Writing Consultant and Freelance Contracts for Your Clients

Once you strike out on your own, the question of contracts eventually will surface. Do you? Or don’t you?

Is a contract necessary between you and your client? The answer is no, it isn’t. Many consultants and freelancers work for years without contracts of any type. They rely on the verbal agreement between themselves and their clients. However, such agreements tend to cover only the basic elements of the business relationship, leaving many contingencies unaddressed and omitting important protections.

It is advisable to use some form of a contract for every project you do. A contract clarifies the project, what you have agreed to do and when you will deliver, and binds the client to pay for your services. Contracts avoid misunderstandings that could create problems later in the work relationship.

Generally, when we think of contracts, we envision a long document of legalese that has been drawn up by an attorney. If you prefer this type of contract, there are many available on the Internet.

You do not need, however, something this formal to protect yourself and your business. Here are some other forms of contracts that are used:

• A formal letter
• An proposal or quote
• A preprinted form that you fill in for each project/client
• A purchase order from the client

I generally create a detailed agreement for the first project I do for a client. Any additional projects thereafter, I cover with a quote that is just as detailed as the agreement. In each instance, the client must accept and sign the document before work begins.

To make any contract legal, the client must sign it or accept it in such a manner that can be proven and enforced in a court of law. Even if you would never pursue it that far, a carefully written and signed contract provides a written record that details the business relationship between all parties. It avoids misunderstandings at the beginning. Writing down the details will remind you of things you have forgotten to discuss, and the details may prompt questions from the client, as well as other elements that should be covered. A contract is your best source of reference later on as to what was agreed.

It is important to include certain elements and protections within a contract:

• The document should be clearly labeled as a project agreement, project contract, or other such title.
• Your name, company name, and contact information (I include my company logo, too).
• The date the contract was created.
• The expiration date of the contract, if not accepted. For example: This contract expires in 30 days, if not accepted.
• The client’s name, company and contact information.
• The project’s scope and details.
• The project milestones.
• Payment of the project.
• An acceptance line for the client’s name and date signed.
• Thank you for your business! at the bottom in larger, bold letters.

Project Scope and Details

Description of the Project. There are several elements for inclusion in the scope and details sections. Foremost in importance is the description of the services you will provide – be precise and clear in your wording and as detailed as the project requires. The bigger and more complex the project, the more details you should provide. Include any limitations – things you won’t and are not willing to do. Add what the client or a third party must provide. Then, clarify what is considered additional work that is beyond the scope of the contract, and clearly state what additional compensation you expect for it.

Ownership. I include ownership details only when the client requests transfer of copyright, or I clearly feel that I would not wish to retain these rights. Under current copyright law, you as the creator of the work own the copyright if there is no verbal or written agreement to the contrary. Many designers and writers never broach the topic. This means that the client must return for their services whenever changes are required or reprints are desired. You are not compelled by law to sell the copyright to the client.

If you agree to transfer ownership of the completed project, then include the following in the description:

• The separate fee (if there is one) for the transfer.
• Note that copyright ownership is transferred upon full payment of the project. Until then, you retain ownership.
• The ownership of proprietary items, whether owned by you or someone else. For example: When a book is written for a client, the professional may include stock photos purchased for such work. The writer does not own these. Only a license of unlimited, nonexclusive use was purchased. The copyrights belong to others. If this notation is forgotten, the client may believe he/she owns the photos and reasonably assume the photos could be sold or reused in another manner other than the use license allows.

Indemnification. Once you turn your project over to the client, you have no control how the final piece will be used or distributed. If the client should be sued for the work, you too may be included in the lawsuit. Even though you had nothing to do with the situation, you created the piece. For example, a copywriter creates an advertisement, based solely upon the information provided by the client. Legal prosecution is brought against the client and copywriter for false or deceptive advertising. Other concerns are copyright or trademark infringement, libel and a whole host of possible bases for lawsuits. Whether real or frivolous, lawsuits are expensive.

Under the project description and ownership, add a paragraph on indemnification. Expressly state:

• The professional is not responsible in any way for the distribution or use of the project’s end product, all of which is the sole and exclusive responsibility of the client.
• Include a statement identifying anything the client or a third party will supply to the project and their sole responsibility and liability for these items.
• If sued, the client will pay or reimburse you for all costs incurred for the investigation, defense and settlement of the claim, including court costs, attorney’s fees, and all losses and damages you incur as a result of the claim.

Obviously, if you are solely responsible for an area of creation, then you cannot ethically include this. For example, a client may contract with you to write an article, requiring that the article be original and not infringe on another’s copyright. In such a case, the client will not sign a contract absolving you of this responsibility. So, when you write your indemnification clause, customize it to the particular project.

Warranty Disclaimer and Liability Limitation. Such a clause limits your liability for situations and events beyond your control. It puts forth that you cannot be held accountable for unreasonable expectations from a client. Without such a clause, you risk a claim by the client for lost profits or opportunities, resulting from something you did or did not do.

For example, a potential client, who needs a press release written, may state that the media must use the release. In this case, the writing of the release is only a small part of whether the media uses the release or not. The primary motivation for use is whether a release is actually news, news in which the media’s audience might be interested, and whether the media has available space in a particular publication (releases are used as filler and neither the writer nor the media is compensated). The release may be well written, newsworthy, and written for the intended audience … yet, not be picked up for publication. In this case, the writer should be protected from being held responsible.

Limit your exposure in a worse case scenario by stating that:

• You make no representations or warranties regarding your services performed under the contract, other than the project will be done in a good, workmanlike manner.
• You are not liable for any lost profits or damages, resulting from your performance or failure to perform in a manner other than described in the contract.
• Your legal liability to the client is limited to the amount paid to you for this particular project, if a dispute goes to arbitration or court.
• You are not responsible or liable for events or circumstances that are beyond your control, called force majeure (greater force), that prevent or delay your performance. Examples of such events are lightening storms that take out electricity, earthquakes, wars, computer system failures, and similar events – whether they affect your performance directly or indirectly.
• You are not responsible or liable for the client or third party (hired by the client) not fulfilling their agreed responsibilities that prevent or delay your performance. If the client or third party does not or is late to supply information, creations (such as, graphics or photos), or any other element required to perform your work and noted in the project description of the contract, you are free of responsibility.

Project Milestones

Milestones are the primary stages of a project. Creating a draft book outline for the client’s review within 48 hours of receipt of data, for instance, is a milestone. It is an objective element of the project and has a projected completion date (deadline). Milestones should be clear, precise and verifiable.

For each milestone identified, note any deliverables and contingencies that are required. If your work is dependent upon the client or third party supplying an element of the project, state that the deadline is dependent upon this delivery. Clearly identify items needed and who will supply them, as well as the date or time frame by which they must be delivered to meet your milestone completion date.

Payment of Project

Your total project pricing and payment schedule is stated here in very clear and direct language. For example, a total fee for the writing and layout of an original ebook is $400. You might require $300 be paid, when the writing is completed and approved. Then, the remaining $100 to be paid after the ebook is formatted and delivered to the client.

Other elements to include in this section are:

• Discounts you may offer for prompt payment. State these clearly and in detail.
• The time frame the client has in which to pay (such as, due upon receipt of invoice).
• If you charge for late payments, then state the rate of interest the client will incur if your invoice is paid late. Include what is considered a late payment.
• Because laws differ from state-to-state (and country-to-country), include a governing laws clause. For example: This contract is governed by and interpreted in accordance with the laws of Georgia. Use your state of residence.
• Provide a dispute resolution clause, which is using a professional arbitrator and much cheaper than pursuing a dispute through an attorney and the court system. Designate the organization that will be used and where the arbitration proceedings will be held – as close to you as possible. (The American Arbitration Association, www.adr.org, provides worldwide arbitration services and information on the subject.)
• State that the decision of the arbitrator is final and binding on all parties and enforceable in any court having jurisdiction over the matter.

If you do not wish to include an arbitration clause, at least state that any disputes are to be resolved in the jurisdiction of the state and federal courts within your state of residence.

The Signing

In all cases, you should provide the contract, regardless of the form used. If the client requests changes, make the changes to the original contract and resubmit for the client’s signature.

If the client returns the contract to you signed with hand-written changes, let him/her know that you will add the changes to the original document and resubmit for signature. Never accept a contract with hand-written changes. Ensure the contract is always clear and precise.

These are only basic guidelines to creating contracts for freelancers and consultants. I recommend you seek the advice of an attorney with a practice in contract law to ensure your rights are adequately protected. Whatever you do, always use a written contract for each project to protect your business and the assets for which you have worked so hard.