TLDR (Summary)
A contract protects scope, payment terms, and timeline. Without one, there's no documentation to reference when deliverables expand or invoices go unpaid. 72% of freelancers carry unpaid invoices (IEC report), and the ones working without contracts have the weakest position to recover the money.
Plutio ($19/mo) creates contracts from reusable templates with e-signatures built in. The signed contract links directly to the project, so both sides can reference the agreed scope at any point during delivery. Plutio's contract generator produces a ready-to-send document in minutes for freelancers who need a starting point.
Why freelance contracts matter
A freelance contract turns a verbal agreement into documented terms that hold up when projects go sideways.
52% of projects expand beyond original scope (PMI). Without a signed contract, there's no baseline to point to when a client adds deliverables mid-project. The extra work either gets absorbed unpaid, or the client relationship takes a hit from pushing back on something that was never written down.
Beyond scope, contracts establish payment schedules with specific due dates, revision limits that prevent unlimited rounds of feedback, and termination clauses that protect both sides if the project needs to end early. The Freelance Isn't Free Act in New York, which requires written contracts for projects over $800, reflects a broader legal trend toward formal contractor protections, and similar legislation is moving through other states and cities.
The real value of a signed contract isn't just protection from non-payment. The signed document sets the rules for scope, revisions, and timelines so both sides start with the same expectations, and there's a documented reference when those expectations need to shift.
What to include in a freelance contract
A solid freelance contract covers nine clauses that address scope, money, ownership, and exit terms.
- Scope of work: A specific description of what gets delivered. "Website redesign" is too vague. "Redesign of 5 pages (Home, About, Services, Contact, Blog) with responsive layouts" gives both sides a measurable deliverable list.
- Deliverables list: Each individual item the client receives, with file formats and specifications where applicable.
- Timeline: Start date, milestone dates, and final delivery date. A contract with only a final deadline misses the chance to flag delays early.
- Payment schedule: Amount, due dates, and payment method. Common structures: 50% upfront and 50% on delivery, or milestone-based payments tied to deliverables.
- Revision rounds: A specific number (usually 2-3 rounds) with a definition of what counts as one round. Additional revisions beyond the limit get billed at an hourly rate specified in the contract.
- Kill fee: The percentage owed if the client cancels mid-project. Common rates range from 25% to 50% of the total project fee.
- IP ownership: Who owns the work product and when ownership transfers. Most contracts transfer IP to the client upon final payment.
- Confidentiality: What information stays private and for how long.
- Termination clause: How either side can end the contract, required notice period, and what happens to completed work and partial payments.
For a deeper look at how scope documentation connects to the initial pitch, see the proposals guide.
The clauses that matter most are the ones that cover what happens when things change, because scope expands, timelines shift, and projects get cancelled. Without exit terms and revision limits, the hardest conversations end up completely undocumented.
Freelance contract types for different engagements
Different project structures call for different contract formats, and the wrong type quietly creates gaps in protection.
Fixed-price project contract
Best for defined deliverables with a clear endpoint. The contract specifies exactly what gets delivered, the total price, and the payment schedule. Fixed-price contracts protect both sides from surprises, but they require accurate scope documentation upfront. When the scope is vague, the fixed price quietly becomes a trap.
Hourly or retainer agreement
Best for ongoing work without a fixed endpoint. The contract specifies the hourly rate or monthly retainer amount, billing frequency, and minimum/maximum hours. Retainers work well for clients who need consistent availability, like monthly marketing support or ongoing development maintenance.
Non-disclosure agreement (NDA)
Covers confidential information shared during the engagement. NDAs are separate from the project contract and often get signed before the scope discussion begins. Plutio's NDA generator creates a standard mutual NDA ready for e-signature.
Master service agreement (MSA) with statements of work
Best for long-term client relationships with multiple projects. The MSA covers the general terms (payment terms, IP, confidentiality, liability) while individual statements of work (SOWs) define each project's scope, timeline, and deliverables. New projects get a new SOW without renegotiating the master terms.
An MSA negotiated once means every new project with the same client starts with a lightweight SOW instead of a full contract discussion, which saves hours of back-and-forth over terms that were already settled.
Red flags in freelance client contracts
Some contract clauses quietly shift all the risk onto the freelancer, and the ones that go unnoticed before signing can mean months of unpaid or undervalued work.
- Unlimited revisions: No cap on revision rounds means the client can request changes indefinitely. A simple fix is specifying 2-3 rounds with an hourly rate for additional rounds.
- "Work for hire" without adequate pay: Work-for-hire clauses transfer all IP rights to the client from the moment of creation. That's standard for full-time employment, but for freelancers it means giving up portfolio rights and resale potential, which should be priced into the fee.
- No kill fee: When a client cancels after 20+ hours of work have gone into a project, a contract without a kill fee means all that time... just disappears. A 25-50% kill fee clause protects the hours already invested.
- Vague deliverables: "Design assets" or "marketing materials" without specific quantities and formats creates a scope that keeps expanding. Listing deliverables individually with specifications removes the ambiguity.
- IP assignment with no usage limits: Transferring all rights, including the right to resell, sublicense, and modify, without pricing those rights into the fee undervalues the work.
- Payment on "satisfaction": Tying payment to client satisfaction rather than delivery of agreed deliverables gives the client subjective grounds to withhold payment. Payment tied to delivery milestones instead of approval removes that ambiguity.
Every problematic clause is easier to negotiate before the contract is signed. Once the signature is on the document, the advantage shifts entirely to whoever the clause favors.
Contract tools for freelancers
Contract tools handle document creation, e-signatures, and storage, but they differ in how well they connect contracts to the rest of the freelance workflow.
Plutio ($19/mo)
Plutio handles contracts, proposals, projects, invoicing, and e-signatures in a single platform. Contracts get created from reusable templates, sent for e-signature, and linked directly to the project. When the signed scope needs to be referenced during delivery, the original terms are right there alongside the project, not buried in an email thread from two months ago. The Core plan at $19/month includes all contract features with up to 9 active clients.
Bonsai ($25/mo Essentials)
Bonsai offers contract templates and e-signatures on the Essentials plan at $25/month. The Basic plan at $15/month doesn't include contracts or proposals, so the headline price only covers part of the workflow. Contract templates come pre-built for common freelance scenarios, which speeds up creation but limits customization compared to building from a blank template.
HoneyBook ($36/mo)
HoneyBook handles proposals, contracts, and invoicing starting at $36/month. Contracts and proposals can be combined into a single document for client review and signature. The trade-off is that there's no time tracking on any plan, so anyone billing hourly still needs a separate tool alongside HoneyBook.
DocuSign ($15/mo)
DocuSign handles e-signatures and document sending but doesn't create contracts, manage projects, or generate invoices. At $15/month for the Personal plan, DocuSign covers the signature step only. The contract itself still needs to be created in a word processor or another tool.
The biggest gap in most contract workflows is the disconnect between signing and delivery. When the signed scope lives inside the same workspace as the project, the agreed terms are one click away when questions about scope or payment come up mid-project instead of buried in an email attachment.
When to update or renegotiate freelance contracts
Contracts aren't static documents. Treating them as set-and-forget agreements slowly leads to mismatched terms as the work evolves.
Scope changes
When a client requests deliverables not covered in the original contract, a change order documents the new scope, adjusted timeline, and additional cost before the work begins. The change order references the original contract and becomes a binding addendum. Extra work that starts before the change order gets signed falls into the same unprotected territory as working without a contract in the first place.
Timeline shifts
Client delays, feedback bottlenecks, and shifting priorities push timelines past the original dates. A contract amendment that documents the new timeline protects the freelancer from being held to the original deadline when the client caused the delay.
Rate increases
Annual rate increases are standard across professional services. A rate review clause in the original contract, something like "Rates are subject to annual review with 30 days' written notice," sets the expectation from day one. For ongoing retainer clients, the annual rate conversation goes much smoother when the contract already includes the mechanism.
New project types
When a freelancer starts with web design and expands into brand strategy for the same client, the original contract's scope, deliverables, and pricing rarely cover the expanded relationship. An MSA with project-specific SOWs handles this transition without renegotiating the entire agreement each time.
The contracts that create the fewest disputes aren't the ones that try to anticipate every scenario upfront. They're the ones that include a built-in process for handling changes when the unexpected inevitably comes up.
