The Two Contracts Every Freelancer Needs

As a freelancer, you are more likely to succeed if you have a good set of contract templates to use with clients and subcontractors.

In this post, we’ll look at the two most important contracts every Kansas City freelancer should have in their freelancer contract library: (1) a Client Agreement, and (2) a Subcontractor Agreement.

1. Client Agreement

When working with clients, it is important that both you and your client fully understand the terms of your engagement. By using a well-drafted contract, it forces the parties to think through various “what if” scenarios and establish some ground rules. Additionally, if a dispute arises, having a contract will help you and your client resolve the dispute.

In many situations, the best structure for a freelancer client agreement is an MSA/SOW format. That means you have one Master Service Agreement that lays out the “legal” terms, and then one or more project-specific Statements of Work that establish the service obligations and payment terms.

At a minimum, here’s what you might consider doing:

• Master Service Agreement: Use your MSA to clearly lay out the ground rules; include default payment terms, a provision on who will own the IP created under the agreement (pro-tip: consider making the IP assignment contingent on your client paying you), confidentiality obligations, termination rights, as well as “boiler plate” legal provisions such as assignment and governing law.
• Statement of Work: Include a reference in each SOW that makes it clear the SOW falls under the MSA. From there, the two key elements of a SOW are the service terms (what you will and will not be doing) and the payment terms (how much, how, and when a client must pay you).

2. Subcontractor Agreement

In addition to a freelancer client agreement, you should consider having a subcontractor agreement (which might just be called a contractor agreement).

In many ways, your freelancer subcontractor agreement will mirror the client agreement. It will be in a MSA/SOW format and will include the same basic terms described above.

However, here are two unique things to consider for your subcontractor agreement:

• Consider how it is different from your client agreement: For example, your contractors should represent and warrant that their performance of services for you won’t breach other obligations they have (like obligations to their employer if they are moonlighting). You will also want an ironclad IP transfer section to make sure you own what they create under the subcontractor agreement (so you can then transfer ownership to your client).
• Consider how your client agreement impacts your subcontractor agreement: For example, you might need to require your subcontractors obtain insurance or sign your client’s NDAs. And further, always make sure you can terminate your subcontractor agreement if your client terminates your client agreement.

Best Practices for Kansas City Freelancers

There are several ways you can go about setting up your freelancer contract library.

• Draft your own: You can obviously draft your own. If you do, try to think through as many “what if” scenarios as possible to cover all the important things.
• Copy from past clients or past contractors: You can use drafts you’ve obtained from past clients or past contractors, but they may not match how you run your freelance business.
• Get them online for free: You could do this. But please don’t do this unless you really trust the source. There are a lot of really bad contracts out there and you may get one that doesn’t really protect you (and worse, it might be in favor of the other party!).
• Pay for one online: Depending on your situation, a template may be a great option, provided you trust the source. We actually sell contract templates in our Contract Shop.
• Hire an attorney that works with freelancers: The best way to create your freelancer contract library is to work one-on-one with an attorney. He or she can talk through your operations, what you want from your clients and subcontractors, and can help you create a template that works for you. And, if you find the right attorney, he or she can help you create templates you can use over and over again on your own. You might have to ask for specific advice on some transactions, but if a lot of your transactions are similar, you can often handle them on your own if you have a good template library in place.

(This article is general in nature and is not legal advice.)