As a relatively young founder of a social media consulting firm based in Singapore, I’d had various experiences in drafting contracts for hire, of hire, and of service.
I know a lot of young people out there freelancing either to make a living, or to earn some pocket money. They trade a huge part of their time, labour, youth and service for money, but are sometimes exploited due to no contract or a badly written one.
Disclaimer: I am no legal counsel but have definitely been through some tough times because my contract was either vaguely written, or worse–there was no contract. It is indeed a pity that I had to write off bad debts of up to four/five figures in some cases.
This post is therefore written with the intention to share my experiences of what you can consider looking out for in your contracts. The omission of any one of the eight clauses had caused me some form of trouble in the past.
What is a contract?
According to dictionary.com, a contract is:
“an agreement between two or more parties for the doing or not doing of something specified.”
Why sign a contract?
Signing a contract is a method of protecting good business and personal relationships. We sign contracts because we trust our clients and want to preserve goodwill, not because we don’t trust our clients.
Many people think that signing contracts for small sums of money signifies mistrust. I used to think like this too, until I started really disliking a few of my (perfectly nice) clients at certain points.
So think of it this way–a written contract is first and foremost a means of unambiguous communication and only subsequently a means to legal recourse.
The human memory can sometimes be unreliable, and the human ego can be even worse. In times of dispute, you would not want things to morph into a case of “he said, she said”–that which is unverifiable.
Aside to that, it would be good to audio-record down any important meetings. Once again this is not done with the intention of legal recourse, but more for your own reference in times of dispute.
A detailed contract is usually superior to a vague or simple one, because you can then negotiate for each clause. So remember–anytime there is money involved, sign a contract!
Why do people NOT sign contracts?
The main reason why freelancers/young people do not sign contracts seems to be because that they are too trusting.
However, the road to hell is paved with good intentions, and communication is not an easy thing. In my experience, young people/ freelancers lose money because they assume a lot about their clients, and vice versa.
That being said, at this point I still have no idea why experienced business owners don’t want to offer contracts to their freelancers or part-timers. As IKIGUIDE‘s standard business practice, we offer everyone from our regular to guest writers written contracts.
The eight clauses to look out for
No. #1. Single point of contact
This is extremely important because no two points of contact in the world have identical world-views. You wouldn’t want a case when you have to do a lot of extra uncompensated work simply because both of your points of contact cannot see eye to eye with each other for even the smallest details.
Insist on having a single point of contact. Trust me on this.
No. #2. Copyrights/ Deliverables
Stating copyrights to the project/work is important because it determines who the profits go to upon resale of the intellectual property.
Now… from this perspective, the ownership of copyrights is a sensitive issue because it involves future revenue sources. Therefore, clarify and negotiate well.
No. #3. Deadlines
In the event when your client is reselling your work to his/her client, you have to be mindful of prior deadlines that are mutually-agreed upon. Codify this expectation in black-and-white. This is to protect your client from not getting late work, and to allow you to impose additional charges if your client wants the work done earlier, due to unforeseen urgent reasons.
No. #4. Change in scope
Sometimes the worst clients are the nicest ones. They will request nicely for a “minor” change in scope– “just one small edit here and there”–upon the completion of work. Sometimes the requests for these minor edits never end.
Therefore, specify in your contract if there are additional charges for a change in scope.
No. #5. Payment schedule
As much as possible, try to avoid a 100% payment upon completion of a project. Instead, list payments according to milestones, or request for a certain percentage of upfront payment upon signing the contract.
Well, this is because your client can simply refuse to pay you, even after your work is delivered. Also, for small amounts below four figures, it would not be cost-efficient to file a lawsuit against your client, even if you have a contract.
No. #6. What happens if the project is cancelled?
To protect your status as a freelancer, state clearly the amount of compensation needed if the project is suddenly cancelled by the client, especially after you have already started on the project.
No. #7. Independent status and non-exclusivity.
This is important because the one client is not your sole source of revenue. Clarify ahead if the client expects the exclusivity clause in the contract. Also, make it clear in the contract if the contract is a contract for service, or of service.
No. #8. Rewrites and revisions.
Specify the number of rewrites and revisions clearly in your contract. If additional rewrites and revisions are needed, specify how much they would cost.
I hope this article helps you a little in knowing what to look out for when you sign contracts! Do know your rights and negotiate well.
Have fun freelancing, and feel free to email me at email@example.com if you have any questions or doubts. Once again I am no legal counsel, and I certainly hope that my experience can help you avoid certain mistakes that I had personally made. All the best for your entrepreneurial journey, and let’s keep in touch! 🙂