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  • Writer's pictureMaggie Aime, MSN, RN

What Every Freelancer Should Know About Freelance Contracts

Updated: May 30

I'm not a lawyer, and this blog post is not a substitute for legal advice. Legal advice is best left to the professionals. Always contact an attorney to get your legal questions answered.



Blog post cover with the title What every freelancer should know about freelance contracts

Don't let that freelance contract intimidate you! Here are expert tips for navigating legalese, spotting red flags, and advocating for yourself as a freelancer.


In this article:




 


Clients! We want them, don't we? That exhilarating feeling of sealing the deal and embarking on a new (hopefully well-paid) project is unbeatable. But with every new client comes… a contract!


You may know and understand the clauses in your own agreement that you send to your clients. But many clients will hand you their standardized contract, which is designed to safeguard their business first. This legally binding document outlines the terms and conditions of your working relationship and can have a significant impact on your freelance career.


Do tell: Do you really read through a freelance contract? A survey found that 91% of people consent to legal terms and service conditions without reading them.


Yet, as business owners (and consumers), we have a legal responsibility to read and understand the terms and conditions of the contracts we sign. It’s called “duty to read”, and ignoring this duty could be a case of what you don't know can hurt you!


What’s more, signing a contract has become a breeze, thanks to technology. Just click a button, and voila, you're committed! But don't let the ease of e-signing lull you into a false sense of security. Those contracts you're so quickly agreeing to are just as binding as ever, and they can make or break your freelance career.


So, what should you do if you don't have the time (because who does?) or need help understanding the legalese in these contracts? The best thing is to talk to an attorney. In the meantime, here are a few pointers, but this is not an exhaustive list.


What to look for in freelance contracts


Hidden within the legal jargon are clauses that can impact your rights as a freelancer, your compensation, and liability, Gigio Ninan, an attorney with over a decade of experience in business, employment counseling, and litigation, told The Write RN. 


Contracts usually start by identifying who the parties are, what the agreement is about, and the effective date.  


Next, you'll likely find a definitions section where terms, such as Services, Works, Assignments, or Deliverables, are described. These terms generally appear in quotation marks, are capitalized, and sometimes underlined the first time they’re mentioned. Be sure to understand these definitions, as you'll see these terms repeatedly (usually capitalized again) throughout the document.


The body of the contract consists of various sections. If you compare a few contracts, you’ll notice these sections can be organized differently, each containing specific provisions that outline the rights, obligations, and expectations of both parties.


While the structure and content of these sections may vary from one contract to another, you should always keep an eye out for certain critical clauses, such as: 


Scope


The scope of work is essentially the ‘what’ and ‘how’ of your freelance agreement. It’s where you’ll find the details about the tasks you’re being hired to complete. 


“This includes both how much work will be done, but it may also outline how it’s performed. For example, it may describe how assignments are made, how approvals and reviews work, or include specifications for any deliverables,” explained Elliott Brown, a former lawyer, currently Head of Marketing at Cache Financials. 


Sometimes, the scope of work may be outlined in a separate exhibit or schedule attached to the main contract. 


So, when you review a contract, make sure the scope of work section is crystal clear. If you encounter a contract with a separate scope of work exhibit or schedule, review it just as carefully as the main contract. 


What to check: 

  • Deliverables are clearly defined

  • Details on how assignments are made are specific




Payment terms


Let’s be honest: when you first lay eyes on a new contract, chances are you're immediately scanning for the payment terms. You’re in good company! As freelancers, the payment terms clause is our best friend.


This section of the contract should spell out all the important details about payment amount, how you'll receive payments, and when you can expect to get paid, said Ninan.


Brown added that it should also include how payment is determined (it could be a flat rate, by the word, hourly, or piecemeal) and how to invoice. “I’ve seen clauses with payment due upon acceptance or publication with no time limit on such,” he said. That’s a no-no. Without a clear deadline for acceptance or publication, the client could potentially delay payment indefinitely, leaving you in a state of financial limbo. 


Let's say you complete a project and submit it to the client. If the contract only states that payment will be made upon acceptance, the client could take weeks, months, or even longer to "accept" the work, all while you're left waiting for your hard-earned money.


Collecting overdue payments can be a real challenge, cautioned Ninan. To protect yourself, consider asking for a deposit to cover initial costs. Similarly, try to include a clause that entitles you to attorney's fees and expenses if you need to take legal action to enforce the contract and collect payment, he added.


Here’s an example, but of course, it’s for reference only and is not legal advice. Please consult with a lawyer to ensure your contracts meet your business and legal needs.


Client agrees to pay Contractor a deposit of [insert percentage or amount] prior to the commencement of work. The remaining balance shall be paid upon completion and acceptance of the work within [insert number] days. Payment is due within [insert number] days of invoice date.


In the event that any payment due under this Agreement is not made as above, Contractor may suspend work until such payment is received. If legal action is required to collect overdue payments, Client agrees to reimburse Contractor for all costs and expenses incurred, including but not limited to attorney’s fees and court costs.


What to check: 

  • How payment is determined (flat rate, by word, hourly, etc.)

  • Payment amount

  • Payment method

  • Payment schedule 

  • Clear deadline for acceptance of work

  • Invoicing procedure

  • Deposit requirement

  • Late payment penalties and fees for legal action to enforce payment

  • Payment for revisions or additional work beyond the original scope, if applicable



a gavel


Intellectual property ownership


The client will typically claim ownership of your work and any copyrights unless another arrangement is agreed to, Brown said. This means your brilliant article, your captivating turns of phrase, the incredible content you create — all of it belongs to your client!


You may see the term “work made for hire” or “work for hire” for short in the contract. This is a legal concept created by U.S. Copyright Law. It basically means the company hiring you is considered the author and automatic copyright owner of your work, even though you created it. 


The biggest impact of this rule is that you lose control over how your client uses your work. The client can publish your work anywhere, anytime, and can even sell the rights to others. Without the client's permission, you can't use the work yourself.


Though the publisher almost always holds ownership, Brown said there certainly can be exceptions. “I can't think of many instances when a writer would want to retain ownership of work they do for hire, but if it's important — like if a work has particular value to the freelancer — you could negotiate for a limited-term license or non-exclusivity,” he added. 


For example, you’re hired to write an article about your area of expertise. If you plan on writing a book on the same topic, it might be worth asking your client for shared ownership, Brown pointed out. “In those cases, the work would revert to the freelancer after a certain period,” he noted. 


While you may not have much wiggle room for negotiation when it comes to intellectual property ownership, understand that these clauses will typically be included in a contract. 


What to consider:

  • Negotiate for a limited-term license, shared ownership, or non-exclusivity if you want

  • Know what you can and cannot do with your work




Indemnification


Tucked somewhere in the middle of all the legalese is a word that’s enough to make your eyes go wide: Indemnification (or “hold harmless”). Those ominous words are confusing and downright intimidating! 


Indemnification means that one party will compensate the other for loss or damage. “This can hold you liable for client losses due to your work, for example, if there was copyright infringement,” explained Ninan. Depending on the provisions in this clause, you, as the freelancer, may have to step up and defend the client if there’s a dispute about the originality of your work.


Are these clauses really as scary as they sound? Brown described indemnification clauses as a safeguard for clients or the party seeking indemnification. “They sound really scary, and I've seen writers balk at them in the past,” Brown replied, “However, they're really only there to protect the employer against plagiarism or something like a work product that defames someone.”    


But what freelancer wants to (or can afford to) defend or pay legal costs and expenses for clients? How can the freelancer make sure they're not left holding the bag? “First, see if you can make the indemnification clauses mutual,” said Ninan. Basically, this means that both you and the client agree to cover each other's backs if something goes wrong.


Try and negotiate the indemnification clause. For example, you could specify that you'll indemnify the publication for any issues with your original work but not for any editorial changes that you didn't sign off on.


You can take it a step further and get professional liability insurance, added Ninan. “[Professional liability insurance] could potentially cover you in the off chance that there is a lawsuit where you are dragged in,” he said. 


What to consider: 

  • Be wary of clauses that seem to put all the risk on your shoulders

  • Negotiate for mutual indemnification clauses

  • Be specific about what you’re willing to indemnify the client for

  • Consider getting professional liability insurance to cover potential legal costs

  • Consult with an attorney to fully understand the implications of the indemnification clause




Independent contractor status


Watch out for contracts that try to treat you like an employee instead of an independent contractor. “A freelance agreement will usually specify that you're not an employee. However, employment law distinguishes between employees and contractors based on the actual relationship, not what your contract says,” explained Brown. 


The IRS has some pretty clear guidelines on this, and it mostly comes down to how much control the client has over how, when, and where you work, Brown added. 


The Department of Labor’s new rules help determine whether a worker should be classified as an employee or an independent contractor. The key is to remember that you should have a high degree of autonomy and control over your work as an independent contractor.


What to check: 

  • Clear statement that you’re an independent contractor, not an employee

  • Responsibility for paying your taxes, not having taxes withheld 

  • No requirements for set hours, location, method, or means to complete the work




Termination 


The termination clause is an exit strategy for your freelance-client relationship. It outlines the specific conditions under which either you or the client can end the working relationship and what happens next.


You'll want to pay close attention to the details here. Ideally, the clause should allow either party to terminate the contract for any reason, be it a legitimate grievance or simply a change of circumstances. 


Look for specifics around outstanding payments, deadlines for delivering final materials, and whether there's a required notice period before termination can take effect. These details can prevent messy situations down the line.


What to check: 

  • Exactly how and when either party can end the contract

  • What happens to any outstanding payments or work upon termination





Non-compete 


A hotly debated topic, and for good reason! These provisions restrict your ability to work with other businesses that offer services similar to or that are competing with the client's. 


The restrictions can be onerous. Some non-competes prohibit freelancers from taking on competing work for months or even years after the contract terminates. That's an entire pool of potential clients suddenly off-limits to you!


You want to be able to freely practice your craft, so review the contract carefully and negotiate any restrictive provisions. 


But there’s a positive turn ahead! The Federal Trade Commission (FTC) recently issued a rule essentially banning non-compete clauses across the United States. This rule is expected to go into effect in August or September of 2024.


What to consider: 

  • Ask your client to list the restrictions clearly

  • Get a list of competitors included in the clause 

  • Evaluate the clause’s impact on your ability to take on new clients

  • Negotiate to have the non-compete clause removed entirely or scaled back in scope and duration

  • Consider walking away from the contract 

  • Stay up-to-date with the FTC’s ruling, which could invalidate such clauses once it takes effect





Confidentiality/Non-disclosure agreement 


This clause protects your client's sensitive information. You may come across confidentiality clauses, but Brown said, in legal terms, a non-disclosure agreement (NDA) clause is probably more relevant to freelancers.


An NDA establishes a confidential relationship between parties. In the context of freelancing, your client may have you sign an NDA when they need to share confidential information with you so you can complete your work. 


“An NDA could limit the freelancer's ability to talk about the client (which is probably fine), but it could also limit their ability to share work/portfolio piece — or even to mention that they've worked for the client. That could be limiting,” Brown added. 


And here's a practical tip from Brown: Be strategic when choosing clients, especially if there are multiple competitors you may want to work for. “It's unlikely a competitor would hire you after you've worked for the competition — and working for a competitor could put you at risk of violating an NDA,” he said. 


Let's say you're a freelance health writer. Client A, a health and wellness company, hires you to write content for their blog. You sign an NDA to work with them. Later, Client B, a direct competitor of Client A, approaches you with a similar project. However, because of the NDA with Client A, you may be unable to work with Client B without risking a breach of confidentiality.


Before you sign that contract, be sure to understand the restrictions and what you can and can't share to avoid any trouble.


What to consider: 

  • Understand what information is considered confidential under the NDA

  • Check if the NDA limits your ability to share your work in your portfolio

  • Verify whether the NDA allows you to mention the client as a reference

  • Determine the duration of the confidentiality obligations

  • Assess potential limitations on working with the client's competitors

  • Ensure that the NDA's terms are reasonable and not overly restrictive

  • Clarify any ambiguous language or terms in the NDA

  • Seek legal advice if you're unsure about the implications of an NDA



a pen and signature

How do you protect yourself as a freelancer?


  • Read that contract like your livelihood depends on it because it literally could — even the tiny fine print that seems like it was written for ants. Contracts can feel deliberately confusing, and you might be tempted to just skim and sign, but don’t. Take time to dig into the details.

  • Ask questions and negotiate, Ninan said. This cannot be overstated. Don’t be ashamed to contact the client and ask for clarification. If a clause seems unfair or unclear, bring it up with the client and see if you can work together to find a solution that works for both of you. A contract should be a win-win, not a one-sided affair.

  • Always consider bringing in a legal professional to review the contract. It may cost upfront, but it's worth it for the peace of mind alone. You can get free legal assistance and contract review from universities and law schools. Are you a member of The Authors Guild? They offer free legal contract review to their members. It’s better to get clarification early on than find out the hard way that you completely misunderstood the terms.

  • Keep meticulous records of everything, Ninan said. Save those contracts, invoices, and communications. You never know when you might need to refer back to them, especially if a dispute arises. Plus, having a clear paper trail can be a lifesaver if you ever need to prove that you kept your end of the bargain.


  • Never sign a document that you don't fully understand. Once you sign on the dotted line, you're legally bound to the terms of the contract, so make sure you know exactly what you're getting into.



FAQ


How does a freelance contract work?


A freelance contract is a legally binding agreement between you, as a freelancer, and your client. It spells out what you'll do, how much you'll get paid, and when the work needs to be finished. By putting everything in writing, both you and the client know exactly what to expect from each other, which helps prevent misunderstandings or disagreements later on.



What to include in a freelance contract?


As a freelancer, make sure your contract has all the important details about what you'll be doing, when you'll do it, how much, and when you'll get paid. You should also include information about who owns the work you create, how to keep things confidential, and what happens if either you or the client wants to end the contract early. 



Can you break a freelance contract?


Breaking a freelance contract is possible, but tread carefully. The contract should have a termination clause that lays out the rules for ending the agreement early. If you have a valid reason for breaking the contract, such as a breach by the client, you may be able to terminate per that clause by properly notifying the client. The same is true if you experience an emergency. However, breaking a contract without a valid reason can result in potential legal action from the client.



I'm not a lawyer, and this blog post is not a substitute for legal advice. Legal advice is best left to the professionals. Always contact an attorney to get your legal questions answered.



 

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1 Comment


anapeartree
May 31

Great blog post! This info is so helpful and something all freelancers should read.

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