Depsite how critical they are to getting what you want (paid), contracts often create alot of uncertainty for freelancers. The biggest points of confusion are always surrounding money, scope of work templates, or proposals vs contracts. Let’s look at how to buff up your contract template to protect you from late, or non-paying clients.
First and foremost, the most important thing to include in your contract template or agreement template are the parts that talk about how you’ll get paid. Unfortunately, a lot of young freelancers feel guilty about asking for money. When you first start out, it’s difficult to grasp the true value of your work.
After your first couple of projects, you’re able to step back and look at how much time was dedicated, what the client got out of it, and what it awarded you in the end. The result is usually “I’m charging too little,” or, “I’m not being paid how I’d like to be paid.”
All of these problems can be solved with additions (or edits) to your freelance contract. Below are some of the important clauses to include.
Outline what your rate is and how it works. It’s common to price out work based on a day rate and require all work to be scoped out to require at least one full day of work (8 hours). Anything after the first day should be booked in at least half day (4 hour) chunks. The reason to include this is both a form of protection and a heads up to the client. While you hopefully explained your fee up front, this acts as a confirmation to the client that this is your rate and it will not change.
As a freelancer, you have the unfortunate disposition of being less trustworthy than a big agency. Including your payment information helps you to be transparent and comfort your client.
Boy will this bunk a lot of history. Traditionally, the service industry (especially in connection to larger, corporate entities) has a habit of paying after the fact. Meaning, “you do the work for us now and we’ll pay you when we’re ready,” somewhere to the tune of 30-60 days after the work is complete. This is a real bummer for freelancers. You have to eat, pay your bills, and nurture your business. Sadly, this can’t be achieved with delayed payments. To avoid the problem altogether, it’s common to include a clause that begins with:
Before any work is delivered at the end of a project, your account must be paid in full. Final payment is due net fifteen (15) days from the designated end of the project.
This does two things. It gives the client 15 days to pay their bill in full. It also covers me, stating that no work will be shipped until the account is paid up. A lot of you reading this just shuddered at the idea, but it works.
The majority of clients (read: not shady) will need the work you’ve done for them and will forget the 15 days and pay right at the end of the project. If you’re afraid to try it, look at it from the angle of respect. If your client respects you and your work, they’ll have no problem paying you promptly.
This is one a lot of people overlook, but it’s a big one. When all is said and done, the copyright, or, ownership of the work is your lynchpin. If you’re in a jam and a client hasn’t paid, retaining the copyright until they pay in full puts them in a unique position.
For individuals this will mean less, but for established companies, there’s no room for loose ends like the ownership of something with their name on it. It may seem slimy, but in reality it’s a tool that you can use to protect yourself. If you haven’t been paid in full, you retain full rights to the work. Plain and simple.
It’s not fair to demand money from your clients and not tell them when they’re required to pay it. The worst thing you can do is to keep the discussion of money silent until the end of the project. Be very up front about when you require payments and for how much. Depending on the size of a project, I like to split up payments into chunks. An example three month project would run like so:
Down Payment – 25% of total fee due before the project startsHalfway Payment – 50% of the project due at the halfway point (1.5 months in this example)Final Payment – 25% due at the end of the project, with a 15 day grace period
Before the project starts, you’re clearly outlining what the client needs to pay to keep the project moving forward. It’s also smart to include how you accept money (i.e. how the client can pay). Add something in like “I accept all major credit cards, PayPal, and check.” Tailor this to your own setup, of course, but help to answer any potential questions the client may have about how to pay you.
Part of running a business is having all of your ducks in a row. When you’re getting started, this will frustrate you to no end. There’s a lot bureaucracy in the world and unfortunately, the topic of money is highly susceptible to it. As a business, you’ll want to have all of your payment information on hand. Make sure to fill out a W-9 (in the U.S. this is what the IRS uses as a standard form of identification for a business/entity) and keep it in your files. Also, know your banking information – things like your routing and account number are good to keep nearby in case a client asks to do a wire transfer.
Don’t be afraid to ask for money. If you’re doing the work – and you’re doing it well – you should get paid for it. Be honest and forthcoming with your clients – don’t be a snake – and take care of yourself by negotiating contract terms that work for you.. Including the above suggestions will help to protect you from unfortunate situations and further improve the professional image of your business and yourself.
A verbal contract (formally called an oral contract) refers to an agreement between two parties that's made —you guessed it— verbally.
Formal contracts, like those between an employee and an employer, are typically written down. However, some professional transactions take place based on verbally agreed terms.
Freelancers are a good example of this. Often, freelancers will take on projects having agreed on the terms and payment via the phone, or an email. Unfortunately, sometimes clients don't pull through on their agreements, and hardworking freelancers can find themselves out of pocket and wondering whether a legal battle is worth all the hassle.
The main differences between written and oral contracts are that the former is signed and documented, whereas the latter is solely attributed to verbal communication.
Verbal contracts are a bit of a gray area for most people unfamiliar with contract law —which is most of us, right?— due to the fact that there's no physical evidence to support the claims made by the implemented parties.
For any contract (written or verbal) to be binding, there are four major elements which need to be in place. The crucial elements of a contract are as follows:
Therefore, an oral agreement has legal validity if all of these elements are present. However, verbal contracts can be difficult to enforce in a court of law. In the next section, we take a look at how oral agreements hold up in court.
Most business professionals are wary of entering into contracts orally because they can difficult to enforce in the face of the law.
If an oral contract is brought in front of a court of law, there is increased risk of one party (or both!) lying about the initial terms of the agreement. This is problematic for the court, as there's no unbiased way to conclude the case; often, this will result in the case being disregarded. Moreover, it can be difficult to outline contract defects if it's not in writing.
That being said, there are plenty of situations where enforceable contracts do not need to be written or spoken, they're simply implied. For instance, when you buy milk from a store, you give something in exchange for something else and enter into an implied contract, in this case - money is exchanged for goods.
There are some types of contracts which must be in writing.
The Statute of Frauds is a legal statute which states that certain kinds of contracts must be executed in writing and signed by the parties involved. The Statute of Frauds has been adopted in almost all U.S states, and requires a written contract for the following purposes:
Typically, a court of law won't enforce an oral agreement in any of these circumstances under the statute. Instead, a written document is required to make the contract enforceable.
Contract law is generally doesn't favor contracts agreed upon verbally. A verbal agreement is difficult to prove, and can be used by those intent on committing fraud. For that reason, it's always best to put any agreements in writing and ensure all parties have fully understood and consented to signing.
Verbal agreements can be proven with actions in the absence of physical documentation. Any oral promise to provide the sale of goods or perform a service that you agreed to counts as a valid contract. So, when facing a court of law, what evidence can you provide to enforce a verbal agreement?
Unfortunately, without solid proof, it may be difficult to convince a court of the legality of an oral contract. Without witnesses to testify to the oral agreement taking place or other forms of evidence, oral contracts won't stand up in court. Instead, it becomes a matter of "he-said-she-said" - which legal professionals definitely don't have time for!
If you were to enter into a verbal contract, it's recommended to follow up with an email or a letter confirming the offer, the terms of the agreement , and payment conditions. The more you can document the elements of a contract, the better your chances of legally enforcing a oral contract.
Another option is to make a recording of the conversation where the agreement is verbalized. This can be used to support your claims in the absence of a written agreement. However, it's always best to gain the permission of the other involved parties before hitting record.
Fundamentally, most verbal agreements are legally valid as long as they meet all the requirements for a contract. However, if you were to go to court over one party not fulfilling the terms of the contract, proving that the interaction took place can be extremely taxing.
So, ultimately, the question is: written or verbal agreements?
Any good lawyer, contract law firm, or legal professional would advise you to make sure you formalize any professional agreement with a written agreement. Written contracts provide a secure testament to the conditions that were agreed and signed by the two parties involved. If it comes to it, a physical contract is much easier to eviden in legal circumstances.
Freelancers, in particular, should be aware of the extra security that digital contracts may provide. Many people choose to stick to executing contracts verbally because they're not sure how to write a contract, or they think writing out the contract terms is too complicated or requires expensive legal advice. However, this is no longer the case.
Today, we have a world of resources available at our fingertips. The internet is a treasure trove of invaluable information, platforms, and software that simplifies our lives. Creating, signing, and sending contracts has never been easier. What's more, you don't have to rely on a hiring a lawyer to explain all that legal jargon anymore.
There are plenty of tools available online for freelancers to use for guidance when drafting digital contracts. Tools like Bonsai provide a range of customizable, vetted contract templates for all kinds of freelance professionals. No matter what industry you're operating in, Bonsai has a professional template to offer.
A written contract makes the agreement much easier to prove the terms of the agreement in case something were to go awry. The two parties involved can rest assured that they're legal rights are protected, and the terms of the contract are sufficiently documented. Plus, it provides both parties with peace of mind to focus on the tasks at hand.
Bonsai's product suite for freelancers allows users to make contracts from scratch, or using professional templates, and sign them using an online signature maker.
With Bonsai, you can streamline and automate all of the boring back-office tasks that come with being a freelancer. From creating proposals that clients can't say no to, to sealing the deal with a professional contract - Bonsai will revolutionize the way you do business as a freelancer.
Why not secure your business today and sign up for a free trial?