While attending Bootcamp 2010, I heard many people asking questions about freelancing contracts. What they are? How are they created? And, are they really needed?
Contracts aren’t usually considered part of the fun side of freelancing, but they can make your life a lot easier if you know what they are and how to use them. The first thing to understand about a contract is what goes into it. What do you need to include for the contract to even be considered a contract?
First, some background and some basics. Let’s start with a few definitions. What is a contract? According to several legal dictionaries on the web and Wikipedia, a contract is an agreement (verbal or written) between two or more persons or entities (e.g., your company and another company) in which there are specific terms describing promises made by each party to do something in return for a valuable benefit, described as “consideration.” For our purposes, “consideration” is your freelancer’s performance fee. You promise to do the work, your client promises to pay you.
Contract law is one of the oldest branches of law, falling under law of obligation. As a freelancer, you probably have already realized a contract serves as the heart of most of your business dealings. Taking the time to understand the parts of a contract will allow you to use a contract’s design to free and protect your creative capabilities, and to work with your clients with fewer worries and fewer complications. So, what are the parts of a contract?
For a contract to be real, the agreement must have the following elements:
- All activities described in the contract must be legal. Contracts for illegal purposes are not enforceable in the courts.
- An indication of the entities or persons making the contract (names and addresses of the company to do the work, and the company to receive it);
- A promise to perform the actions described in the contract;
- A description of the actual items to be written, edited, researched, critiqued, reformatted, developed, audited (such as web pages), or other services;
- The valuable consideration to be provided when the work is done. This usually is your payment. It also could be the providing of a testimonial, or the giving of a referral.
- A date and time or event by which the actions required are to be completed;
- The terms and conditions that affect how the performance is completed;
- The description of terms defining non-performance by one or both parties and how any disputes are to be resolved;
- An indication of the acceptance of the contract by both parties (your signatures and the date of contract agreement).
There are good reasons for the inclusion of these elements. Let’s take a look at some key points. The first, and one of the most important, is “offer and acceptance.”
Offer and acceptance indicates legal status – that, as of a specific date, an agreement exists between the parties listed. There must be evidence that you and the client had each, from an observer’s perspective, performed an act showing consent to the contract’s terms. Should you need to use legal help to get your payment made to you, this contract feature helps strengthen your position that this was what the contract intended. It may not happen often in your freelance career, but you will be glad you took care to craft this section right if the need arises.
Another important term is “consideration.” The term is referred to in legal texts as “the price of a promise.” The idea is that both parties must bring something to the contract. A party seeking to enforce a contract must show some benefit was provided or some detriment suffered from non-performance. As a freelancer, one possible place you may use this idea is the addition of a “kill-fee” clause in your contract. You also may look to this type of clause when the scope of your project increases or decreases. Scope changes should prompt you to do a contract addition (called an “addendum”) that defines the new items to be provided and the compensation that will be added to your consideration for the completion of the additional work, along with a suitable completion date.
Finally, many contracts contain clauses at the end called “terms and conditions.” These clauses define a contract’s execution. For example, you can have a clause that indicates which state’s laws are to handle any resolution of disputes between client and freelancer. Another option may substitute binding arbitration for court appearances. This is often seen in credit card terms.
There can be significant legal consequences and business impacts with these conditions if a freelancer has clients in multiple states and countries. And, naturally, we would all like to have business expansion that allows us to work internationally! As a freelancer with worldwide clients, one particularly useful idea to consider is a clause specifying which currency you are to be paid in. This requires naming the currency to be used and the date to be used for the exchange rate’s value. Sometimes it can be as simple as requiring payment by credit card rather than a bank check.
You also might include a sentence that specifies how a contract may be changed or canceled. Adding a sentence at the end that says, “Any changes to this contract must be approved in writing, with both parties signing, with dated copies kept by both parties. All provisions for new work are subject to the same terms as the original contract, with the exception of the completion date(s),” allows you to pick up the extra work and continue with minimum disruption. A little thought here can save great hassle later.
Don’t forget to watch for part II of this series where we’ll look at items to include in each part of a contract that works for the articles, brochures and web pages we write.
Nadine White is a systems engineer and B2B copywriter (independentbusinessanalytics.com)
with interests in travel (bookwormproductionsinc.com) and dinosaurs (thedinosaurpapers.com)
She’s crafting each of these websites with the help of Nick’s Money Making Websites program and each is due to open soon! Contact her at by email with questions.
This article is part of the Crafting Contracts series.
Series Table of Contents:
- Crafting a Contract: Part 1 – The Basic Pieces (This Article)
- Crafting a Contract: Part II — Defining Your Work Package
- Crafting a Contract: Part III — Loose Ends