The gig economy in India has started to flourish, especially after COVID-19 hit. The pandemic led to many lost jobs, thus kindling many people to take up freelancing full-time or as a side-hustle for more financial stability. There’s a good reason for this: almost 23% of freelancers in India earn up to Rs 60 lakhs per annum! In this post, we explain how to create your own freelance contract.
Freelancing in India is expected to grow to between $20 and $30 billion by the end of 2025.
So, it is evident that freelancing has gained popularity over the years. But why do many people still feel hesitant to take up freelancing? It’s because of the nature of freelancing.
When you freelance, you’re completely on your own. This leaves room for exploitation by clients you may work with. Some may get extra work done from you for the same pay, or may even ghost you.
To save you from all these troubles, it is important to create a freelance contract that acts as an agreement between you and your clients.
In this guide on freelance contracts, let’s look at some of the elements that should be a part of your contract — along with some contract templates for freelancers.
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What is a freelance contract?
A freelance contract is a legally binding agreement that is signed between you and your client. It lists down the details of your:
- Scope of work
- Payment terms
You may also include anything else that is relevant to your work with the client.
Why is it important to sign a freelance contract?
Starting out as a freelancer can be confusing and intimidating. As mentioned before, it requires you to get everything done on your own.
Right from finding the right clients, discussing the scope of work, negotiation, signing contracts, and sending invoices — you have to take care of everything. This may put you in a vulnerable position if things don’t go as expected.
Here are a few things that may go wrong when you freelance:
- You may not get paid on time.
- Your client may expand the scope of work without increasing the pay.
- Your client may ghost without paying you as agreed.
- Or the client may not keep up with one or more promises that they made initially.
Clients that you work with may also have a few apprehensions about working with a freelancer:
- Your work may not be up to the mark.
- You may be late on deadlines.
- You may ghost the client.
- You may not deliver the work that you initially promised.
To have a check on all the above things and ensure that there is legal binding for the terms that are initially agreed between you and your clients, a freelance contract is a must.
If you or your client strays from the freelance contract, then either party may take legal action against the other. Thus, a freelance contract offers a sense of security for both you and your client.
What should you include in a freelance contract?
Now that you know the importance of signing a freelance contract before beginning work, let’s look at some of the important elements that you must consider including in your freelance contract.
1. Introductory statement
Your freelance contract should begin with an introductory statement that clearly states the full names of you and your client. These can be your full names and/or the company’s full name.
The introductory statement should also establish the designations “Client” and “Contractor” for the client and you respectively. You should also include the date from which the contract would be effective.
2. Scope of work
Scope of work is the next crucial part to be included in a freelance contract.
Scope of work should consist of precise and accurate definitions of the work that you’ve agreed with the client.
It is very important to be specific with the scope of work. Being vague here may put you into trouble. Scope is one of the most common problems faced by freelancers where the client increases the amount of work to be done for the same payment terms.
Therefore, you should ensure that the scope of work is highly specific and you do not leave any room for scope creep.
In this section, you can also include terms for additional work and revisions. In case there is a change in the scope of work, you will get paid for the extra work.
Apart from the scope of work, you must also mention the deliverables that will be a part of this freelance project. You can even divide the entire project into different deliverables and mention the timelines for each deliverable.
A deliverable could be a logo, a blog article or a product such as a handmade piece of furniture.
Adding deliverables to your freelance contract, again, helps you avoid uncertainty. It also helps the client to have a clear idea of exactly what they can expect to receive at the end of the freelance project.
Timelines are also a vital part of any freelance contract. Timelines help you set the right expectations with your clients and ensure that the deliverables are completed within the specified time.
Before deciding on the timeline and adding them to the contract, ensure that you’re sure about them. Instead of overpromising and struggling to deliver at the given timelines, you should try to add enough buffer to the timeline so that things are not left hanging at the last minute.
5. Payment information
You should include payment information in your freelance contract, including every possible detail about how, when, and how much payment is agreed as a part of the project.
Based on the payment model that you’ve agreed upon, you can add these details to the freelance contract. For example, you can add the total amount you’d be charging for the project or the rate that you’d be charging per hour.
Apart from the payment model, you should also mention the payment transfer mode and the timelines for payment. If you’re charging advance payments, then this must also be included in the freelance contract.
Sometimes the client wants to have complete ownership of the deliverables. Other times, as a freelancer, you may want to take credit for the work that you’ve delivered.
Based on these terms, you can add appropriate clauses to the freelance contract so that there is no room for unnecessary questions later on.
7. Late payment terms
As an extension of the payment terms, you can also consider including clauses for delayed payments. Though you’d have mentioned timelines for receipt of payment, you can also add a clause for late payments.
For instance, you can include an additional 5% late payment fee for every day beyond the last date of payment. This will ensure that even if payment is received late, you still can ensure that you’re compensated well.
8. Termination clause
If you’re working on an ongoing or retainer freelance project, you must also include a termination clause in the freelance contract. In the termination clause, you can list down the terms and conditions about how either party can terminate the contract.
The termination clause should also include the timelines for intimation of termination.
Finally, it is important to get the freelance contract signed by both you and the client. You can do this through electronic signature generator tools. Having the signature of both parties will ensure that the contract is validated and finalized.
Contract templates for freelancers
By now, you have an idea of the essential elements that should be a part of your freelance contract. In this section, you can find links to some contract templates for freelancers. You can edit these templates to fit your requirements exactly.
Summing it up
Freelancing is emerging as one of the most lucrative career options for many in India, especially after the outbreak of COVID-19. Freelancing gives you a lot of freedom and flexibility, yet it can be intimidating at first.
To ensure that you receive the right payments on time and have a good relationship with your clients, it is important to sign freelance contracts.
Freelance contracts will legally bind both you and clients to ensure that there is no room for exploitation.
Elements such as payment terms, the scope of work, deliverables, timelines, late payment terms, ownership details, etc., must be a part of your freelance contract. The contract templates for freelancers provided in this guide will help you get started with your first freelance contract.