As a Freelancer, Do I Need a Written Contract?

Let me make this easy – Yes!

When starting out as a freelancer or independent professional, you may not need a lot of legal help in the beginning. But, one thing you absolutely need is a good service contract. I say this because the service contract is critical to protecting the most important aspect of your business – the relationship with your clients.

Let’s Go Back to the Beginning.

Business revolves around agreements between people and organizations. A contract makes these reciprocal promises legally enforceable. Without contract law, freelancers would find themselves providing services and merely hoping to get paid for them.

That sounds ridiculous, doesn’t it? Well, the unfortunate fact is that this is exactly what many freelancers do each and every day when they provide services without a written contract. “We don’t need to put that in a contract; they said they would just do it for us.” “They’re great guys – if the widget doesn’t work right the first time, they will work with us.” “I’ve worked with them for years, and there’s never been a problem.” These are all excuses I have heard for why a contract wasn’t written for an agreement. Another common theme behind all of these situations was that the freelancer in question was not paid. In fact, a recent study (PDF) by the Freelancers Union found that 40% of freelancers polled went unpaid when employers refused to pay them fully for work performed.

Why Some Deals Don’t Work Out.

People usually get along while the deal is being put together. But all too often, something goes wrong along the way. My (admittedly simplistic) model for why business deals fall apart consists of two elements:

1. The parties’ expectations were not adequately detailed in the beginning; or
2. One party does not live up to its obligations.

In many cases, the second element relates back to a failure to properly define everyone’s expectations at the outset (element #1). You, as the freelancer, may deliver everything you thought was included in the agreement, but the client may have expected more or may have anticipated something else.

Clarifying Expectations.

As you can see, the real value in creating a written contract is in clarifying what everyone expects out of the deal. You shouldn’t feel untrusting or slimy about asking a client to sign a contract for services, because it is good for all involved. A contract shines a light on the parties’ presumptions about what their obligations will be and what they will get out of the deal.

Anyone who is serious about living up to his or her obligations will happily agree to a written contract. Moreover, presenting yourself as a freelancer or independent professional who asks clients to sign a contract before actual work begins demonstrates your professionalism and allows you to separate the serious clients from those you should be wary of.

I believe that most people are not out to take advantage of others. There are definitely situations in which one party either cannot or decides not to live up to its obligations. But, the majority of business deal collapses boil down to a failure to define everyone’s expectations in the beginning. Either way, a contract protects you by setting the expectations or by providing a method of addressing a breach of the agreement.

Does it Matter?

If the deal matters to you, create a written contract. If the relationship with your client matters, create a written contract. If neither of these apply, create a written contract anyway.