What NOT to miss in freelance contracts
Disappointingly for contract, self-employed or freelance consultants, the devil is too often found hiding in four key areas of the agreement:
Failure to specify “the Services"
In simple terms, if the services to be provided are not properly set out in a contract, the work the client demands may not match the payment promised. Often contracts just state “consultancy services” in a particular field and the demands of the client can change and expand. When on a daily rate, this may be acceptable, but when on a fixed price, the failure to specify the job can be costly.
Setting payments for projects is relatively easy but many times there is just a daily rate stated in contracts. Does this mean day or part of day? How long is a day? Often these issues give rise to disputes, especially when freelancers submit full-day invoices for 20 minutes call-out work, which could have been easily avoided by being specific in the contract.
Rights of substitution
This right assists with avoiding adverse tax consequences. It allows the freelancer to supply the individuals they want under the contract. Clients do not like this and often clients and agents will try to fetter substitution rights by requiring client approval. This should be avoided at all costs. Fettered rights can make the services provided personal and personal service provision/mutual obligations fall foul of IR35. Clients should pay for the service and product, not the person.
Make sure it is clear who will own what. If you retain the ownership of anything you produce under a contract, agree the terms under which the client will use this going forward. Ask yourself: will they pay going forward? Will they use your property under a free licence forever? Be very careful when providing services and products of your own creation without agreeing the terms. Too many freelancers lose their IP and their marketability by handing over the product that made them desirable in the first place.
David Buckle, head of the employment practice at Cubism Law.