5 Legal Mistakes to Avoid When Freelancing (In Order of Fatality)

by . September 26th, 2012

1) Fatal: Not having a written contract.

A contract is simply an agreement between two parties. A reciprocal promise: “I’ll buy you candy if you clean your room” is technically a contract (and kids are really good at arguing, so beware)! Oral agreements are legally binding and can be enforced in court. The problem is they’re tough to prove, and going to court is expensive. So, when the value at stake is not candy but cash, you want to have a written contract. As the Romans said: Verba volant, Scripta manent (literally “spoken words fly away, written words remain”). And as New Yorkers say: “don’t get screwed over.”


There are many places to get a written contract or at least a starting point:

2) Mortally wounded: Assign copyright before full payment.

The most important provision in a design or web design contract is intellectual property: who owns the final work you created? In most cases, the client will want as many rights as possible, like this entire assignment clause:

Assignment of Copyrights. Upon completion of the Services and conditioned upon full payment of all fees, costs and out-of-pocket expenses due, Designer shall assign to Client all ownership rights, including any copyrights, in and to any artworks or designs comprising the works created by Designer as part of the Final Art and Final Deliverables for use by Client. Designer shall cooperate with Client and shall execute any additional documents reasonably requested by Client to evidence all such assignments of intellectual property.

Focus only on the first line: “upon completion of the Services and conditioned upon full payment on all fees, costs, and out-of-pocket expenses due.” This is a classic example of a legal condition precedent. You’re telling your client that you will get the ownership if you pay me in full. It doesn’t matter if you already sent them the final work and they are using it; as long as you reserved those rights, you can successfully sue your client for breach of contract and violation of copyright. That gives you pretty good leverage in getting the money you deserve, as you might be entitled to hefty statutory damages.


Conversely, if you don’t have such a clause in your contract and the client doesn’t pay, you’ve lost all your economic leverage. If they offer you such a document, add the condition, like this example:

All grants of any license to use or transfer of ownership of any intellectual property rights under this Agreement are conditioned upon receipt of payment in full which shall be inclusive of any and all outstanding additional costs, taxes, expenses, and fees, charges, or the costs of changes.

3) Grievously wounded: Forget to specify a kill fee.

A “kill fee” is the money you reserve the right to charge to mitigate the risk of clients calling you in the middle of a project to tell you they don’t need you anymore. This is a loss not just of the time you spent on the project but also of potential alternative jobs you turned down because you thought you were busy. In a contract, this is usually taken care of in the “cancellation clause” like article 6 here:

In the event of cancellation of this assignment, ownership of all copyrights and the original artwork shall be retained by the Designer, 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 100% 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 $250 or 50% of the remaining hours that were expected to be completed on the project, whichever is greater.


4) Painfully injured: Write a sloppy statement of work.

Once you have a solid standard contract, you should try not to touch the legal boilerplates without the help of an attorney. Instead, use your professional knowledge to shape a good statement of work. This is a chance to skew the contract on your side. If you think the client will ask for more and more things during the project, be very specific so you have grounds to charge extra for extra work. If the project is long and complicated, establish clear milestones to check the deliverables with the client and get his written approval.


5) Deeply bruised: Forget to disclaim liability.

As a general rule, you are responsible for the work you deliver. If you buy a washing machine, you’d expect it to wash clothes, right? That’s called the warranty of merchantability, and it’s so essential that you don’t even write it down. It’s implied. When you sell services and not things, you have more flexibility. You can sell it without warranties (what is called “as is”) and disclaim future liabilities that your work might cause. This is particularly important for software, but in general, you want to avoid the client coming back at you if/when things go wrong. This clause can be as simple as this:

We can’t guarantee that the functions contained in any web page templates or in a completed web site will always be error-free and so we can’t be liable to you or any third party for damages, including lost profits, lost savings or other incidental, consequential or special damages arising out of the operation of or inability to operate this web site and any other web pages, even if you have advised us of the possibilities of such damages.

Or it can be long enough to cover one full page in AIGA’s standard agreement, such as articles 9 and 10 here.
The liability disclaimer is like your car’s airbag: when shit happens, you want it to pop and save your career.


Bottom line: always keep these 5 points in mind when drafting or reviewing a contract. If there’s something you don’t understand, always ask for an explanation and ask a lawyer to check the document out before signing. Preventing problems is the primary goal of the design contract. So, protect yourself and finally get to the actual work!

Disclaimer: This article wants to be valuable and informational, but take note it is not legal advice, and all the legal documents cited are only to be used as a starting point. The author, YouTheDesigner, Docracy, and the original authors of the documents cited disclaim any liability connected to the use of these materials without a licensed attorney.

Veronica Picciafuoco

About the Author

Veronica Picciafuoco is the Director of Content for, the home for free, open-source legal documents socially curated by the communities that use them. She has a legal background and works closely with tech startups and freelance designers in Brooklyn, NY. You can find her on Twitter, Linkedin, and Tumblr.