Don't make these freelance contract mistakes
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After graduation, I decided to avoid the corporate route and plunge straight into freelancing. It's been a little over a year now, and one thing I've learned (the hard way) is to always work with a freelance contract.
Many freelancers make critical mistakes with their contracts, and others don’t even bother making one. But ignorance is not bliss, and not having a freelance contract can lead to serious problems:
- Unpaid work
- Ghosted by client
- Delayed payments
- Excessive demands
So let’s get started!
Wait! Do I even need a freelance contract?
YES. You see, there's no HR person to go to when things go haywire. What's more, freelancing is a business, and in any business you need to make sure your rights are protected.
Enter the freelance contract, an important document that defines the whats, whys, and hows of your freelance project. In theory, It may sound obvious to have one, but many freelancers (like myself) do not spend enough time on the same. We're eager to land new clients, and when we do, it's easy to overlook tedious (but important) tasks like creating valid contacts.
In my case, I spent not more than 10 minutes on creating a contract for my very first “big” freelancing gig. The result? For many months, I was asked to do more work than I had expected (AKA project creep). Plus, the client had unrealistic deadlines as I didn't define them clearly at the start. On the whole, the project turned out to be a nightmare.
Remember, don’t be that freelancer. Before you begin work make sure you and your client agree on a mutually beneficial contact so that the project starts off on the right foot. In NYC, the Freelance isn’t Free Act states that anyone entering into a freelance agreement paying over $800 needs to have a contract — it’s now the law.
5 mistakes to avoid at all costs:
1)Not working with cash down
Always take upfront payment before you start working on a project. Even if you’re working with well-known brands, if a project is going to take a lot of time, make sure you don't run into cash-flow problems.
Factors to consider:
- For smaller projects (think <$1000), ask a minimum 25% down payment.
- For larger projects (think: $1000+) break up the project into three or four phases, and include a percentage upfront payment accordingly.
2) Having no payment terms
No matter the size of a project, it’s always a good idea to establish payment terms that apply to the balance payment. After all, the upfront payment is only a small chunk of the project, so it’s important to have payment terms for the rest of the project.
Conditions to consider:
- Set payment deadlines with a late fee to keep clients accountable.
- Clearly define who covers the transaction fees and the modes of payments.
- Offer discounts for early payments (best suited for larger projects).
- Include legal measures in case of non-page invoices.
Here’s an example:
“[Your name here] will invoice [Your client's name here] on [XYZ] day of each month for that month’s delivered work. Payment must be received by the client by the [include deadline here] of the next month to avoid a late fee of [XYZ%] late fee on the next invoice.”
3. Not setting boundaries
Freelancing offers you a lot of freedom, but you need to take extra measures to protect this freedom. For instance, a client can set deadlines for a project, but they cannot demand you to work at particular times or to be "on-call." So it's vital to define your freelancing contract and set clear boundaries for the project.
Ideas to consider:
- Set deadlines, based on current work, and make your client know of changes if workload increase due to any additional requirements.
- Include holidays and off hours so that your client knows when NOT to contact you.
Note: I recommend checking with your state’s laws to understand your rights and how to take appropriate action.
4) Not defining scope of project
At times, clients will want you to do more than what was agreed, and unless you’ve clearly defined the scope of the project, you’ll have no leverage.
Don’t be a victim to scope creep. Put the exact tasks you will handle into your freelancing contract, and if a client asks you to do more, decline or charge them an additional fee.
Conditions to consider:
- Define the project deliverables.
- Assign additional costs for add-on services (this can be used as an up-sell).
- For creatives, define the number of concepts and revisions.
Bonus 5) Cushion your attorney fee
Now, this isn't a ''freelance contract mistake" but rather an element that most freelancers should utilize in their contract.
You see, some freelancers shy away from contracts because they think the legal costs of suing clients is high. Yes, lawyers are expensive, and their fees (in most cases) do exceed the price of the project.
But that doesn't mean you have to cover the cost. Instead, you can make the client liable for all legal fees by simply adding a clause in your contract. In this case, clients are most likely to pay you to avoid legal costs — and you will be more inclined to take legal action if needed.
Important freelancing contact FAQs
Now, creating a freelance contract is beyond the scope of this article, but these questions should be enough to guide you in the right direction.
Q: What are the essentials of a freelance contract?
A: There are no real rules when it comes to the freelance contract, but make sure you include these elements:
- Name, contact, and dates of both parties
- Project scope (deliverables, responsibilities)
- Payment information and terms
- Any additional terms (think: add-on services, revisions, etc.)
Q: Do I need a lawyer to create a freelance contract?
A: I recommend hiring a lawyer only if you are negotiating a contract for a project that’s above $5000. Else, just use freelance contract builder or write a custom one yourself.
If you decided to write one yourself, I recommend using tools like Grammarly to check for errors and improve the brevity of the contract.
Q: Does a verbal contract count?
A: No, it does not. With a verbal agreement, you can't enforce anything, and open yourself up to misunderstandings. I highly recommend creating a written contract.
Q: Is a digital signature valid?
A: Yes, a digital signature is valid. In fact, signing your name on a form and clicking submit counts as a legal signature in the court of law.
I recommended checking out the Master freelancing FAQs page for more information.
Always have it in writing
Look, I’m not a lawyer, so take my advice with a grain of salt, and if you want a 100% unbeatable freelance contract then create a contract with a lawyer.
But if you can’t afford one, make it yourself and be sure to define everything in writing. After all, a freelance contract is a simple way to protect your rights, set expectations, and on the whole, ensure the project starts off on the right foot.