Overview of a Freelance Contract
What is a Freelance Contract?
A Freelance Contract is a short-form contract between a freelancer and a client for the provision of services.
A Freelance Contract 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 Contract is meant for simple, straightforward transactions. For more detailed and elaborate terms, use a Consultancy Agreement.
What is in a Freelance Contract?
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,
All have advantages and disadvantages. Make sure that these terms are negotiated in a Freelance Contract 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 Contract?
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 Contract 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 Contract 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:
- A software company hires a designer to design a new site
- An agency hires a photographer to take pictures for a new campaign
- A sales executive is placed on retainer to help with business development activities
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 Contract so that issues don’t arise at the end of the engagement.
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Along with this document, make sure you see these other templates in our library:
- Shareholder Agreement
- Option Agreement
- Employee Option Repurchase Agreement
- Share Appreciation Rights Plan
- Share Option Plan
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