Client Contracts 101: The Complete Guide for Creative Business Owners
Some of the most frequent questions we get asked and the biggest horror stories we hear relate to client contracts.
That’s why we’re so pleased to bring you this post to help you prepare for those sticky situations before they happen and ensure that your client contract is air-tight.
We’ve received SO many questions on the topic of client contracts, so we’ll be covering those and more today.
Let’s get started, shall we?
Client Contracts 101:
The complete guide for creative business owners
Starting off with the basics…
What is a client contract?
It’s the agreement between your creative business and the clients you serve. Whenever you enter into a business relationship where you’re offering a product or service for sale, you’ll want to have a solid contract that covers all matters of issues that may arise in your specific field.
Can I use a generic independent contractor contract?
This is so important and something that is often overlooked by business owners is using some generic contract that doesn’t cover the specific issues that may arise in your field of work.
Many times creative business owners are working with some extremely generic “independent contractor” agreement.
But does that contract actually cover you?
Let’s say you’re a wedding photographer and you attend a wedding where some guests are acting in an extremely unsafe manner. If it gets to the point where the behavior is so awful, you may need to leave the event, before finishing up your services. But what happens then? You didn’t fulfill the contract. However, you were in an unsafe environment.
This is an example of a time you would want a highly-specific wedding photographer client contract which has a provision covering what happens in the event of you, the contractor, being put in an unsafe working environment due to the behavior of the other attendees.
Similarly, if you’re a graphic designer and design a logo for a client based on their guidelines, and then someone takes legal action against your client for trademark infringement, are you on the hook? You designed the logo. But your client gave your the specific instructions, business name, inspiration, etc.
A generic independent contractor agreement doesn’t cover these unique circumstances because it must apply to a wide variety of businesses.
That’s why it’s so vital to have a contract that was written by an attorney who actually understands the type of creative business work that you do.
If you’re looking for a contract specific to your field of work, take a browse through our shop, we have over 30 creative business-specific client contracts available.
When do I need a client contract?
We understand starting a business from scratch, we’ve done it ourselves! Though a client contract is not something to skimp on, no matter the budget your new business is on. (See examples above for the sticky situations that may arise without a legally sound client contract.)
You need a client contract when you take money from a client.
If money is exchanging hands, it’s time for a client contract.
Are e-signed contracts legal?
We love a good CRM system just as much as the next creative business owner!
Because of the rise in CRMs and therefore the online signing abilities they bring with them, we’re often asked if e-signed contracts are legal and would hold up in court.
The answer is thankfully yes!
With one caveat, while the digital signature is legal, we often see business owners and their clients making other mistakes when signing contracts. Often we see business owners getting the wording of the signature mixed up or having themselves and their clients sign in the wrong order.
For more on how to sign your contract correctly, be sure to also read:
But what about if you’re selling a smaller product or service where a full client agreement isn’t the norm? That brings us to talking about the difference between client contracts and Terms & Conditions.
When do I need a client contract vs a terms & conditions of sale?
To make it as simple as possible, we’ll break this into two circumstances.
If there’s no interaction with the client and you’re selling a passive income style product, then a Terms & Conditions would be appropriate. (Note: There are a few different types of Terms & Conditions (T&Cs). We have a regular Terms & Conditions of Online Sale template, a Terms & Conditions of Online Courses template, and another T&C template coming soon, one for selling website templates.) If you’re selling courses, get the courses T&Cs, if you’re selling a website template, get the website template T&Cs when it comes out, and if you’re selling anything else, go for the general T&Cs of sale.
If there is a client interaction, then a Client Contract that is specific to your service offering would be more appropriate.
Common mistakes with terms & conditions “signatures”
Often times we see websites where their Terms & Conditions of Sale are linked somewhere in the footer, but the client is never asked to specifically agree to them, therefore meaning the client never really “signed”.
In order to “sign” a Terms & Conditions of online sale, the customer must check a box at checkout that states “I agree to the Terms & Conditions” and have the words ‘Terms & Conditions’ linked to the page where those T&Cs live.
Only if the customer has had to check the agreement to the Terms & Conditions box at checkout, is it considered that they have legally signed and entered into that contract with you, the vendor.
So remember, don’t simply have your Terms & Conditions linked on the website somewhere in the footer, you must ALSO have your customer check a box agreeing to the terms when placing their order & checking out too in order for them to legally e-sign your T&C contract.
Is a contract I write myself legal?
We’ll liken this to flying a plane.
Could you fly a plane yourself? Possibly.
Is it a good idea? Probably not.
A contract is so much more than an agreement for X customer to pay Y business for a service to be completed by X date.
A contract is a complex puzzle with many provisions and each provision piece needs to fit with the others in order for the contract to hold up in court.
For example, your entire contract could be thrown out by the opposing council if your Indemnity provision is missing 3 specific words…
The same goes for the Waiver provision and the Sever provisions.
If you have no clue what any of those 3 provisions are or what words are vital to be included, we would highly suggest against writing your own contract.
Is the demo contract in my CRM enough?
We get this question often from creative business owners who use Honeybook, Dubsado, 17Hats, Bonsai, etc.
These demo contracts are really intended to be a starting place, but most won’t hold up in court as they’re much too sparse on vital legal language or are often not worded correctly for exactly what it is that you are doing.
These demo contracts may get you by with your first client, but after that, we recommend investing in an attorney-written, creative-business-specific client contract that will serve you for years to come as your offer your services like the real professional that you are!
In the end, you really want to run your business on solid legal ground by using a contract that a contract-specialized attorney has written.
The contracts in these CRM systems were created with the CRMs clients in mind, they’re written for people who are just getting started in running their business.
They’re intended to be a springboard that allows you to start a business and then you can actually start treating your business like a business with a comprehensive contract that’s tailored to the creative work you do.
What are the basics that my client contract should cover?
For each and every one of our contracts, we have a “What’s covered” section available for you to view. Everything mentioned in that section is what we would suggest you should have covered in your contract.
So feel free to take a moment to browse over the page of the contract template that aligns with your business and compare your current contract to the “what’s covered” section in our contracts.
We’ll link below a few of our client contracts so you can browse through the “what’s covered” section for each. Alternatively, you can browse all of our client contracts here.
Okay, now we have contract basics covered, let’s move along to the bits you’ll need to fill in your contract template.
How much should I define the work I’m doing?
Ready for a very lawyer-like answer?
You want to define the work you’re doing in a specific way, but not have it be so specific that you accidentally back yourself into a corner.
We’ll give some examples to demonstrate what we really mean by this.
Copywriter scope of work example:
Copywriters should be specific about how many words are to be written, the intended turnaround time, and how many revisions are included.
An issue we see copywriters run into frequently is when the client wants to revise the first draft of copy and strikes 500 words on the About page. In that scenario, we don’t want you to have to provide 500 words somewhere else, on say the Services page or Home page.
So you’ll want to be specific about how many words are to be included on each specific page.
Another issue we see copywriters, and honestly, most creative professionals, get stuck with is turnaround time.
We would suggest you word the turnaround time as being based on how promptly the client provides feedback.
So let’s say you told your client “I’ll try to get the first draft to you by April 1st.” Then it’d be suggested that you have stated in your contract that your client has say “3 calendar days to review and provide feedback."
If the client asks for more days, then both parties agree that would extend the deadline and a new deadline would be provided.
Here’s an example of how exactly to state what’s included in the contract:
About page of up to 1,500 words
Sales page of up to 5,000 words
7 sales emails up to 10,000 words
“The copywriter will provide the 1st draft of copy on DATE. The client will have 3 days to review & provide feedback. If the client chooses to strike any portion of for example the about page, they cannot transfer the unused words from one page to another.”
Top 5 common contract mistakes to avoid
When our shop attorney reviews contracts there are 5 things she sees most often which need changing.
Mistake #1:
Trying to make your contract shorter
We find creatives often do this likely in an attempt to not “scare off” their client. But what this often results in is creatives leaving out the actually legally relevant provisions. We want to encourage you that a thorough, lengthy contract both actually protects you and your client AND makes you look like more of a professional.
If anything we see our most successful clients have the longest contracts, because they’ve been around the block in their business for a while, have had issues arise, and have improved and strengthened their contracts with new sections and provisions to protect against those issues in the future.
So don’t try to shorten your contract, often when creatives do this, they delete the sections that are most likely to protect them from future legal action.
Mistake #2:
provisions missing vital wording
In a few provisions, there’s very specific legal language that must be included in them in order for them to hold up. One frequent case of this is with Indemnity Provisions. An Indemnity Provision must have the words “to the fullest extent permitted by law” included.
So be sure to open up your current client contract to ensure those words are in your Indemnity Provision!
Mistake #3:
Owner signing first
Oftentimes we see business owners, the vendor, signing the contract first and then sending it to their client to countersign. It should actually be done in the reverse order, the client signs first, and then the business owner/vendor.
Mistakes #4:
Assigning the wrong effective date
The date the contract is effective from should be the date that the last party signs the agreement.
Often we see this done incorrectly because the business owner signs first (see mistake #3), sets the effective date as that date, then sends the agreement to the client to sign and doesn’t know exactly upon which date the client will sign on.
To account for this, we suggest you prepare the agreement with an effective date of when you know you’ll countersign.
So for example, you could send the contract to the client and let them know they have 3 days to sign. Then you account for 1 day to allow you to countersign. So when writing the agreement, plan for the number of days to give your client to sign and another day for yourself to sign, and state that date in the agreement.
This can also be beneficial from a booking perspective because by giving a deadline to sign the agreement to your client will ensure they don’t dawdle on signing.
Mistake #5:
Incorrectly editing the legal template
The good news is, this one is so easy to fix.
Legal templates tend to come with instructions. For example, all of our templates have the editable bits and instructions highlighted in yellow, like so.
Sometimes we see people forget to take out brackets or the example or editable text.
If you have one of our contracts, we make it easy, before sending your contract off to your client, be sure to edit/take out all the text highlighted in yellow.
If you want to double-check your contract to ensure there are no other mistakes, we definitely recommend downloading a free copy of our Client Contract checklist!
What should I put under governing law location if myself and my client are in two different locations?
You want to ensure that the location is your jurisdiction, as the business owner/vendor. You do NOT want this to be the jurisdiction of the client.
If you’re in the USA, you want to get even more specific than just state and country but also get specific down to the county.
For example, if you lived in Tulsa, Oklahoma you want to define the governing law location as
“Tulsa County, Oklahoma, USA”
Wondering why?
The first reason is practical, in the event of court action, you don’t want to have to travel across the country in order to fight the case and appear in court in say Alaska. If you’re paying for attorneys fees to fight the court case, you don’t want to have to pay for a hotel and travel on top of that amount.
The other reason is that every jurisdiction has slightly different laws and if the governing law location is always your location, you just need to be versed in the laws relevant to your county, not every single location that each of your clients is from.
How specific to my business should my contract be? Will a general independent contractor contract suffice?
If you’re only able to buy one contract ever, you will get the most mileage from the Independent Contractor Agreement.
However, if you are a vendor with 1:1 clients especially, there are nuances to the services you provide that you need to think about. For example, in our Wedding Planning Agreement, we state that the wedding planner must be provided with a meal. That sort of specificity only comes in a contract that’s been tailored to a certain type of service, and language like that wouldn’t come in a more general Independent Contractor Agreement.
At the end of the day, you want to be very specific in your contract about what work you’re providing to your client. So you could get away with an Independent Contractor Agreement at the beginning, but as soon as is reasonably possible, we suggest getting the agreement that’s specific to the type of services you offer.
The reason is, there will be a number of important items which are covered in a contract specific to your services that a more general agreement won’t cover, by nature of it needing to apply to a broad range of services.
In the beginning, an Independent Contractor Agreement is a wonderful starting place, and then down the road, you may take that contract to an attorney who is familiar with your type of creative business and pay them hourly to tweak it to your industry.
Granted, we haven’t met many attorneys who have worked on the back ends of weddings and therefore know the unique situations that arise which need to be covered in a contract, so it’s important that the attorney you choose is well-versed in your industry through contact with other industry professionals or that you educate them on what the potential issues are.
Alternatively, you could get a contract that is specific to your type of creative business from the get-go in our shop, where our attorney Paige Hulse who has a heart for the creative business industry has already reviewed each contract with an industry professional.
If I get an attorney to write me a custom contract, how much should I expect it to cost?
In this case, you’ll pay the attorney hourly for their service, and the price depends on the going rate for attorneys in your area. In California for example, expect attorney’s fees to be $500/billable hour.
What’s a billable hour? It’s every 10th of an hour, so lawyers track every 6 minutes of their day and charge accordingly.
Let’s say for example’s sake that you’re in a less expensive state than California where hourly rates aren’t quite $500/hour.
At minimum you could expect an attorney writing a custom contract to take between 5 - 15 hours, at $200-$400 an hour, resulting in a price of $1,000 - $6,000 for your custom contract.
Is A P.O. Box a legal address for contract purposes?
Yes.
How should I be listed in the contract if I don't want to be known as the company?
Many of our clients want their contracts to come off a little more friendly, and a simple way to do this is to add in your name.
For example, in all our wedding planner contracts anytime we’re referring to the business we’ll state ‘Wedding Planner’ and where we’re referring to the client we’ll say ‘Client’.
You may absolutely change that to be your and your client’s actual names, while still keeping your contract legal.
So for example ‘wedding planner’ may be replaced with ‘Jenny Hope’ and ‘Client’ could be replaced with the client’s actual name, say ‘Sarah Smith and John Ranger.’
The important thing when you do this is that you use the same names consistently throughout the documents, so what you don’t want is to refer to yourself sometimes as ‘wedding planner’ and sometimes as ‘Jenny Hope’ in the same contract.
We’ve put together an example of how the intro paragraph should read, taking into account listing yourself in the contract as your name.
Contracts mentioned in this post:
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