I’m not an attorney, but I have read through more than my share of agreements, both for my own business and on behalf of my clients. There are some clauses that are vital, especially when you are providing contracted services. Here is a breakdown of some of the big ones and why you may want to consider working them into your agreement.
Kill Fee
A kill fee is simply a cancellation fee. This is particularly important for designers and developers because it specifies that you will still get paid for all work completed to-date, even if a client cancels the agreement. Most kill fee clauses are worded to protect the contractor and ensure they get paid, regardless of the reason the client cancels.
Independent Contractor
This clause should clearly state that you are an independent contractor and not an employee of your client’s organization. It’s an important clause because it ensures that you are not entering into a non-exclusive arrangement, gives you control over how and when you work, and states that you will not receive benefits from the client. Basically, this clause protects you and your independent status. For more about the employee vs. self-employed confusion, read: Who Are You? Employee or Self-Employed?
Non-Exclusivity
Many times this clause is worked into the Independent Contractor clause, but it’s so important that there is some value in giving it its own paragraph. It should reiterate that you are not providing services exclusively to the client and that you have the right to perform services for other clients during the term of the contract.
Indemnification
The Indemnity clause is considered a “hold harmless” clause because it states that you are not an agent of the company. Essentially, it protects you as the contractor from future losses or damages experienced by the client.
Confidentiality
This clause is one that is meant to afford protection to the client and their knowledge capital. It states that as an independent contractor, you will not divulge confidential or proprietary information that you encounter as part of your working relationship.
Warranty
A warranty states that you will do certain things in a certain way and that the client can have certain expectations about the result of your working relationship. This can apply to stating that you will provide services that are consistent with high-quality standards in the industry. It can also specify any support services, troubleshooting and bug fixes you will provide as part of your agreement. If you do include a warranty, it’s important to limit the term and be very specific about what is included.
Ownership
The ownership clause is an especially important one for those in the creative and technical fields because it specifies who owns the final product as well as the working files that were used during the course of the work. This clause can also outline what rights you have as the contractor to use the work and related images in your portfolio. It can also provide permission to include a credit line, stating who did the work, on the final product.
There are other important clauses that should be in your agreement, but these are among the most important ones. Please note that this shouldn’t be considered legal advice and it’s always best to consult with an attorney in order to make sure your contract is bulletproof.
What other clauses do you think are most important to include in a contract?
Image credit: Steve Woods
Frequently Asked Questions (FAQs) about Freelance Contract Clauses
What is the importance of a kill fee clause in a freelance contract?
A kill fee clause is a critical component of a freelance contract. It protects the freelancer by ensuring they receive compensation if the client cancels the project after work has begun. This clause is particularly important for projects that require a significant time investment. It ensures that the freelancer is not left uncompensated for their time and effort, even if the project does not reach completion.
How is a kill fee calculated?
Kill fees are typically calculated as a percentage of the total project cost. The specific percentage can vary, but it is often between 25% and 50%. The exact amount should be clearly stated in the contract to avoid any confusion or disputes later on.
Can a kill fee clause be negotiated?
Yes, like all aspects of a freelance contract, the kill fee clause can be negotiated. Both parties should feel comfortable with the terms of the contract, including the kill fee. If the proposed kill fee seems too high or too low, it can be discussed and adjusted as necessary.
What happens if a client refuses to pay the kill fee?
If a client refuses to pay the kill fee, the freelancer has the right to take legal action to recover the owed amount. The contract serves as a legally binding agreement, and failure to adhere to its terms can result in legal consequences.
Are kill fees common in all freelance industries?
While kill fees are common in many freelance industries, they are not universal. They are most commonly found in industries where projects require a significant time investment, such as writing, design, and consulting.
What other clauses should be included in a freelance contract?
In addition to the kill fee clause, a comprehensive freelance contract should include clauses outlining the scope of work, payment terms, confidentiality, and intellectual property rights. It may also include clauses related to dispute resolution, termination, and indemnification.
How can I ensure my freelance contract is legally sound?
To ensure your freelance contract is legally sound, it is advisable to consult with a legal professional. They can review the contract to ensure it includes all necessary clauses and adheres to all relevant laws and regulations.
Can a freelance contract be modified after it has been signed?
Yes, a freelance contract can be modified after it has been signed, but any changes must be agreed upon by both parties. Any modifications should be documented in writing and added to the contract as an amendment.
What should I do if a client wants to start work before the contract is signed?
It is generally not advisable to start work before the contract is signed. The contract serves as a protection for both parties, and starting work without a signed contract can leave the freelancer vulnerable.
What is the difference between a kill fee and a cancellation fee?
While similar, a kill fee and a cancellation fee are not the same. A kill fee is paid when a project is cancelled after work has begun, while a cancellation fee is paid when a project is cancelled before work has started. Both fees serve to compensate the freelancer for their time and effort.
Alyssa GregoryAlyssa Gregory is a digital and content marketer, small business consultant, and the founder of the Small Business Bonfire — a social, educational and collaborative community for entrepreneurs.
