourself from it by adding a new clause to your next contract.
Free freelance contract templates
The type of contract you use will depend on your industry, the kind of clients you work with and what’s important to you. Here are some contract examples from different sources:
- Andy Clarke’s Open Source Contract free for anyone to use and adapt
- John McGarvey’s Copywriting Contract based on Clarke’s formula and adjusted for writers.
- Speider Schneider’s Sample Design Contract adapted from the AIGA Standard Form of Agreement for Design Services.
These sample contracts are just a starting point. Be sure to find one that works for your business, fits your sector, and covers all of the legal rules that apply to professionals in your industry.
Tips on how to handle a breach of contract
- Keep all communication in writing. It’s much easier to refer to conversations when they’re there in black and white. So if a client relationship goes sour, avoid talking on the phone and stick to email instead. This will also help you stay professional and keep your emotions at bay.
- Stick to your guns. You have a contract and you may be within your rights to enforce it. Remember that you have a business to run and don’t give in to undue pressure from clients.
- Seek legal advice. While your contract should offer some protection, if you’re unsure what to do next, there’s no substitute for proper legal advice. It could save you time and hassle in the long run.
Remember, your contract is a work in progress. You can edit and improve it as your business grows!