Biz Features

What You’re Never Told About Contracts

by . May 2nd, 2014

With a Sample Contract for Freelancers!

Budding freelancers and other entrepreneurs don’t often realize that it’s often necessary for them to draw up and offer contracts, instead of just blindly trusting their clients to provide them with one.  Having your own contracts to send to clients will:

1. Give you the initiative in any negotiation.

2. Save everyone time.

3. Make you appear more professional.

However, drawing up legally-binding contracts is not a simple undertaking. It’s true that you don’t have to have a law degree or fluency in legalese to be able to draft a contract, it’s still important to seek legal advice and have a qualified attorney refine your drafts, or create one from scratch based on your requirements.

10 Things to Consider Before You Start:

10.) Consult a lawyer.

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The whole article and the sample contract in particular, are just here for gisting purposes. There is simply no way we could cover every single quirk different jurisdictions might have. Check online for local laws if you have to, but always defer to an experienced attorney that specializes in contract law as it pertains to your jurisdiction.

You will also need to come up with a lot of other forms apart from the contract. If your business has unique circumstances (most do), then forms templates would probably not cover all that you’ll want them to do. An experienced lawyer can draw up contracts and other forms that would best suit your particular needs.

You could just try to do it all yourself. Fine, if you also happen to have legal expertise. But if you don’t, not having access to a competent legal adviser is the very mark of an amateur. Having a lawyer will often be the very thing that will protect you from being exploited and allow you to live comfortably off your work.

9.) Never talk to your client’s lawyer without yours present.

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In fact, don’t talk to them at all. Talking to your client directly is fine. But if their lawyer is present and yours isn’t that can put you at a severe disadvantage in any negotiation. Excuse yourself from the situation and explain that you don’t feel comfortable without your own legal counsel present.

More: F*ck You, Pay Me – Why Creative Workers and Freelancers Need Contracts 

8.) Keep all emails and physical related to contracts and projects.

To make it even easier, keep all e-mails from each client in their own folders. Depending on where you live, the contents of those emails can have different legal implications. In some cases, you might find yourself bound to things you said in an email that were not explicitly in the contract.

7.) Digital-signature legality in your area.

Receiving a FAX
In some jurisdictions, faxes are the only accepted electronic means of sending a legally binding copy. In others, a simple email exchange might be considered enough. Always consider the local context before agreeing to anything.

6.) Always provide clients with an estimates form.

Even when you’re communicating face-to-face or over the phone with a potential client, it’s always useful to send them a written estimate regardless. This ensures they can’t feign shock when they are finally presented with an invoice. Include all possible estimates for expenses as well as the rights to be exchanged.

Always include your terms and conditions in the estimate. If you include it afterwards, it may weaken your position should a dispute arise.

5.) Always get a signed assignment confirmation if the client agrees to your estimate.

A confirmation note serves to set expectations for both parties before any contract is signed. This can be part of your estimates form, or separate from it. Though not strictly necessary in a vast majority of cases, this will strengthen your position in any possible dispute that should come up.

ALWAYS make sure you have a signed copy of the confirmation as well as your actual contract before you start any work. This will make it harder for the client to dispute your terms, than if you started work beforehand.

4.) Get a change order form in writing for every single revision session.

This will provide the documentation that you will need to claim compensation for revisions, as stated in your contract.

3.) Provide delivery notifications, and packing slips.

Whether you email finished work, or physically have the job items delivered to your client, you should deliver a note that indicates exactly what it is you’re delivering. This will help your client match your work with the specific project they’re having you work on.

The delivery note is also a good place to remind your client the extent of your responsibilities for the project or particular delivery. Especially useful for creatives, programmers, and contractors involved in artisan work.

Tip: Just invest in a couple of filing cabinets already.

2.) Log all the times and dates forms got sent and received.

This can further reinforce your position should a client flip-flop on an agreement. Again, not strictly necessary, but this is what the pros all do. This will help you get a better idea of when certain things happened should in case of a dispute. You’d get surprised about how difficult it is to keep track of when important things actually happened, especially when you work for multiple clients.

1.) Always Provide Invoices!

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This serves as a formal notification to the client that it’s time to pony up to whatever you agreed to on the contract, be it written or verbal. You will both also need these for tax purposes.

It’s also a great place to restate your terms and conditions. It is however, a very bad idea to make it the only place you could see them, especially when dealing with medium and large businesses. Invoices will end up in their accounting department 99% of the time, where project managers may not have easy access to them, possibly creating miscommunication and a perception of bad faith.

Are Invoices, Assignment Confirmations, Estimates, Delivery Notes, and Change Order Forms Contracts? 

As a general rule, they are only evidence of a contract. They can however, become contracts once signed or if there is any other evidence that they have been accepted.

Rejection of these forms should not in any way invalidate or override the contract specific to the job. These forms are important however, for covering your rear and for ensuring you do not leave any money on the table.

Generic One-off Project Sample Contract for Freelancers

This is a generic contract we made up based on AIGA’s Standard Agreement and Tad Crawford’s Legal Guide for The Visual Artist and Docracy’s Independent Contractor Template, and former MAD Magazine Graphic Artist Speider Schneider’s take on it on Smashing Magazine. While no template will work perfectly, the sample below should be appropriate for a wide variety of fields. Copy directly at your own risk:


YouTheEntrepreneur Sample Contract


Client:
Primary Contact:
Secondary Contact:
Project Name:
Project Description:
Date of Project:
Project Deadline:
Purchase Order #:
Your Name:
Invoice #:
Project Briefs/Creative briefs/Overviews,etc:
Compensation Package:

        • Terms of the exchange/sale
        • Rates
        •  Estimated hours
        •  Rights to be sold or transferred
        •  Number of revisions
        •  Rates for revisions
        •  Overtime, if applicable
        •  Other Perks


1. Payment

All invoices are payable within ____ business days of receipt. A $____ service charge is payable on all overdue balances for reissuing each invoice at 45, 60, 75 and 90 days from the date of original invoice. The grant of any license or right of copyright is conditioned on receipt of agreed compensation.

2. Default in payment

The Client shall assume responsibility for costs incurred by contractor in all collections of unpaid fees and of legal fees necessitated by default in payment. Invoices in default will include but are not limited to fees for collection and legal expenses.

3. Estimates

The fee will be ________ per hour and the contractor shall keep the client apprised of a tally of hours within a reasonable period of time. The fees and expenses shown are minimum estimates only unless an alternate compensation package or hourly fee is agreed upon. Final fees and expenses shall be shown when invoice is presented. The fees and expenses shown are minimum estimates only unless the quote and/or invoice is clearly marked Firm Quote, otherwise the below stated hourly fee will be payable on all time over that which was quoted _____ minute increments.

4. Changes

The Client must assume that all revisions in content, layout or process changes requested by the customer will alter the time and cost. The Client shall offer the Contractor the first opportunity to make any changes.

5. Expenses

The Client shall reimburse the Contractor for all expenses arising from this project, including the payment of any sales taxes due on this project, and shall advance the Contractor for payment of said expenses, including but not limited to materials needed for the project.

6. Cancellation

In the event of cancellation of this project, ownership of all copyrights and the original work shall be retained by the Contractor, and a cancellation fee for work completed, and expenses already incurred, shall be paid by the Client. Cancellation fee is based on the hours submitted, if the project is on an hourly basis or a percentage based on the time estimate for the entire job. A ___% cancellation fee is due once the project has been finished, whether delivered to the client or not. If the project is on an hourly basis and the project is canceled by the client, the client agrees to pay no less than 100% of the hours already billed for the project at the time of cancellation plus a flat fee of $____ or ____% of the remaining hours that were expected to be completed on the project, whichever is greater.

7. Ownership and return of work

The Contractor retains ownership of all original work, whether preliminary or final, and the Client shall return such work within ____ days of use unless indicated otherwise below. If transfer of ownership of all rights is desired, the rates may be increased. If the Client wishes the ownership of the rights to a specific design or concept, these may be purchased at any time for a recalculation of the hourly rate on the time billed or the entire project cost.

8. Credit Lines

The Contractor and any other creators shall receive a credit line with any editorial usage. If similar credit lines are to be given with other types of usage, it must be so indicated here.

9. Releases

The Client shall indemnify the Contractor against all claims and expenses, including attorney’s fees, due to the uses for which no release was requested in writing or for uses that exceed authority granted by a release.

10. Modifications

Modifications of the terms of this contract must be written and authorized by both parties, involving the implementation of a new version of the contract as a whole following standard procedures of documentation and approval.

11. Uniform commercial code

The above terms incorporate Article 2 of the Uniform Commercial Code.

12. Code of fair practice
The Client and the Contractor agree to comply with the provisions of the Code of Fair Practice.

13. Code of fair practice

The Contractor warrants and represents that, to the best of his/her knowledge, the work assigned hereunder is original and has not been previously published, or that consent to use has been obtained on an unlimited basis; that all work or portions thereof obtained through the undersigned from third parties is original or, if previously published, that consent to use has been obtained on an unlimited basis; that the Contractor has full authority to make this agreement; and that the work prepared by the Contractor does not contain any scandalous, libelous, or unlawful matter. This warranty does not extend to any uses that the Client or others may make of the Contractor’s product that may infringe on the rights of others. Client expressly agrees that it will hold the Contractor harmless for all liability caused by the Client’s use of the Contractor’s product to the extent such use infringes on the rights of others.

14. Limitation of liability

Client agrees that it shall not hold the Contractor or his/her agents or employees liable for any incidental or consequential damages that arise from the Contractor’s failure to perform any aspect of the project in a timely manner, regardless of whether such failure was caused by intentional or negligent acts or omissions of the Contractor or Client, any client representatives or employees, or a third-party.

15. Dispute Resolution

Any disputes in excess of the maximum limit for small-claims court arising out of this Agreement shall be submitted to binding arbitration before a mutually agreed-upon arbitrator pursuant to the rules of the American Arbitration Association. The Arbitrator’s award shall be final, and judgment may be entered in any court having jurisdiction thereof. The client shall pay all arbitration and court cost, reasonable attorney’s fees, and legal interest on any award of judgment in favor of the Contractor. All actions, whether brought by client or by contractor will be filed in the contractor’s state/county of business/residence.

16. Acceptance of terms

The signature of both parties shall evidence acceptance of these terms.

Contractor: __________________

Date: _____________________

Client: _____________________

Date: ______________________

16a. Acceptance of terms

The action of the sending and receipt of this agreement via electronic method will hold both parties in acceptance of these terms. The Contractor as sender and the client as recipient will acknowledge acceptance of these terms either through an e-mail noting acceptance or acceptance is acknowledged at the beginning of any work on said project. Electronic signatures shall be considered legal and binding.

This contract is held accountable to the legal system of ____________ and any applicable statutes held therein.


 

Again, we must re-emphasize that this sample contract is only for educational purposes, and we cannot be held responsible for anything illegal or untoward that will happen if you use it. Check laws in your particular jurisdiction as well as all others under which your project will be subject.

Bonus:

 

Image Sources:

JonathanCohen via photopin cc
thinkpanama via photopin cc
MyTudut via photopin cc
kalleboo via photopin cc
Claire Dancer via photopin cc
miguelb via photopin cc

Other Sources and Additional Reading:

AIGA Standard Agreement

stuffandnonsense.co.uk – Contract Killer

David Airey – Graphic design contracts – your advice

Docracy – Freelance Writer Assignment

Docracy – Independent Contractor Agreement Template

University of Mississippi – Web Developer Sample Contract (.doc)

ABOUT THE AUTHOR:

Arthur Piccio manages YouTheEntrepreneur and has managed content for major players in the online printing industry. He was previously BizSugar's contributor of the week. His work has appeared multiple times on The New York Times' You're the Boss Small Business Blog. He enjoys guitar maintenance and reading up on history and psychology in his spare time.

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