Just like they say, “good fences make good neighbors”, good agreements make good client relationships.
You’ve heard a nugget of wisdom repeated over and over: always use an agreement with clients! It seems like common sense, but a surprising number of freelancers continue working without agreement templates or contract templates. We’ll outline some common reasons why they don’t use an agreement, and explain why they should.
First and foremost, remember that you are the business. It’s important to establish a great reputation and long relationships with clients, but you have right and duty to protect your interests. Good clients will respect the professionalism you show by using agreements. Always protect yourself and your business.
A good agreement template sets clear expectations for what happens in various circumstances, covers what's already mentioned in the scope of work template, and allows you to enforce expectations if something goes wrong. Ultimately, having an agreement reduces the risk you don’t get paid for the work you do.
A good agreement can protect you from:
Scope creep — This is a common issue with freelancers: you’ll complete a project for a client, as agreed upon. Then the client will ask to tweak this.. and that.. and that.. until you end up doubling the time you budgeted for no extra money. Your rate has been effectively cut in half. You’ll save yourself many headaches if upfront you clearly agree to: (1) what you’ll do (and not do), (2) how much you’ll get paid for this, and (3) the process agreeing upon work beyond this. Simple, but powerful.
Unresponsive clients — You agree on terms, block off your calendar, produce great work, and then… nothing. The project takes way longer than expected because the client takes days or weeks to give you feedback, and you end up with less business because of it. Including your expectations for feedback (and what happens if the client isn’t responsive), can help save you time and money.
Late / no payment — This is another common issue: you do the work, the client likes it, then… nothing again. That check you were expecting you pay rent? They’ll “get it in the mail… soon.” Sometimes this happens because clients are busy and disorganized. Sometimes they need a gentle reminder, and having clear payment expectations in the agreement helps. Sometimes, clients act in bad faith and simply withhold payment because they can. Again, having written expectations is the only way to solve that.
So, why don’t freelancers use agreements, and why should they? Below are some common answers we get.
“I’ve worked with client X so long and often, we just understand each other. We don’t need to formalize that.”
It’s great that you’ve developed a long-lasting relationship with your client. They wouldn’t want to continue working with you if you weren’t professional, and part of professionalism is having agreements. You don’t need to make it a complicated process getting new agreements signed. Having a simple yet comprehensive and fair agreement that you can create, send, and sign easily makes this process easy. We've prepared a guide on how to digitally sign a PDF and how to insert a signature in Word that you can easily follow.
“Agreements don’t mean anything. What can I even do if the client breaks it?”
This is a common objection, but couldn’t be farther from the truth. You can use an agreement to correct a wrong long before you have to resort to any legal option (e.g., a lawsuit). First, agreements serve as an important written record, one you can point to if there are “what if’s” in the relationship. Often re-reading what both parties signed and agreed to will settle most disputes.
If the client still doesn’t adhere to the agreement they signed, the threat of legal action can help. You determine how best to handle this with your client, but it can be anything from saying you may involve a lawyer, to actually having a lawyer contact the client about the agreement. And finally, in the worst case scenario where you must go through a legal proceeding, having a clear written agreement will make the process much easier for you.
“I don’t want the hassle of signing an agreement. I just want to get to work and get paid.”
It can be tempting to jump right into work, especially when you’re coming out a dry spell. Be disciplined about including agreements in your process for signing all clients, new or returning.
It helps to have a standard agreement in place, one that’s easy to understand and fair to you and the client. It may take a few extra minutes up front, but it can save you a lot of time and money later. As the Boy Scouts say, “It’s better to have it and not need it than need it and not have it.”
There are many excuses for not using an agreement with clients, but none of them are good. Remember, you are a business and you must protect yourself. Having an agreement also helps your client relationships, by signaling your professionalism and defining what’s fair in the relationship. The key is having simple, comprehensive, and fair agreements that you can quickly create and send to clients.
Start your free Bonsai trial today and draft your contracts in just 3 steps. Happy freelancing!
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?