This article has been written by Deepika Ahuja pursuing a Diploma in International Contract Negotiation, Drafting and Enforcement from LawSikho.

This article has been edited and published by Shashwat Kaushik.

What are freelancers

Freelancers are the individuals who are not associated with any company, or relatively speaking, they are self-employed, and who deliver their services on a contract or project basis for any company. Freelancers are the independent contractors or self-employed workers and don’t have any boss. They are not considered the employees of the company that engages them for their services.

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What are the freelance contracts

Freelance contracts are the agreements that legally bind and outline the terms and conditions of any project between a freelancer and the client, which form the foundation of the professional arrangement between the freelancer and the client.

Understanding the importance of freelance contracts 

A well-drafted and well-versed written contract specifies the project description, payment terms, timeline and schedule, and other necessary details required for the successful completion of the project. Freelance contracts provide a detailed description of the entire work relationship and ensure that both parties have a clear understanding of their roles and responsibilities. A written contract provides clarity in the work relationship and it avoids the ambiguity or any disputes that arise during the course of the project to be accomplished. It also helps to establish the obligations and expectations of the parties that are involved, i.e., the freelancer and the client.  

How are freelance contracts essential

  • Clear expectations: Freelance contracts help to establish a smooth understanding of roles and responsibilities between both parties. It specifies the project description, payment terms, timeline and schedule, and other necessary details required for the successful completion of the project.
  • Legal protection: Freelance contracts provide legal protection to safeguard the rights, interests, and obligations of both the freelancers and clients. These contracts specify the arrangement of work relationships, which includes project description, payment terms, timeline and schedule, intellectual property rights, and dispute resolutions. By endorsing these details in written contracts, freelancers and clients gain a clear understanding about their respective responsibilities, which reduces confusion or conflicts that might arise during the course of a work relationship.
  • Transparency: Freelance contracts act as a reference guide for both parties to ensure the smooth functioning of the work relationship and they avoid ambiguity between the parties about any aspect of the services or the roles and responsibilities of the other party.
  • Payment security: A freelancer needs to incorporate all the information related to the payment terms and it should be very clear. Freelance contracts specify the payment terms, which include how the payment is made, whether it is hourly based and how many hours are to be considered. What will be the payment schedule? Will it be after the submission of work is completed? Will the client pay the deposit amount before starting to work on the project or will they be charged a late fee if payment is not made in time and what will be the mode of payment? In this way, if the payment terms are clearly specified in the contracts, freelancers can protect themselves from payment disputes and ensure that they are fairly compensated for the services they have rendered.  

Key terms that ensure a smooth working relationship with a client of freelancers

Title and details of the parties

Title signifies the name of the agreement and it describes the nature and purpose of the agreement. The name of the parties includes all the details, such as name, Aadhar card number, CIN number., age, occupation, and address, and will also provide for the parties’ heirs and successors, who shall survive the contract.

Project description/work scope

This clause is very necessary because it protects the rights of the freelancer. It clearly defines the scope of work that freelancers will be providing. This includes the services they are offering and to whom they are offering their services. It should include various information, such as the project’s execution date, duration or period of the project to be completed within, the detailed description of services that are to be provided, the project’s end date and the payment terms, including when the payment is to be made and in what manner and in which currency.

Payment terms

A freelancer needs to incorporate all the information related to the payment terms and it should be very clear. Freelance contracts specify the payment terms, which include how the payment is made, whether it is hourly based and how many hours are to be considered. What will be the payment schedule? Will it be after the submission of work is completed? Will the client pay the deposit amount before starting to work on the project or will they be charged a late fee if payment is not made in time and what will be the mode of payment and any additional expenses or reimbursements. In this way, if the payment terms are clearly specified in the contracts, freelancers can protect themselves from payment disputes and ensure that they are fairly compensated for the services they have rendered. 

Deadlines and timeline

It specifies the duration or period in which the freelancer will start rendering the services and when they will cease. Deadlines and timelines are the duration or period specified in the contract, which is very essential for the submission of the project.

Intellectual property rights

Intellectual property rights are most relevant to the freelancers, as they define who will own the intellectual property rights that are created or produced during the project work and whether the freelancer retains the rights to use them or grants them to the client against the payment. It is a very common feature for the freelancer or independent contractor to either assign work created for the client or retain ownership of their work and grant the client a license to use it.

Confidentiality and non–disclosure

 In this clause, both parties are sharing any proprietary or sensitive information and also have some confidential information that is used as a part of freelance services during the course of the project and both parties wish to restrict its disclosure to the third parties, which ensures to protect the confidential information and will not be disclosed to the third parties. This clause specifically builds trust, establishes the professional relationship between the two parties and ensures that both parties have obligations to keep each other’s confidential information a secret.

Termination clause

This provision specifies the circumstances or the events under which the agreement can be terminated due to the breach of obligations under the contract, including any notice periods or termination fees. Having the termination clause in the contract helps both parties understand the conditions and the circumstances that lead to the premature end of the contract or under which conditions the contract can be terminated. This includes specifying any notice periods or termination fees that may apply, which ensures a smooth working relationship between the parties.   

Dispute resolution

If the potential disputes arise in the working relationship between the freelancer and the client, then the clause of dispute resolution is very necessary to be included so that the freelancer and client can resolve their disputes through negotiation, mediation, conciliation, or arbitration. It can be considered to involve a mediator or arbitrator to solve the potential disputes that arise in the working relationship.

Conclusion

Freelance contracts are very essential for safeguarding the interests and rights of the freelancer and it gets to know what the client expects from the freelancer. It specifies the project description, payment terms, timeline and schedule, and other necessary details required for the successful completion of the project. It serves as a safety net, defining the expectation or operation of the client, may it be an individual or a company. This legal agreement or contract assures that the payment will be made for the work you deliver and that the client will receive the work of the expected and promised quality.

References

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