Contracts are a significant part of Freelance work. They serve as a formal and binding agreement between you and your client. A contract should always state the approved upon project, the amount the client will pay for the work rendered, the time–frame for the project and any other specific details that need to be agreed upon.
Writing and signing contracts
The majority of companies that you work for have standard contracts. Before committing to any terms and conditions in the contract, you should always read it carefully once or twice before signing it. Please note that you must ensure that it is fit for purpose especially when it comes to a particular project that you will complete.
However, producing your own contract will give you much credibility and professionalism. When writing out your own contract it is advised to get the advice of a solicitor first. A solicitor will be able to find the loopholes in the law that may cause a client to get out of paying you.
Payment of contracts
Freelancers need to ensure that the terms of payment are agreed upon at the onset of the working relationship with your client. This will ensure that the client is aware and has agreed to the amount to be paid and the date that payment needs to be made for all work rendered.
If a project has a fixed scope, then you will know what the job entails and when it will be completed giving you a good idea as to how much you should charge. If you are not sure as to the scope of the project at its commencement, then you should charge on a ‘time and material’ basis. This allows you to get paid for the cost of materials and for the time you work. A combination of both could also be adapted allowing you to get paid for the time you work as well as getting paid at agreed times along the project timeline.
Project Terms and conditions
The project terms and conditions need to be agreed upon before any work commences so that an agreed amount can be given to your client based on the scope of the project. Without a full understanding of what the project actually entails could easily allow your client to change the scope of the project halfway through while your payment amount remains unaltered.
Intellectual Property Rights
Your freelance contract should incorporate Intellectual Property Rights if you use your own methods, designs, software. Some clients expect that these will be used by them exclusively in which case you wouldn’t be allowed to use them for other clients.
Contracts provide protection
Freelancers who are also sole traders and do not have a limited company, are not separate from their business. This means that all liability lies with you the freelancer. If anything goes wrong, then the freelancer will be personally liable and runs the risk of getting sued. A contract in this instance will protect you as it sets out clearly that you will not be held liable if anything happens which is out of your control.
Terminating a freelance contract
The termination of a contract should also be agreed upon. You can include how much notice a client must give you if they want to terminate the contract with you. This time-frame should allow you ample time to find a new client.
Legally binding contracts
A Freelance contract is legally binding even if you have not signed it and even if does not appear on paper. For instance, if you have never signed a contract with a well-established client who regularly pays you, this contract is still legally binding. Contracts can be oral or agreed via email where both parties have agreed to terms and have exchanged emails over a period of time. Please note that these situations can be hard to prove in court. Hence, your best option is to have a signed legal and binding contract with all your clients providing you with the best form of protection.
Shoaib Aslam is the co-founder of Pearl Chartered Accountants, a UK-based chartered accountancy firm that has multiple locations across London. They are experts in helping startups and established businesses with all aspects of growth, strategy, scaling up, accounting and tax planning.