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This article is written by Shubhang Gupta, pursuing a Diploma in Cyber Law, Fintech Regulations and Technology Contracts from Lawsikho.com. Here he discusses “Seven points you should consider while Contracting with Freelancers”

 

Introduction

Nowadays, where the process of doing any business, profession etc. involves different activities apart from core functions has been demanding extra workforce for these functions. Freelancing has been evolved as an emerging field in the space of employment. The freelancing provides workforce as per the requirement of an organisation at lower rates than the cost of any permanent employee in any organisation. During heavy workload within the organisations, business entity etc. or to take service of any special nature without incurring a heavy cost (i.e. in case of maintaining permanent employee(s) etc.), these institutions or business entity, thus go for engaging freelancers as per their requirement. These freelancers are subjected to many terms and conditions after been engaged by the developers. For this purpose, the contract between these engaging party and freelancer makes their execution smooth throughout the transaction. The benefits of such contract done with the developer are as follows: –

  • Contract includes a provision regarding payments etc

The contract between the freelancer and a developer must include provisions regarding the payments etc. In payments provision, the developer clearly states the amount of payment shall be made on the completion of a task assigned to the freelancer. This provision deals in a comprehensive manner and also stipulates the mode in which the payment has to be made, the no. of instalments (if any) or time frame within which the payment has to be made etc. But in case, if there is no contract then, there can be an issue regarding the payment to a freelancer and there can also be an issue relating to the instalment (s) of the payment or mode of payment payable to a freelancer. The developer may also impose unnecessary penalties on freelancer, Therefore this gives rise to harassment of freelancer. Without an agreement, a freelancer could not sue the developer in future for any non-payment for the task.

  • Rights pertaining to the copyrights are also settled

The parties under the contract also clear their position regarding the rights or ownership in respect of the copyright of work done by a freelancer. This provision could certainly aid the parties to not involve in unnecessary litigation in respect of ownership of the copyright of all proposed future task by a freelancer. This will definitely save the cost of litigation, time and efforts of the parties or will preserve the relationship between the parties. By mutual understanding of the parties, they could establish their individual position in respect of the copyright of future task assigned to the freelancer. This enables the parties to the contract to take legal action against the third party if any infringement is done on its territory. But in case, without any agreement for the assigned task, the parties to the contract may not settle their rights relating to the copyrights of the future creation. The parties do not stand in a position to sue the third party for any infringement or breach of such future creation, done under the engagement of a freelancer.

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  • Damages in case of any loss

The contract between the parties may also include a provision relating to the damages provided to both the parties in the event of loss to any party. This means if there is any loss to any party to the contract, by the fault of another party, then the aggrieved party should be provided with damages to recover from the loss. Here both the parties (freelancer and developer) are always prone to loss; this includes loss to the freelancer in the following ways: –

  1. The developer always holds a superior position over the freelancer; the developer may cancel the task anytime after assigning it to the freelancer.
  2. The developer can also offer less pay, then the previously stated amount at the time of assigning the task. 

For all this, the parties to the contract should mention the liquidated damages in the contract which will immune the parties from such loss. If there is no contract between the parties, in the event of loss to any party, there can be no certainty regarding the amount of damages payable to the aggrieved party under the transaction. In short, a freelancer will be in a more disadvantaged position than the developer. The contract done between the parties for the task assigned to freelancer will definitely protect the rights of him. 

  • Risk relating to the third party

The parties to the contract are always subjected to the risk by the third party. Such a risk might disturb the legal position of the parties to the contract. For example in the case of freelancer, the third party may be hired by the developer for the modification, updating, alteration, accessing etc of the work done by the freelancer. This clearly changes the position of the freelancer in respect of his work done. So, to prevent from such third party risk, the parties to the contract with mutual understanding between them must mention the provision related to the third party risk. But in case of direct engagement, both the parties are not ascertained about their rights and power to deal with the third party. Both parties can enter into an agreement with the third party, which can result in many conflicts on the legal grounds between the parties. Without an agreement; there can be no contractual provision between the parties which states the liability of the party in case of third-party intervention in the relationship of the developer and freelancer.

  • Provision related to follow up the basic requirements in completing the assigned task

There can be some basic requirements, which shall be taken into consideration while working on the given task. These are mandatory in completing the assigned task under the contract. This wholly puts the responsibility upon the freelancer’s shoulder to implicit all mentioned requirement in the provided task. This provision carries such an important value that, not abiding with such provision by the freelancer, the developer may not make payment to the freelancer or not obliged to accept the assigned task. This is a core provision which states that what should be the ingredients of the recipe. This provision includes such elements: – 

  • Which software has to be used?
  • On which platform the program has to be developed.
  • Which language for coding shall be used?
  •  What shall be the design of the program etc?

After completing the task according to the above-mentioned requirement, the freelancer could not be made liable for any shortcoming in the task. This makes immune the freelancer from any deficiency in the service. But in case of direct engagement, the freelancer might not be clear about the basic requirements of the developer upon which the task has to be completed. It is convenient for both the parties to act accordingly as per the provisions of the agreement. Any deviations from the stated provisions of the agreement can be easily traced out and required liability can be imposed upon the party at fault.

  • Duration for the completion of the task

The contract in such case also deals with the time duration within which the freelancer had to complete the assigned task. This provision also carries importance in concluding the agreement between the parties. Under this provision sometimes the parties may also provide for penalties on the account of delay in submission or breaching any other requirement under the same provision. This provision generally states the time period initiating from accepting the agreement until the fixed date. This also states some events which may restrict or hamper the work of the freelance in completing the task. This protects the freelancer from being liable to damages to the developer on the account of delay in submitting the assigned task to the developer. The time of completion could be set by mutual understanding between the parties. This time period is one of the essences of the contract. But in case of direct engagement, there can be an issue between developer and freelancer, which could arise under such conditions on which the deadline has been fixed.

  • Third-party contracts

After settling each their rights (i.e. Freelancer and Developer) relating to the copyrights, the parties to the contract can contract with the third party in respect of their copyright work. It is beneficial for both the parties to clear their lines of copyright in an assigned task under the contract. Thus, the respective party knows their rights and obligation in relation to their work and consequently can sue the third party for any breach or infringement of their work. Else, no party has the power to sue the third party for such an act. In this case, the freelancer and developer could settle their rights pertaining to the assigned task. The contract will provide the privilege to the freelancer to put forward his interest or rights in the future task. But in case of direct engagement, the parties are not settled with their ownership on the copyright of the future creation consequently the freelancer has no such opportunity to deal with such an issue and the developer dominates the position in respect to freelancer, Therefore, the freelancer may not have such rights over the task done by him. 


Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.

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