You’ve landed a client! Please take a beat to celebrate your radness before reading on. Ready? Cool. Once festivities are complete, it’s time to talk about contracts: what they are, what they include, and how to create them. Below, we’ll answer all your essential questions about freelance contracts, so you can get to work ASAP.

What is a contract?

First, let’s clarify something: Contracts and proposals are not the same thing. Although they’re often used interchangeably, these two documents serve very different purposes. A freelance proposal acts as an extension of your pitch. It summarizes your action plan and outlines your pricing structure. It’s the step you take before sending over an official contract, and it gives potential clients the opportunity to ask questions and make changes.

A freelance contract is a legally binding agreement required to kick off a business relationship with a client. It will generally reiterate the statement of work included in the proposal, and include all the additional fine print that ensures you get paid. Contracts protect you from liability too, including terms and agreements around payment, confidentiality, intellectual property, and so on. It’s crucial because it removes ambiguity and prevents misunderstandings. Plus, it protects you in the event something bad happens.

Some freelancers do choose to combine their contracts and proposals, so if that works for you, go for it. We prefer to keep them separate, because sending the proposal first encourages a pause—you and your client can consider the scope of work and nail down the plan before proceeding to all the fine print. Plus, combining them can be a bit overwhelming.

Creating a Good Freelancer Contract

The number one rule of thumb: Be as specific as possible. Contracts are designed to protect you, but if you omit important details, they aren’t enforceable. So be thoughtful about the clauses and conditions you state. Once it’s signed by both parties and work commences, you’re on the hook for whatever you’ve promised in writing.

Here are the key elements of a good freelance contract:

• Name the parties.
• Include your scope of work (which is usually in the proposal).
• Include price, payment terms, and penalties for late payment.
• Name deadlines, especially if payment is tied to product milestones (e.g. “25% on December 10 after the first wireframe is delivered; 25% on January 5 when the landing page is live”).
• Define copyright ownership: Who owns the IP?
• Include a termination clause for both you and the client, stating how many days notice is required in order to end the contract.
  Include an indemnity clause.
• Require a signature by both parties.

Your freelance contract won’t cover everything, so your client may ask you to sign a non-disclosure agreement (NDA), a non-compete, or a data protection agreement (DPA) as well. What you sign is always up to you. Just be sure to communicate clearly about what the expectations are. And read the fine print before signing! Unlike every other online contract we mindlessly agree to—you didn’t read your cell phone company’s contract either, did you?—this one is super important, and has very real legal implications. So pop on your reading glasses and get to it.

Have additional questions about how to create a freelance contract? Not sure where to start? It never hurts to contact a lawyer. We’re huge fans of Brittany Ratelle. A talented lawyer for creatives, Brittany can help get your business legally legit without all the confusion and painstaking Googling. Give her a shout if you’re in need of support.

If you’re a Harlow user, you can also use our contract template to make sure you’re covering your bases. You can sign up to use the product here.