Every freelancer or small business service provider should have a standard client contract that they use with every single client.
But not all contracts are created equal.
There are so many free templates out there that weren't written by lawyers and don't include all the necessary elements.
I put together this list of common contract mistakes so you don't get caught in the trap of a bad contract.
1. Not having a client contract at all
I've heard all the excuses for not having a contract:
- It's just a simple project...
- I don't do enough business to need a contract...
- My clients don't like contracts...
Honestly, all of that is garbage.
You are a business owner and you provide a valuable service. You deserve to protect yourself and your business just like any other business. You deserve to get paid for simple, one-off projects just as much as for complex, long-term projects. And any client who refuses to sign a contract isn't a client you want.
The protection provided by a contract isn't just about lawsuits. A good contract makes sure everyone is clear on exactly what to expect.
When your clients know what to expect, they will always be happier.
Nobody likes the unknown, especially when they're paying for it. A contract gives your clients security in knowing their investment is protected as well.
And when your clients are happy, you get more referrals, better testimonials, and can charge higher rates. It's a win-win.
2. Not including clear payment terms in your contract
You would think this is the most obvious, but it's amazing how easy it is to mess up.
For example, if a contract says: 6 blog posts, $200. Is that $200 total, or $200 per post? Are the payments made on the delivery of each post? Is all $1200 due before work starts? Do you expect 50% upfront?
You may have standard policies and even discussed them with the client ahead of time. You may think you made it perfectly clear.
But if it's not in the contract, it doesn't really matter.
Clients forget things all the time. You likely aren't the only freelancer their working with, not to mention all the other things going on in their businesses or lives.
3. Not having a way out, i.e. a clear cancellation policy, in your contract
Sometimes a client relationship just doesn't work out. It's important to know exactly what steps to take to end the contract on good terms with the client (if possible).
Can you cancel your contract without facing a penalty?
What happens to your payment if the client cancels in the middle of a contract? Is there a cancellation fee?
If you're on a retainer, can the client only cancel at certain times of the month?
You should consider (and perhaps negotiate) all of this ahead of time - before you or your client wants out and things get tense.
4. Not being clear on exactly what is included (and not included) in the scope of work
The scope of work of a project outlines exactly what deliverables are included in the project.
Clarity on the scope of work is the most important aspect of a contract in terms of actually making a profit on a client.
If you charge a fixed fee, you want to spend as little time working on the project as possible while still doing thorough, high-quality work. This is impossible if you have to go back and forth with your client a million times to clarify what the project actually involves after you've already signed the contract. If you negotiate and then document exactly what you'll do for the project ahead of time, you save yourself time and save the client frustration. If the client then wants additional work later, you can easily ask for more money for the additional work.
The scope of work is important if you charge an hourly rate as well. You need to be able to plan your time and avoid overbooking yourself. You also don't want to surprise a client with a higher-than-expected bill because you had to do more work than you anticipated.
Regardless of your fee structure, clearly identifying client expectations on a project allows you to go above and beyond and impress the client every time.
5. Not clarifying ownership and licensing of the finished work
This is huge for creatives. There is always the question of who owns the finished work.
Does ownership transfer completely to the client? Does the creative retain ownership but give the client a license to use the work? Are there any limitations on that license? Each of these questions needs to be answered thoroughly in every contract.
The answer often depends on the type of client you serve - another business or a consumer. A consumer is less likely to care about ownership as long as they can use the work for its intended purpose. A business is more likely to be concerned about the competition having access to the work.
It can also depend on your industry. If you're a copywriter for a business, they will likely want to keep ownership (but you might be able to negotiate royalties). On the other hand, photographers often want to keep ownership of their photographs to make sure the client can't edit, filter, or otherwise ruin the photography.
Make sure you also clarify whether you can use this work in your portfolio. Does the client have exclusive publishing rights?
6. Not setting appropriate client expectations for timing and communication
Setting clear expectations is the easiest way to keep your client (and yourself) happy throughout your relationship.
Let's say you set a deadline of five days to complete a project. But you can't start the project until your client gets your intake questionnaire back to you. Does your contract say when the deadline starts? These types of little details can cause huge issues for you and lead to very unhappy clients.
Setting clear expectations from the start also helps you maintain your sanity.
If you have clear “office hours” in your contract, the client has no right to complain when you don't answer their emails at 2 am. They might complain anyway, but you can point back to your contract.
7. Trying to write your own contract
The most successful freelancers...
...the ones who charge $1000 for an hour consultation and won't even look at a project without a monthly retainer of at least $10,000...
They all have their own contracts written by lawyers.
They shelled out $2000-$3000 because they understand the value of a strong contract to their business.
They also understand their own value. They respect themselves and their business enough to invest in the protection and security a contract provides.
You may not be at that income level yet, but you and your business deserve that same respect.
Yes, there are free templates online. Some of them are okay. Some of them are terrible. Do you really know the difference? You could make something that sounds good to you. But you don't know what you don't know.
The savviest business people do what they're good at and outsource the rest.
If you know you need to hire an ads manager for your ads...
...or a copywriter for your newsletters...
...or a web designer for your website...
...why wouldn't you pay for a contract written by a lawyer to secure the backbone of your business - your income from the clients you serve?
Just like with every other aspect of your business, let the expert handle the piece they're good at.
Now that doesn't mean you have to go out and hire an attorney at $300 per hour to write you a customized contract.
That's why I created Artful Contracts - to provide solid legal templates written by lawyers to creatives who have better things to do with their time than read 1,000 blogs on how to write a contract (it took me three years of law school to learn, so I doubt a reading a few blogs is gunna cut it).
Respect yourself and your business. Cover your butt. Get one of my contract templates today.
For other ways to protect your money and business, watch the free masterclass: How to Legally Protect & Grow Your Online Business So You Can Keep More of the Money You Make