We all think that the most difficult part for a freelancer is to chase the lead and convert it into a prospective client. While the difficult part ends at that step, the complex bit starts post the call to action. For sealing the deal, one of the most crucial elements is The Freelancer Contract.
A freelancer contract is a legal document outlining the agreements between the client and you. These specifics basically define your relationship with the client. It needs to be signed by the client and you, to prove each of your consent to the set agreements.
The sentences mentioned in the freelancer contract can prove to be confusing, complex, or even misleading at times. The documents are many times filled with legal jargon. Therefore, it is essential to carefully read them before you sign, or seek legal/professional advice to understand them.
Dealing with contracts is a small part of a business procedure that eventually is an obligation to be fulfilled. Contracts can be of two types, verbal and written. Verbal contracts are legally enforceable. They are mostly formed on the basis of trust and in good faith. We always recommend to go for a written agreement, as it serves as evidence in case any unforeseen unfortunate incidents arise in future.
An eye for detail is required when reviewing a freelancer contract. Make sure that the agreements set are mutual, considering the expectations of both the parties, and focusing on future outcomes. A contract is pivoted on four main components.
A freelancer contract is a way to protect your interest. Along with being the safety net, they also define the functioning of the business. This legal document ensures that you receive the guaranteed money for the work you deliver and the client receives the work of expected and promised quality.
Now that we understand the meaning and the importance of the freelancer contract. Let’s move on to the process of forming the content for the agreement. Entrepreneurs are often found in the dilemma of what to include or on what basis should the contract be formed. We further discuss the vital points that need to be considered before you sign the deal.
1. Research about the other party
Once you know who you are going to do the business with, research on them. Get the basic information including name, address, etc. Know about the creditworthiness of the other party. Seek for any historic complaints against them from any of their previous clients.
2. Negotiating contract terms
It is important to start with allocating and clarifying who is responsible for what. Know who owns the liability of things, mainly in case something goes wrong. Identify the impartial arguments and negotiate on the relevant things before you put them on the contract.
3. Get into specifics
Define the scope of the project you are going to work on. Be clear and precise on this one. Add as many details as you can. It is always better to be specific to avoid any future problems. Along with outlining the project also specify any outliers, i.e. that is the surrounding elements you will not provide them with.
Be upfront with your clients on only performing the activities that you want to finish. State what you are committing to, and mention measures for any extreme situations. If the client demands any changes or starts expecting more work from you, consider what is to be done in that case.
There might be over commitment during the pitch or the expectations of the final deliverables might be different. When you write it down as part of the agreement, there will be lesser confusion. Incase, there is confusion due to difference in interpretation, a third person will be able to mediate to resolve this.
4. Price and Work Rates
Be determined and specify the amount you are going to charge for the work. Consider the resources, time, and quality of your work when you decide on the rate. Mention the payment terms, including the payment mode, time, late fees, taxes etc.
Deciding on a payment schedule mutually is very crucial. You can take advance, partial or full payment. State the payment options that you offer. Be open to the payment alternatives that the clients suggest.
Talk about the late payment fees. In order to maintain the cash-flow or motivate clients to pay on time, do you plan to charge fees or interest on late payment. Let them know about this in advance. You might also want to offer an early payment discount. Make your offers reasonable enough considering the client’s position too.
Also clarify on what happens if the client decides to cancel the project. Discuss ‘how much will you be paid in that case’. Are you going to charge any cancellation fee or take a safety deposit at the beginning of the project.
5. Work Deadlines
The project has a timeline to follow. Communicate the dates for all the milestones to be accomplished beforehand. Tailor your schedule according to your convenience, measure the time you will need to finish the work. Your time management should cope with your working pattern. Telling about the deadlines to your client makes things clear, and lets them know when to expect the work. If they are not happy, you can negotiate and find a suitable date that you both agree upon.
6. Termination Clause
Mention the date when the contract is going to end. What happens if one party decides to get out of the contract before the completion date. On what terms should one leave the contract. Read the exit terms carefully. The termination clause by mutual consent allows one to terminate the contract due to non-obligation or breach of contractual terms or non-performance.
7. Dispute Resolution
Present how you want to resolve the disputes that might occur. It is important to maintain a healthy relationship with the client. Sometimes the dispute requires peacemaking rather than directly going to the court. If you go to the court, then who is going to bear the expenses. Having an arbitrage can save you heaps of time and money too.
You own your work. If you are self-employed or working as a freelancer, your work is your USP and you own it. It is important to have a clause that protects it. An ownership or copyright clause helps you to retain the rights to your work.
Put forward this clause in a way that you do not seem dominating and that this benefits both the entities involved. This clause is crucial as it decides who has the right to the work once it is delivered. Whether the copyright will be passed on to the client or not. Specify what the client will own too.
The contract should reflect the negotiated terms and conditions. Take your time, read every word or take legal advice before signing anything. Check carefully for any red flags. Do not sign the contract if you are unsure or even in case you are pressured. Always keep a copy of the contract with you for evidence.
A well-written contract can prove to be of mutual benefit to maintain the relationship for the long term and to continue doing the business. We suggest reviewing the contract every once in a while. If the contract is to be altered, it is essential that both parties initiate the changes.
But before you go to the contract, wouldn’t you like to have grabbed the deal first. Read our blog on Sales 101 for freelancers to crack your next deal.