What is a Freelance Agreement?

A Freelance Agreement is a short-form contract between a freelancer and a client for the provision of services.

A Freelance Agreement sets out simple terms governing the services to be provided, the contract period, the service charges, the payment terms, and which party will own intellectual property rights in the works created.

A Freelance Agreement is meant for simple, straightforward transactions. For more detailed and elaborate terms, use a Consultancy Agreement.

What is in a Freelance Agreement

A freelance agreement must cover these areas:

Type of services to be provided: What is the scope of work and the deliverables?

Length of the contract period: How long the freelancer or contractor will be working with the client.

Service charges and payment terms: This details how the freelancer will be paid.  The most common options are to charge for:

  • time & materials.
  • a flat fee per day/week/month.
  • fixed cost or,
  • deliverable-based. 

All have advantages and disadvantages. Make sure that these terms are negotiated in a freelance agreement prior to engagement.

Method of payment: Will the payment be via bank transfer, credit card, or cheque?  There are many forms of payment and it is always wise to have different options.

Ownership of intellectual property rights in the works created: Will the client own the IP generated from this engagement?  Or can the freelancer use it in future engagements?

Responsibilities of the service provider: Aside from the deliverables, a service provider typically will also deliver professional levels of punctuality, written documentation, and transparency during the term of the engagement.

Responsibilities of the client: In certain circumstances, the contractor may need to access resources that only the client has access to. If these are required for the service to be performed, the freelancer should include this in the agreement.

Notice period required to terminate this contract: In the event that something doesn’t work out (for example, the relationship turns sour; change in scope; etc), it may be necessary to terminate the contract.  Both parties should provide adequate written notice to terminate.

When should you use a Freelance Agreement?

Most companies hire freelancers for project-based work that is not permanent.  Or they are looking for special skills over a set period of time.  These independent contractors allow companies more flexibility in that there is no long-term commitment and the company is not obligated to pay for benefits such as sick pay, holiday leave, or health insurance and retirement.

A Freelance Agreement provides transparency and sets the expectations of the services to be provided.  This way, both parties agree to a common scope of work.  Finally, using a Freelance Agreement confirms that the contractor is not a full-time employee of the company. The following types of services are but a few examples of when this agreement will come in handy:

  1. A software company hires a designer to design a new site
  2. An agency hires a photographer to take pictures for a new campaign
  3. A sales executive is placed on retainer to help with business development activities

Common issues that freelancers face without a contract

Freelancing contracts are legally binding and they specify tasks, remuneration and duration of the project. Without one, a freelancer can face several issues and problems related to:

Delays or nonpayments: With no contracts, there is no proof that the payment was to be made. This can cause clients to take payment obligations for granted or not make one at all.

Undefined scope of work: Freelancers usually give in their expertise for a short period of time to complete a project. When the project has no bounds, the tasks can be unorganized and scattered whilst also equally time-consuming.

Benefits of freelancing

Tasks as per your choices: freelancing allows you to choose tasks and jobs you are interested in and want to undertake. There is no obligation to do tasks that one does not wish to.

Better negotiation: you can negotiate for better pay, and more flexible deliverables or deadlines as per your own schedule. 

Get to be your own boss: as a freelancer, you are your own boss, your own manager, and representative. You have to report to no one and can work on your own terms.

Do I have to pay for a freelancer IP agreement?

This largely depends on how the contract has been drafted. If there is a contract in place that officially states that IP rights will pass onto the client upon completion of the project, then the IP will be passed to the client. However, until its completion, it still belongs to the freelancer.  When you pay a freelancer for some work, your payment is for the right to use their IP, not to own it.

Conclusion

Whether you’re a client or a freelancer, agreeing to the scope of work and terms of the engagement in a formal contract is essential.  Always ensure that the scope and payment terms are laid out in a freelance agreement so that issues don’t arise at the end of the engagement.

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