Freelance Contract Essentials: What to Negotiate and How to Protect Yourself

Why Freelance Contracts Are Your Primary Protection

Unlike employees protected by labor laws, freelancers rely almost entirely on their written contracts for legal protection. Your contract defines everything: what you’re paid, when you’re paid, who owns the work, how the relationship can end, and what happens if things go wrong.

A strong contract isn’t just a formality—it’s the foundation that allows you to work confidently, prevents misunderstandings that damage relationships, and gives you recourse when clients don’t honor their commitments.

Think of your contract as insurance. You hope you’ll never need to enforce it, but when payment is 90 days overdue or a client claims ownership of your entire code library, a well-written contract is what stands between you and financial disaster.

MSA vs SOW: Understanding Contract Structure

For one-off projects, you’ll typically have a single comprehensive contract. But for ongoing client relationships, many companies use a two-document structure:

Master Service Agreement (MSA)

The MSA establishes the overarching legal framework that applies to all work you do for the client. It includes:

• Payment terms and invoicing procedures
• Intellectual property ownership rules
• Confidentiality and non-disclosure obligations
• Liability limitations and indemnification
• Insurance requirements
• Termination and dispute resolution
• Governing law and general legal terms

The MSA is negotiated once and remains in effect for the duration of your relationship with the client, often 1-3 years or indefinitely until terminated.

Statement of Work (SOW)

Each specific project gets its own SOW that references the MSA and defines:

• Specific deliverables and features
• Project timeline and milestones
• Acceptance criteria and testing procedures
• Project-specific compensation and payment schedule
• Resources and dependencies
• Project-specific assumptions and constraints

New SOWs can be created quickly for each project without renegotiating the entire legal framework.

Which Structure Should You Use?

Use MSA + SOW when:

• You expect multiple projects with the same client
• The client is a larger company with standard procurement processes
• Projects vary significantly in scope and requirements
• You want to streamline contracting for future work

Use a single comprehensive contract when:

• It’s a one-time project
• The client is a small business or individual
• You’re unsure if there will be future work
• The project is straightforward and well-defined

Essential Contract Clauses: Detailed Breakdown

1. Scope of Work and Deliverables

The scope of work is your defense against endless revisions, feature requests, and “just one more thing” asks that can turn profitable projects into money-losing time sinks.

What to include:

Specific deliverables:

• List exactly what you will deliver (and in what format)
• Define quantity and quality standards
• Specify number of revision rounds included
• State what is explicitly excluded

Milestones and timeline:

• Break project into phases with completion dates
• Define dependencies on client input or approvals
• Include buffer for reasonable delays

Acceptance criteria:

• How will completion be measured?
• Who approves deliverables?
• What is the approval process and timeline?
• What happens if client doesn’t respond?

Change request process:

• How are additional requests handled?
• Must be in writing with fee estimate
• Client approval required before proceeding

Example of strong scope language:

Deliverables: Contractor will design and deliver a responsive e-commerce website including:

• Homepage, product listing, product detail, cart, and checkout pages (5 total page templates)
• Mobile-responsive design for screens 375px to 1920px width
• Integration with Stripe payment processing and Shopify inventory API
• Documentation for site administration and updates
• Two rounds of revisions per page template

Explicitly Excluded: The following are NOT included and will require separate SOW if requested:

• Custom plugin development beyond Shopify/Stripe integration
• Content creation (product photography, copywriting)
• Ongoing maintenance, hosting, or support beyond 30-day warranty period
• Marketing integrations (email, ads, analytics)
• Additional page templates beyond the 5 specified

Change Requests: Client may request changes beyond the defined scope. Contractor will provide written estimate within 3 business days. Work will proceed only upon Client’s written approval and payment terms agreement.

Example of dangerously vague scope:

“Contractor will design an e-commerce website to Client’s satisfaction and provide reasonable support.”

This language gives the client unlimited scope (“to satisfaction”) and undefined support obligations (“reasonable”).

Red flags to watch for:

• “Other duties as assigned” or “as needed”
• “Unlimited revisions” or “until satisfactory”
• No exclusions list
• No change request process
• Client has sole discretion over acceptance

2. Payment Terms and Schedules

Payment terms determine when and how you get paid. This is where freelancers face the most risk and where you should spend the most negotiation capital.

Critical elements to specify:

Compensation structure:

• Total fee (for projects) or rate (hourly/daily/monthly)
• Currency (specify exactly: USD, EUR, GBP, etc.)
• Whether amount is inclusive or exclusive of taxes
• Rate for out-of-scope work or rush requests

Payment schedule:

For project-based work, use milestone payments:

• 30-50% deposit before starting
• Payments tied to deliverable completion
• Final payment upon project acceptance
• Retainage (10-20% held until warranty period ends)

For retainer/ongoing work:

• Monthly payment amount
• Invoicing date (1st of month, last day, etc.)
• Whether payment is for upcoming or previous month
• Minimum commitment period

Invoicing and payment processing:

• Payment due date (Net 15 recommended, Net 30 acceptable, avoid Net 60+)
• Accepted payment methods (wire, ACH, PayPal, Wise, etc.)
• Who pays transaction and transfer fees
• Who bears currency conversion risk
• Invoice format and required information

Late payment provisions:

• Interest rate on overdue payments (1.5-2% monthly is standard)
• When interest begins accruing
• Right to suspend work if payment is late
• Right to terminate for non-payment

Example payment clause (project-based):

Project Fee: $24,000 USD, payable in four milestone installments:

• Milestone 1: $7,200 (30%) upon contract signing
• Milestone 2: $6,000 (25%) upon completion of design phase and Client approval
• Milestone 3: $6,000 (25%) upon completion of development phase and Client approval
• Milestone 4: $4,800 (20%) upon final project delivery and acceptance

Payment Terms: Invoices are due within 15 days of invoice date (Net 15). Client will pay via international wire transfer to Contractor’s designated bank account. Client is responsible for all wire transfer fees. Payments shall be made in USD; Contractor bears currency conversion risk if receiving in different currency.

Late Payments: Payments received more than 15 days after invoice date accrue interest at 1.5% per month (18% annually). If any payment is more than 30 days overdue, Contractor may suspend work until payment is received. If any payment remains unpaid for more than 60 days, Contractor may terminate this Agreement and retain all payments received to date.

Example payment clause (retainer-based):

Retainer Fee: $8,000 USD per month for up to 80 hours of services (approximately 20 hours per week). Unused hours do not roll over to subsequent months. Additional hours beyond 80 per month are billed at $120/hour.

Payment Schedule: Contractor will invoice Client on the first business day of each month for that month’s services. Payment is due within 15 days (Net 15) via ACH transfer to Contractor’s designated bank account.

Minimum Term: This retainer arrangement has a 3-month minimum commitment. Either party may terminate with 60 days written notice after the initial 3-month period.

Red flags to watch for:

• Payment only upon “completion” or “satisfaction” (undefined)
• Net 60, Net 90, or longer payment terms
• Payment only after client receives payment from their client
• No late payment penalties
• Contractor pays all transaction fees
• Vague payment amounts (“competitive rates,” “to be determined”)

3. Intellectual Property (IP) Ownership

IP clauses determine who owns what you create. This is often the most misunderstood and contentious part of freelance contracts.

Three common IP models:

Work for Hire (Complete Assignment)

Client owns everything from the moment of creation. This is standard for most freelance work.

Pros:

• Clients expect it and readily agree
• Simple and clear
• No ongoing obligations

Cons:

• You can’t reuse any part of the work
• You can’t show work in portfolio without permission
• Your tools and templates may be claimed by client

Critical protection: Explicitly list all pre-existing IP you’re excluding from assignment.

Example work-for-hire clause with protections:

Ownership of Work Product: All Work Product created by Contractor specifically for Client under this Agreement shall be “work made for hire” under copyright law and owned exclusively by Client upon full payment of all fees. Client shall own all right, title, and interest in the Work Product, including all intellectual property rights.

Pre-Existing Materials: Contractor retains all ownership rights in Pre-Existing Materials, defined as tools, code libraries, templates, designs, and methodologies developed by Contractor prior to this Agreement, including specifically:

• React component library “ContractorUI v2.3”
• CSS framework “GridFlow”
• Workflow automation templates
• [Any other specific tools you use]

Contractor grants Client a perpetual, non-exclusive, worldwide license to use Pre-Existing Materials solely as incorporated into the Work Product. Contractor may continue to use, modify, and license Pre-Existing Materials to other clients.

Portfolio Rights: Contractor may include generalized, non-confidential examples of the Work Product in professional portfolio materials, case studies, and marketing materials, provided Client’s confidential information is removed.

Licensed IP (Contractor Retains Ownership)

You own the work but grant the client a license to use it. This is less common but appropriate for specialized tools or when you want to retain rights.

Example licensed IP clause:

Ownership: Contractor retains all ownership rights in deliverables created under this Agreement. Contractor grants Client an exclusive, worldwide, perpetual license to use, reproduce, modify, and distribute the deliverables for Client’s business purposes.

Exclusivity: The license is exclusive for [specific use case, e.g., “SaaS project management tools in the construction industry”]. Contractor may license similar work to clients in other industries or for different use cases.

Hybrid Model (Components Licensed, Work Product Assigned)

Your reusable components remain yours; client-specific customizations belong to client.

When to negotiate for licensing or hybrid models:

• You’ve developed proprietary tools/frameworks
• You want to reuse components across clients
• You’re creating educational content or templates
• Work is part of your product strategy

Red flags to watch for:

• Assignment of “all work product” without pre-existing IP carve-out
• Claims to your general knowledge and skills
• Retroactive assignment (claiming past work)
• Automatic assignment even if not paid
• No portfolio or attribution rights
• Overly broad definition of “work product”

4. Revision Limits and Scope Boundaries

Unlimited revisions can destroy project profitability. Even reasonable clients can request endless tweaks if there’s no limit.

How to structure revision limits:

Define what counts as a revision:

“A revision is defined as changes to deliverables after initial submission that do not constitute a change in scope, requirements, or objectives. Revisions must be requested within 7 days of deliverable submission.”

Set clear limits:

“Client is entitled to two rounds of revisions per deliverable. Additional revisions beyond the included rounds will be billed at $150/hour with a 2-hour minimum.”

Distinguish revisions from scope changes:

“Revisions are limited to changes that refine or improve the approved scope. Changes that add functionality, alter objectives, or expand deliverables constitute scope changes and require a written change order with additional fees.”

Set approval deadlines:

“If Client does not provide revision requests or approval within 14 days of deliverable submission, the deliverable shall be deemed accepted.”

Example combined revision clause:

Revisions: Contractor will provide up to two rounds of revisions per deliverable at no additional charge. Revisions must be submitted in writing within 7 days of deliverable submission and must not change the scope, objectives, or requirements.

Additional Revisions: Revisions beyond the two included rounds will be billed at $150/hour with a 2-hour minimum. Contractor will provide time estimate before proceeding.

Scope Changes: Changes that add features, alter deliverables, or expand requirements beyond the original scope require a written change order and additional fees, regardless of revision count.

Deemed Acceptance: If Client does not respond with revisions or approval within 14 days of deliverable submission, the deliverable shall be deemed accepted and approved.

5. Termination and Notice Periods

Termination clauses protect you from sudden income loss and give you time to find new work if the engagement ends.

Two types of termination:

Termination for Convenience (Either Party Can End Without Cause)

For one-time projects:

• Often no notice required, but payment for work completed
• May include “kill fee” if client terminates mid-project

For ongoing retainers/relationships:

• 30-60 day notice period (longer for higher monthly fees)
• Payment through end of notice period
• Transition assistance obligations

Example (project-based):

Termination: Either party may terminate this Agreement at any time with written notice. Upon termination:

• Client shall pay Contractor for all work completed through the termination date, based on percentage of project completion
• If Client terminates before 50% project completion, Client shall pay a termination fee equal to 25% of remaining project value
• Contractor shall deliver all completed work product and work in progress
• All terms regarding confidentiality, IP, and payment survive termination

Example (retainer-based):

Termination for Convenience: After the initial 3-month minimum term, either party may terminate this Agreement with 60 days written notice. During the notice period, Contractor will continue providing services and Client will continue paying the monthly retainer fee. Either party may elect to pay the notice period in lieu of continued services.

Termination for Cause (Immediate, Due to Breach)

Allows immediate termination if one party seriously breaches the contract.

Example termination for cause:

Termination for Cause: Either party may terminate immediately for material breach if the breach is not cured within 14 days of written notice. Material breaches include:

• Non-payment by Client for more than 30 days after due date
• Breach of confidentiality by either party
• Contractor’s failure to deliver for more than 30 days without justification
• Misrepresentation or fraud by either party

Upon termination for cause by Contractor due to Client non-payment, Contractor retains all payments received and may retain or destroy all work product. Upon termination for cause by Client due to Contractor’s breach, Client pays only for work accepted prior to breach.

Key elements to include:

• Notice period appropriate to engagement value and duration
• Payment obligations upon termination
• Deliverable handoff requirements
• Survival of key clauses (confidentiality, IP, liability)
• Transition assistance (if any)

What to negotiate:

• Longer notice for higher monthly retainers ($5K+ = 60 days)
• Kill fees for project termination (20-30% of remaining value)
• Option to pay in lieu of notice
• Clear definition of “material breach”

6. Confidentiality and Non-Disclosure

You’ll have access to client’s business strategies, customer data, code, and financial information. Confidentiality clauses protect both parties.

What strong confidentiality clauses include:

Clear definition of confidential information:

“Confidential Information includes all non-public information disclosed by either party, including: business strategies, customer lists, financial data, technical specifications, source code, trade secrets, and any information marked as confidential or that a reasonable person would understand to be confidential.”

Exclusions (information that is NOT confidential):

“Confidential Information does not include information that: (a) is publicly available through no fault of the receiving party; (b) was rightfully possessed by receiving party before disclosure; (c) is independently developed by receiving party without use of Confidential Information; (d) is rightfully obtained from a third party without confidentiality obligations.”

Obligations:

“Each party agrees to: (a) maintain Confidential Information in strict confidence; (b) use Confidential Information only for the purposes of this Agreement; (c) not disclose Confidential Information to third parties without prior written consent; (d) protect Confidential Information with the same degree of care used for own confidential information, but no less than reasonable care.”

Duration:

“Confidentiality obligations survive termination and continue for 3 years from the date of disclosure, except for trade secrets which remain confidential indefinitely or until they become publicly known through no breach of this Agreement.”

Permitted disclosures:

“Either party may disclose Confidential Information: (a) to legal or financial advisors under confidentiality obligations; (b) as required by law or court order, provided the disclosing party gives reasonable notice to allow the other party to seek protective order; (c) to contractors or subcontractors who need access to perform services and are bound by similar confidentiality obligations.”

Example combined confidentiality clause:

Mutual Confidentiality: Each party may disclose Confidential Information to the other in connection with this Agreement. Confidential Information includes business plans, customer data, financial information, technical specifications, source code, and any information marked confidential or reasonably understood to be confidential.

Obligations: Each party agrees to: (a) hold Confidential Information in strict confidence; (b) use it only for purposes of this Agreement; (c) not disclose to third parties without written consent; (d) protect it with at least reasonable care.

Exclusions: Confidential Information excludes information that: (a) is or becomes publicly available through no breach; (b) was rightfully possessed before disclosure; (c) is independently developed; (d) is rightfully received from a third party.

Duration: Confidentiality obligations survive termination for 3 years, except trade secrets remain confidential indefinitely.

Return of Information: Upon termination or request, each party will return or destroy all Confidential Information and confirm in writing.

Watch out for:

• One-sided obligations (only you have duties, not client)
• Overly broad definitions (claiming your general skills/knowledge)
• Unreasonable duration (lifetime for non-trade secrets)
• No exclusions for public information or independent development
• Restrictions on working with competitors

7. Non-Compete and Non-Solicitation

Many contracts include non-compete (you can’t work for competitors) or non-solicitation (you can’t hire their employees or solicit their customers) clauses.

Enforceability varies by jurisdiction:

• Weak or unenforceable: California, North Dakota, Oklahoma
• Enforceable if reasonable: Most US states, UK, Canada, Australia
• Stronger protection for employees: Many EU countries limit non-competes for contractors

What makes a non-compete reasonable:

• Limited duration: 6-12 months (longer is often unenforceable)
• Limited geographic scope: Specific regions, not “worldwide”
• Limited industry scope: Direct competitors, not entire industry
• Compensation: Payment during non-compete period
• Necessary to protect legitimate interests: Client trade secrets or customer relationships

How to negotiate:

Option 1: Remove it entirely

“As an independent contractor working with multiple clients, Contractor cannot agree to non-compete restrictions. Contractor commits to maintaining confidentiality but must retain the right to work in the industry.”

Option 2: Narrow the scope dramatically

“Contractor agrees not to directly solicit Client’s employees for employment during the term and for 12 months after. This does not prevent Contractor from general hiring activities or prevent employees from applying to Contractor’s public job postings.”

Option 3: Request compensation

“If Client requires non-compete restrictions, Contractor’s fee will increase by 30% to compensate for lost opportunity, or Client will pay Contractor 50% of the monthly retainer during the non-compete period.”

Example non-solicitation clause (more reasonable):

Non-Solicitation: During the term and for 12 months after termination, Contractor agrees not to directly solicit Client’s employees to leave their employment. This does not prevent: (a) general hiring activities not targeted at Client; (b) employees from applying to Contractor’s public job postings; (c) hiring employees who were terminated by Client.

Red flags:

• Unlimited duration or “perpetual” non-compete
• Worldwide or multi-industry scope
• Prevents you from using general skills/knowledge
• Applies after Client terminates you
• No compensation during restriction period

8. Liability and Indemnification

Liability clauses limit what you can be sued for and how much you might owe if something goes wrong. Indemnification requires one party to cover the other’s legal costs in certain situations.

Common liability provisions:

Limitation of liability:

“Contractor’s total liability arising from this Agreement shall not exceed the total fees paid by Client to Contractor in the 12 months preceding the claim, or $25,000, whichever is less.”

Exclusion of consequential damages:

“Neither party shall be liable for indirect, incidental, consequential, or punitive damages, including lost profits, lost revenue, or business interruption, even if advised of the possibility of such damages.”

Indemnification (protection from third-party claims):

Clients often require you to indemnify (reimburse their legal costs) for:

• IP infringement: Your work violates someone else’s copyright/patent
• Negligence: Your mistakes cause client damage
• Confidentiality breaches: You leak their secrets

How to make indemnification fair:

Make it mutual:

“Each party shall indemnify and hold harmless the other party from claims arising from: (a) breach of this Agreement; (b) negligence or willful misconduct; (c) violation of applicable law.”

Limit your exposure:

“Contractor shall indemnify Client from third-party claims that Work Product infringes intellectual property rights, provided: (a) Contractor had sole control over the work; (b) Client used the Work Product as delivered without modification; (c) claim does not arise from Client specifications or materials.”

Require notice and cooperation:

“Indemnification obligations require that the indemnified party: (a) promptly notify the indemnifying party of any claim; (b) allow the indemnifying party to control defense and settlement; (c) reasonably cooperate in the defense.”

Example balanced liability clause:

Limitation of Liability: Except for breach of confidentiality or IP indemnification, each party’s total liability under this Agreement shall not exceed the fees paid by Client in the 12 months preceding the claim.

Excluded Damages: Neither party shall be liable for indirect, consequential, or punitive damages, including lost profits, even if advised of their possibility.

Mutual Indemnification: Each party shall indemnify the other from third-party claims arising from: (a) material breach of this Agreement; (b) negligence or willful misconduct; (c) violation of law.

IP Indemnification: Contractor shall indemnify Client from claims that Work Product infringes third-party IP rights, provided Contractor had sole control and Client used Work Product as delivered. Client shall indemnify Contractor from claims arising from Client-provided materials or specifications.

Red flags:

• Unlimited liability
• One-sided indemnification (only you indemnify client)
• No caps on indemnification amounts
• Indemnity for things outside your control
• No requirement for notice or cooperation

9. Payment Protection: Deposits and Late Fees

Beyond basic payment terms, include specific protections against late or non-payment.

Require deposits for new clients:

“For new client relationships, Client shall pay 40% of project fee as a non-refundable deposit before Contractor begins work. Deposit is credited against final payment.”

Include strong late payment language:

“Invoices unpaid after 15 days accrue interest at 1.5% per month (18% annually). If any invoice remains unpaid for 30 days, Contractor may: (a) suspend all work; (b) terminate this Agreement; (c) retain all work product created to date; (d) pursue collection remedies including legal action. Client shall reimburse Contractor’s reasonable collection costs, including attorney fees.”

Right to suspend work:

“If any payment is more than 15 days overdue, Contractor may suspend work immediately upon written notice until all outstanding amounts are paid in full. Suspension does not extend project deadlines unless parties agree in writing.”

Collection costs:

“Client shall reimburse Contractor’s reasonable costs of collecting overdue payments, including attorney fees, collection agency fees, and court costs.”

Kill switches for digital work:

“For hosted work or software, Contractor may disable Client’s access if payment is more than 30 days overdue, upon 7 days written notice. Access will be restored upon payment of all outstanding amounts plus reactivation fee of $500.”

10. International Considerations

For cross-border contracts, address currency, taxes, and jurisdiction.

Currency and conversion:

“All fees are stated and payable in USD. If Client pays in different currency, Client bears currency conversion risk and costs. Contractor will apply exchange rate from date payment is initiated by Client.”

Tax responsibilities:

“All fees are exclusive of taxes. Contractor is responsible for all taxes on income in Contractor’s jurisdiction. Client is responsible for any withholding taxes, VAT, or sales taxes required by Client’s jurisdiction. If Client is legally required to withhold taxes, Client shall: (a) withhold minimum amount required by law; (b) provide Contractor with official documentation of amount withheld; (c) cooperate with Contractor to minimize withholding through tax treaty benefits.”

Governing law and jurisdiction:

“This Agreement shall be governed by the laws of [State/Country], without regard to conflict of law principles. The parties agree that [specific court or arbitration] shall have exclusive jurisdiction over disputes.”

Consider arbitration for international contracts:

“Any dispute arising from this Agreement shall be resolved by binding arbitration under [ICC/AAA] rules, conducted in English, with seat of arbitration in [neutral location]. Each party bears its own costs and shares arbitration fees equally. Arbitration award is final and enforceable in any court of competent jurisdiction.”

See our guide on international contractor agreements for detailed international contract considerations.

Red Flags: When to Walk Away

Some contract terms are so problematic that you should seriously consider declining the engagement:

Payment red flags:

• Net 90+ payment terms
• Payment contingent on client receiving payment from their customers
• “Pay when paid” clauses
• No ability to suspend work for non-payment
• Contractor pays all transaction fees (especially international)

IP red flags:

• Assignment of all IP including pre-existing work
• Claims to your general knowledge and skills
• No portfolio rights whatsoever
• Automatic assignment even if not paid
• Work-for-hire for work you’ll continue to develop

Scope red flags:

• “Unlimited” anything (revisions, support, scope)
• “To Client’s satisfaction” as only acceptance criteria
• No change request process
• Vague deliverables
• “Other duties as assigned”

Termination red flags:

• Client can terminate immediately, you need 60+ days
• No payment for work completed if client terminates
• No kill fee despite significant project commitment

Liability red flags:

• Unlimited liability
• One-sided indemnification
• Indemnity for things outside your control
• No caps on damages

Control red flags:

• Set work hours (9-5 daily)
• Required to use client equipment only
• Exclusive engagement (can’t work for others)
• Detailed supervision of methods
• These suggest employee relationship, not contractor

Contract Negotiation Strategies

Most clients expect some negotiation. Here’s how to approach it effectively:

1. Review Systematically

Use a checklist (provided below) to review every contract section. Don’t just skim—actually read each clause carefully.

2. Identify Your Must-Haves

Determine your non-negotiables before discussions:

• Minimum payment terms (e.g., “Will not accept Net 60+”)
• Required deposit percentage (e.g., “Need 30% upfront for new clients”)
• IP protections (e.g., “Must exclude my framework library”)
• Minimum notice period (e.g., “Require 30 days for retainer work”)

3. Propose Specific Alternative Language

Don’t just say “this doesn’t work for me.” Provide exact replacement language.

Weak negotiation:

“I can’t agree to unlimited revisions.”

Strong negotiation:

“Section 3.2 currently provides unlimited revisions. I propose changing to: ‘Client is entitled to two rounds of revisions per deliverable. Additional revisions will be billed at $150/hour.’ This protects both parties from scope creep while ensuring quality deliverables.”

4. Explain Your Reasoning

Connect your requests to risk reduction and mutual benefit, not just your preference.

Example:

“I’m requesting a 30-day notice period for termination because I’ll be declining other opportunities to commit to this engagement. This protects my income stability while giving you confidence I won’t suddenly leave. It benefits both parties.”

5. Offer Trade-Offs

If they won’t budge on one term, trade it for another.

Example:

“I understand you need Net 45 payment terms due to your internal processes. I can accept that if we adjust the payment schedule to include 40% deposit upfront. This way, I’m not carrying all the payment risk.”

6. Know Your Walk-Away Point

Before negotiating, decide what terms would make you decline the project. When you reach that point, be willing to walk away professionally.

Example:

“I appreciate the opportunity, but I cannot accept terms that leave me without income protection if the engagement ends suddenly. If 30-day termination notice isn’t possible, I’ll have to respectfully decline so you can find a contractor whose situation better fits your needs.”

7. Get Everything in Writing

Verbal agreements and email assurances don’t count. All negotiated changes must be in the final written contract.

Don’t accept:

“Don’t worry about that clause, we never enforce it.”

Require:

“I appreciate that, but I need the contract to reflect our actual agreement. Can we strike that clause or modify it as we discussed?”

Contract Review Checklist

Use this checklist when reviewing any freelance contract:

When to Hire a Lawyer

Legal review isn’t necessary for every contract, but it’s worth the investment in these situations:

Definitely hire a lawyer when:

• Contract value exceeds $50,000
• Engagement duration is 12+ months
• You’re entering a highly regulated industry (healthcare, finance, government)
• Contract includes unusual IP, non-compete, or liability terms
• You’re signing an MSA that will govern many projects
• Governing law is in an unfamiliar jurisdiction
• You’re being asked to carry significant liability or insurance
• Something feels wrong but you can’t pinpoint why

Expect to pay:

• $500-1,500 for straightforward contract review
• $1,500-3,000 for review and negotiation assistance
• $3,000-5,000+ for drafting custom contract from scratch

How to work with a contract lawyer:

1. Provide context: Explain the relationship, project, and what you’re concerned about
2. Be specific about concerns: “I’m worried about Section 7 on IP ownership” is better than “review this”
3. Ask for priorities: “What are the 3 most problematic clauses?”
4. Request alternative language: Don’t just get “this is bad” - get specific replacement text
5. Understand implications: Ask “What’s the worst case if I sign this as-is?”

Find a lawyer:

• UpCounsel: Freelance attorneys, many specialize in contractor agreements
• Lawyers.com: Search for “contract attorney” or “freelance attorney”
• Your network: Ask other freelancers for referrals
• Local bar association: Many offer referral services

Special Situations

Working with Agencies or Marketplaces

Platforms like Upwork, Toptal, or design agencies often have non-negotiable terms. You generally must accept their standard agreement to use the platform.

Key considerations:

• Platform takes percentage (15-30% often)
• Dispute resolution through platform, not courts
• IP terms are usually work-for-hire
• Platform controls payment (pro: less non-payment risk; con: less flexibility)
• Review terms carefully - some claim broad IP rights

What you can sometimes negotiate:

• Direct client relationship after exclusivity period
• Custom SOW for specific project details
• Bonus or incentive structure
• Intellectual property for your proprietary tools

Fixed-Price vs Hourly Contracts

Fixed-price considerations:

• Essential to have crystal-clear scope
• Milestone payments protect both parties
• Include buffer for unknowns (15-20%)
• Change request process is critical
• Higher risk but higher reward if efficient

Hourly/daily rate considerations:

• Clearer scope less critical (but still important)
• May need cap on total hours
• Detailed time tracking expected
• Lower risk but less upside
• Watch for scope creep in ongoing requests

Retainer Agreements

Ongoing monthly retainers require special terms:

Minimum commitment period:

“This retainer has a 3-month minimum commitment. Either party may terminate with 60 days notice after the initial period.”

Hours included and rollover:

“Retainer includes up to 80 hours per month. Unused hours expire at month end and do not roll over. Hours beyond 80 are billed at $125/hour.”

Priority and response time:

“Contractor will prioritize Client’s requests and respond to non-emergency requests within 1 business day. Emergency requests (production issues) will receive response within 4 hours during business hours.”

Retainer adjustment:

“Either party may request retainer adjustment (hours or rate) with 30 days notice. Adjustments require written mutual agreement.”

Sample Contract Clauses

Here are copy-paste-ready clauses you can adapt:

Payment Terms (Project)

PAYMENT TERMS

Total project fee is [AMOUNT] [CURRENCY], payable as follows:
- [XX]% ([AMOUNT]) upon contract signing
- [XX]% ([AMOUNT]) upon completion of [MILESTONE]
- [XX]% ([AMOUNT]) upon completion of [MILESTONE]
- [XX]% ([AMOUNT]) upon final delivery and acceptance

Invoices are due within 15 days of invoice date (Net 15). Client will pay via [METHOD] to Contractor's designated account. Client is responsible for all transfer fees.

Payments more than 15 days overdue accrue interest at 1.5% per month. If any payment is more than 30 days overdue, Contractor may suspend work until payment is received. If any payment remains unpaid for 60 days, Contractor may terminate this Agreement and retain all payments received.

Scope Protection

SCOPE AND DELIVERABLES

Contractor will deliver: [LIST SPECIFIC DELIVERABLES]

Explicitly excluded from scope: [LIST EXCLUSIONS]

CHANGE REQUESTS

Client may request changes beyond the defined scope. Contractor will provide written estimate within 3 business days. Work will proceed only upon Client's written approval of the additional fees and any timeline impact.

IP Protection

INTELLECTUAL PROPERTY

Work Product created specifically for Client under this Agreement shall be owned by Client upon full payment of all fees.

Contractor retains ownership of Pre-Existing Materials, including:
- [LIST YOUR TOOLS/LIBRARIES]

Contractor grants Client a perpetual, non-exclusive license to use Pre-Existing Materials solely as incorporated in the Work Product.

Contractor may include non-confidential examples of Work Product in portfolio materials.

Termination (Retainer)

TERMINATION

After the initial [X]-month minimum term, either party may terminate with [X] days written notice. During the notice period, Contractor will continue providing services and Client will continue paying the monthly retainer.

Either party may terminate immediately for material breach if not cured within 14 days of written notice.

Upon termination, Client shall pay for all services through the termination date. All confidentiality, IP, and payment obligations survive termination.

Tools and Resources

Contract Templates

• AIGA Standard Form of Agreement for Design Services (graphic designers)
• Docracy: Free legal document repository with contractor templates
• Bonsai: Contract templates and tools for freelancers (paid)
• AND CO: Free contract generator (basic templates)
• Your lawyer: Custom template pays for itself over time

Rate and Invoice Tools

• Freelance rate calculator: [Link to contractor-rate-calculator tool] - Calculate sustainable hourly/project rates
• Invoice template tools: Bonsai, FreshBooks, Wave (free tier)
• Proposal software: PandaDoc, Proposify (includes contracts)

Learning Resources

• “Business and Legal Forms for Graphic Designers” by Tad Crawford
• “The Freelancer’s Bible” by Sara Horowitz
• “Design Is a Job” by Mike Monteiro (includes contract negotiation)
• Freelancers Union: Resources and community

Key Takeaways

Protecting yourself as a freelancer starts with a solid contract. Here’s what matters most:

1. Payment terms are your top priority: Clear amount, currency, schedule, method, deposits, and late fees with right to suspend work
2. Define scope precisely: Specific deliverables, exclusions, revision limits, and change request process prevent scope creep
3. Protect your IP: List all pre-existing tools and frameworks as excluded from assignment; negotiate portfolio rights
4. Require adequate notice: 30-60 days for ongoing work protects income stability; include kill fees for project termination
5. Make it mutual: Confidentiality, indemnification, and liability should protect both parties, not just the client
6. Choose practical dispute resolution: Arbitration beats foreign litigation for international contracts
7. Everything in writing: Verbal assurances and email promises don’t count; get all terms in the signed contract
8. Know when to walk away: Some contracts are too risky; declining bad terms protects your business

A strong contract isn’t about distrust—it’s about clarity. When both parties understand exactly what’s expected, you can focus on delivering great work instead of managing misunderstandings. Invest time upfront to negotiate fair terms, and you’ll build more profitable, less stressful client relationships.