Why is it important for freelancers to have a legal contract with their clients?
By: Priyam Agarwal
Tags: Law For Freelancers, Designers, Freelancing, Freelancers, Law

The last decade saw an increase in the number of freelancers in India. The world is waking up to the nuanced ways in which technology has altered the business models for us, people can work from across the borders, companies can optimize their resources when they choose to hire a freelancer rather than a full-time employee, and with this, we can only expect a major boom in the freelancing industry with the number of freelancers whether they are designers, writers, photographers or consultants growing exponentially every year.

While the world of a freelancer looks glittery at first, it might get stormy as soon as you dive in it. As a freelancer, you might be familiar with the feeling of flying without a seat belt. On any given day a client shall call you and ask for a project to be done(especially if you are designer or writer) and you would enter into a verbal agreement with the details concerning the work and the payment terms and get hustling to deliver the project. In some cases you might be lucky to have a written agreement in the form of an email, thus leaving a lot of unsealed and grey areas relating to extra work, rework, ownership rights, timely payments among others.

That is why it is highly recommended to have sign a contract with your clients which includes the terms of all your important concerns. Let us see some of the important points that should be covered by your contract

Scope of work

It cannot be sufficiently stressed on how important it is for freelancers to reduce in writing as to what services will be provided by you and if possible what services would not be provided. Clearly mentioning the scope of your work for the given project helps you not only structure your project but also saves you time and energy when the clients asks you to do extra work, thus making your work extremely efficient.

2. Payment

The terms of payments will be determined based on the model of your work and the monetary necessities around it. There are different ways to charge your client such as pre-decided rate, variable range or through retainers

Often times it is standard practice to pre decide the cost of the project based on the deliverables which remain fixed, however this leaves a lot of room for overwork. The other common practice is to give your clients the cost of your services or your hourly rates, this also helps you avoid doing latent work free of cost. Another effective way is to get into a retainer ship from your client, ie. a fixed amount of payment per month for a client who has regular work, this saves you and the client the hassle of negotiating the terms every time you work with them and ensures that you have a regular flow of income and the client a reliable source to meet its need.

Further, it cannot be stressed enough on how important it is for you to ensure that your client pays an upfront deposit to you. This serves a lot of purposes including giving you a source of income till the work is delivered and also ensures that the client does not ghost you just before completion of work.

In addition to the standard payments, the contract should also mention if there are any miscellaneous expenses incurred by a freelancer, example-traveling and in some cases accommodation then whether they will cover for such expenses.

3. Intellectual Property Rights

As soon as a freelancer especially if you are a writer, designer or photographer, reads or hears about companies fighting over any intellectual property infringement, they try to understand on how might it affect them in future; but unfortunately, we as humans let our humane tendencies take the better of us prefer to go about our next project forgetting about it all. A clause in the contract stating the ownership right to intellectual property might not indemnify you against all possible future legal battles, but it will definitely cause to give you some sense of relief by reducing the chances of potential disputes regarding ownership and usage of such Intellectual Property

4. Taxes/Returns

How many times has your client deducted TDS on your invoice? Well, the clients are required by law to deduct this amount because they have no way of ascertaining your income in a financial year. However, do you know that you can claim, if not all, then at least a part of this amount? Therefore, it is important to clearly write in your contract that they will provide you with a TDS certificate, In addition to this, there might be other applicable provisions of law based on your annual income model of work, like cross border service, GST etc. and therefore it is suggested to reduce the same in writing in order to prevent any future conflict.

In addition to the above important clauses, freelancers should also add indemnity clause, dispute resolution clause among others. At the end of the day, what we want with our clients is to build a long-standing relationship, we want them to hire our services again and refer us to potential clients in the industry. One important way to do that in addition to our work is professional and preventing any untoward conflicts.

A small agreement can help you achieve this, which brings me to another important point, that is, most freelancers cannot afford the services of a lawyer while they are starting out, and honestly, you if you are starting out you need a simple template which can be easily found on the internet. And in case you want me to send you a free template, please drop me an email here, and I will be more than glad to help you out. However, do not just jump into the ship without an agreement and always ask what your WORK IS WORTH!