You’re an independent contractor? You’d better know how to make a contract. Not only is making a contract something you should know, but it’s also a great way to protect yourself.
What is a contract?
A contract is an agreement that is legally enforceable by a court. For a contract to be made, there must be an offer, acceptance, and something called “consideration.” In legal terms, “consideration” just means that there must be something given in return (read more).
What should I put in a contract?
Here are some things you should write in your contract:
- What are your obligations? As the contractor, what are your obligations to your customer, the contractee? What work will you perform? In what period of time will it be done?
- What are your client’s obligations? What are the obligations of your contractee? Do they need to provide input to help you perform your duties? How should they pay you? Do you need a deposit? When should they pay you?
- When is the date of delivery? List dates for everything: when you must perform your duty by, when they must pay you, etc. If you don’t list dates, there’s no rush to finish the work and there’s not going to be a rush for you to get paid. I give a lot of my clients 2 rounds of revisions when I design a site. I want to stay on track with my schedule, so if they don’t respond in time, I state that they forfeit their revision.
- Insert contingency clauses. What if the work turns out to take longer than previously thought? You should always ask yourself this. Insert a clause into your contract to protect yourself from what might turn out to be a time sink. I once agreed to help a client troubleshoot his website for a fixed fee. It turned out that their website was horribly designed and I ended up taking three times as much time doing the job than I expected. If you have leverage with your clientele, then just state that you will take y hours to do the job. If the job ends up taking 20% more time than expected, both parties will agree to re-work the contract. If you end up taking less than z hours, you will give them a discount. This clause is meant to make things fair for you and your client.
- Warranty. This is very important for any product or service-related business. You can’t do business if your customers don’t trust you. So, add a warranty clause to give them some peace of mind. For my web designs, I give a 60-day warranty. After I submit the final version, the client has 60 days to spot any errors or point out things that I forgot. The client must contact me promptly and I will correct it within 2 days. As you can see, time is very important.
Do I need a lawyer?
A lot of people overestimate what lawyers do and how simple the law actually is concerning contracts for doing business. Don’t just start writing a contract though – you should either search for or buy a legitimate contract template. These contract templates or contract examples will cover the important parts. Whether you’re a web designer (like me) or you’re leasing property, you will save time and money by just searching for a proper template. If you’re really paranoid about your contract, then you can always hire a lawyer to review it, which is still much cheaper than having him write one up for you.
Why should I make a contract?
When you’re selling goods for $500 or more, you’ll need a contract signed by your client. Verbal contracts are no good for anything above $500 (please read more about The Statute of Frauds). Even if the contract is under $500, I would still recommend taking the time to make the contract and get a signature.
Forget the legal stuff for a moment – making a contract shows people that you are serious. Furthermore, a contract helps people think of all the little things, like who pays the excise tax. The best thing about contracts is that it helps you weed out people who aren’t serious (the flakes). Trust me, there is a big difference in commitment between agreeing to do business and actually signing a contract.
Cover Your Time Liability
As a web designer, I have the job of designing a website that is appropriate for my client. Sometimes though, my work does not turn out to be what my client had in mind. For this reason, I usually offer 2 rounds of revisions. ONLY 2.
“If you give a mouse a cookie, he’ll ask for a glass of milk.”
In web design, I have come across many clients that are like the mouse – they just keep asking for more. Mainly, these clients ask for small little changes here and there. I never get annoyed at my clients though – I just tell them to write down all the changes they want and to give it to me once, because I don’t work otherwise.
Clients always want something changed, but I don’t want to constantly answer their requests, so offering finite services is important. If you don’t put a limit on your time, then the client might keep asking you to make the logo smaller, move the text a little to the right, make the background “pop” a little more, and they will just embark on a never-ending journey of demands and indecision.
So, cover your bases and make sure that whatever you’re offering, make it finite. It doesn’t matter if it’s a warranty, revisions, adjustments, support – either make it a certain amount or have it expire after some time. Cover your time liabilities. Both you and your client will appreciate it in the end.