Getting a contract signed before you provide services should be a priority for any freelancer or consultant. A contract protects you by setting out your obligations clearly and reducing the risks of a misunderstanding with the client. Without it, you are relying on a verbal agreement, which is unlikely to be the same agreement in the minds of both parties, or cover all of the issues. The contract should contain all the terms that apply to the services while allowing for flexibility and a process to make changes if necessary.
Services: Setting out the services to be provided and the standards required avoids confusion about what is to be delivered. It reduces the risk that the services will increase without a change to the price or timescales.
Responsibilities: Consider who is responsible for each part of the project and what each party needs to provide. If you’re providing your own equipment, set this out. This is helpful to show that you’re self-employed. You may want the client to provide you with access to its property and documents, and respond quickly to your requests for information. Setting out the client’s responsibilities ties them to those obligations.
Time frame: Any milestones or time frame for the services should be made clear, with a process for dealing with any slippage or adding extra services during the period of the contract.
Payment: Make clear what payments are due and when, the process for making the payments and what happens if they are not paid on time.
Confidentiality and Intellectual Property: Define both parties’ obligations in relation to confidential information and what steps need to be taken to protect that information. Make clear who will own any intellectual property relating to the services and when will this transfer. Most intellectual property rights will remain with you unless specifically assigned to the client. Consider whether you want to retain any rights to use information about the services in your future marketing.
The end of the contract: How can both parties end the contract? Is the contract for the life of the project or will it continue until either party gives notice to the other party? Without a notice period, you may be in breach of contract if you try to end the contract early (unless the client has breached the contract badly). Make sure you can also end the agreement if the client does not follow the contract or their business gets into financial difficulty.
What happens after the contract ends: If there are any obligations after the contract ends, for example, to make certain payments, include these in the contract. Don’t leave it to chance that these will happen.
Self-employment/IR35: The contract can help show that you are self-employed for tax purposes. The key factors that decide your employment status (or whether you’re outside IR35 if you provide service through a limited company) are whether you decide how the services are provided (and you aren’t under the control of the client), whether you have to deliver the services personally and whether the client has to offer you further work and you have to accept it. The contract should confirm your status and make these things clear.
It’s worth a contract lawyer reviewing the contract before you sign it if you have any concerns. They can check that the contract covers everything, and that there aren’t any unusual clauses or terms that could cost you a lot of money in the future if things go wrong.
Louise Paull - LawBite Employment LawBrief. For further legal advice, you can contact Louise via our online legal advice portal.
