How to create a solid client contract covering scope of work, payment terms, intellectual property, liability, termination, and dispute resolution for freelancers and consultants.
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Parties and Scope of Work
Identify both parties with legal names and contact information
Use the client's legal entity name (e.g., 'ABC Corp, LLC'), not just a person's name. Contracts with individuals are harder to enforce against a business. Verify the entity name with the state's Secretary of State database.
Define the scope of work with specific deliverables
List every deliverable, including quantity, format, and quality standards. Vague scope like 'marketing strategy' leads to disputes. Specific scope like '20-page marketing strategy document with 3 campaign concepts and a 12-month timeline' does not.
List each deliverable with format and specifications
Define what is explicitly NOT included in the scope
Set project milestones and deadlines
Break the project into 3-5 milestones with specific dates. Tie payment installments to milestones, not just the final delivery. Include language that adjusts deadlines if the client is late providing required materials or feedback.
Specify how scope changes will be handled
Include a change order clause requiring written approval for any additions to scope. State that changes will be quoted separately and may adjust the timeline. Without this clause, clients will expand scope without expecting to pay more.
Payment Terms
State the total project fee or rate structure
For fixed-fee projects, state the total amount. For hourly work, state the rate and estimated range of hours. For retainers, state the monthly fee and included hours. Ambiguity about money is the number one cause of freelancer-client disputes.
Define the payment schedule and due dates
Common structures: 50% upfront and 50% on delivery, or 33% at signing, 33% at midpoint, and 34% on completion. Never start work without at least 25-50% upfront. Invoices should be due within 14-30 days of receipt.
Specify the upfront deposit amount
Tie remaining payments to milestones or dates
Include late payment penalties
Standard late payment terms are 1.5% per month (18% annually) on overdue balances. State that work will be paused if payment is more than 15 days late. Without penalties, 29% of freelancer invoices are paid late.
Specify accepted payment methods
List the payment methods you accept: bank transfer (ACH), wire transfer, check, or digital payment platforms. Note who pays processing fees — credit card fees of 2.9% on a $10,000 project cost $290.
Address expenses and reimbursement policies
Specify whether expenses (travel, software, materials) are included in your fee or billed separately. If billed separately, require pre-approval for expenses over a threshold (e.g., $100) and submit receipts within 14 days.
Intellectual Property and Confidentiality
Define who owns the work product
By default, freelancers own the copyright to their work until it is assigned in writing. If the client wants full ownership, include a clear assignment clause that transfers rights upon full payment — not before.
Specify your right to use the work in your portfolio
Include a clause allowing you to display the work in your portfolio and marketing materials. Without this, you may not legally show the work to prospective clients. Most clients agree to portfolio use if you ask.
Include a confidentiality clause
Protect the client's sensitive business information with a mutual NDA clause. Typical terms: 2-5 year duration, covers proprietary information shared during the project, and excludes information that becomes publicly available.
Address use of third-party materials
If your deliverables include stock photos, open-source code, or licensed fonts, specify that these retain their original licenses. The client should understand they are receiving a license to use these materials, not ownership of them.
Liability and Warranties
Limit your total liability to the project fee
Without a liability cap, you could be sued for damages far exceeding what you were paid. Standard language limits total liability to the amount the client paid under the contract. Courts generally enforce reasonable liability caps.
Include a warranty for your work
Offer a 30-60 day warranty period to fix defects or errors in your deliverables. This reassures clients while limiting your obligation. Specify that the warranty covers defects against the agreed specifications, not new requirements.
Add an indemnification clause
Each party should indemnify the other against claims arising from their own actions. For example, you warrant that your work does not infringe on third-party rights, and the client warrants that materials they provide are legally theirs to use.
Termination and Dispute Resolution
Define conditions for contract termination
Allow either party to terminate with 14-30 days written notice. Specify that the client pays for all work completed up to the termination date. Clarify whether the upfront deposit is refundable or non-refundable if the client terminates early.
Set the required notice period for termination
Specify what happens to work-in-progress upon termination
Include a kill fee for early termination
A kill fee (typically 25-50% of remaining project value) compensates you for turning down other work to accommodate this project. It is standard practice in creative and consulting industries.
Choose a dispute resolution method
Mediation costs $2,000-$5,000 and resolves 80% of disputes. Arbitration costs $5,000-$15,000 but is faster than court. Litigation can cost $50,000+ and take years. Specify that disputes will first go to mediation, then binding arbitration.
Specify which state's laws govern the contract
Choose your home state as the governing law — this means any legal proceedings happen in your jurisdiction. For remote clients in other states or countries, this prevents you from having to travel for legal disputes.
Have an attorney review your template before first use
A contract review costs $300-$800 for a freelance-level agreement. This is a one-time cost for a template you will reuse dozens of times. An unenforceable clause can cost you thousands when a dispute arises.
Frequently Asked Questions
Do I need a lawyer to write a client contract?
For a basic freelance or consulting contract, no. Reputable templates from LegalZoom, Bonsai, or AND.CO cost $0-$50 and cover standard terms. However, if you are signing contracts worth $25,000+, working with enterprise clients, or dealing with complex IP ownership issues, a business attorney ($200-$500 per hour) should review or draft the agreement. A poorly written contract can cost far more than legal fees if a dispute arises.
What is the most important clause in a freelance contract?
The scope of work clause, because it defines exactly what you will and will not deliver. Scope disagreements are the leading cause of freelancer-client disputes. List every deliverable, format, revision limit, and deadline explicitly. If a client asks for work outside the scope, the contract gives you grounds to negotiate a change order with additional fees rather than absorbing free work.
Should I include a kill fee in my contract?
Yes. A kill fee (also called a cancellation or termination fee) protects you if a client cancels the project after you have blocked time or turned down other work. Standard kill fees are 25-50% of the remaining project value. For example, if a $10,000 project is cancelled after $3,000 of work is delivered, a 50% kill fee on the remaining $7,000 means the client owes you $3,500 plus the $3,000 already completed.
Who owns the work product before the client pays in full?
This depends entirely on what the contract says. Without a clear clause, copyright law in the U.S. defaults to the creator owning the work (unless it qualifies as work-for-hire). Many freelancers include a clause that transfers IP rights only upon full payment — this gives you leverage if a client withholds final payment. License-based models, where you grant usage rights instead of ownership, are becoming increasingly common in creative fields.
How do I enforce a contract if a client does not pay?
Start with a formal demand letter citing the specific contract clause and amount owed. If unpaid after 30 days, you have three options: a collections agency (they take 25-50% of the recovered amount), small claims court (for amounts under $5,000-$10,000 depending on the state, filing costs $30-$75), or a business attorney sending a legal demand ($300-$800). Including an attorney fees clause in your contract means the losing party pays legal costs, which deters non-payment.