Leave nothing to chance; the need for a good contract

Contracts, are they worth it? The answer is yes! Contracts are important to a business because they provide a legal obligation from all parties to fulfill the agreement. So this could mean getting paid on time, or getting paid at all! And as a business, we know that every penny counts. So next time you’re taking a job, make sure you have a contract to work with! It’s an essential. For example, could you imagine doing so much hard work, and nearly finishing a collection, and then the company pulled out last minute, leaving with you no money, and time you’ll never get back… We spoke to Neil Millar, from SENATE Solicitors Ltd to give us some expert advice.

Is it safe for any freelancer to start a job without a contract?

I think that the question should be: “Is it safe for any freelancer to start a job without a written contract?” Contracts don’t have to be in writing (other than in special circumstances such as the sale of land) and therefore any freelancer starting a job / piece of work for a company/business will have entered into a contract simply by agreeing the work to be done and the payment for the work. However, if a contract is not in writing, then if a dispute arises about the terms of a verbal contract, it is a lot more difficult to prove what was actually agreed. With a written contract, each party to the contract should know where they stand. The written contract should set out each party’s rights and obligations.

In your opinion, what is the most important contract to be put in place?

For a freelancer (and indeed the business contracting with the freelancer), it must be the contract for services which the freelancer will supply to the business. For example, the freelancer agreement should, either in the agreement or by reference to an attached project document, set out the services to be supplied by the freelancer, the rates of pay and how and when the payments are to be made. From a freelancer’s point of view, the freelancer would want in the contract obligations on its customer to enable the freelancer to perform his or her obligations under the contract, including general matters such as an obligation to cooperate with the freelancer and also project-specific obligations. There can be clauses to cover payment of compensation to the freelancer if its customer unlawfully terminates or cancels the services agreed to be provided by the freelancer. If there are to be any changes to the project, then provision can be included for agreeing such changes and for payment of additional charges to the freelancer.

Another issue which needs to be covered in the contract is the rights in any material produced under the contract. Will they belong to the freelancer or its customer? If the freelancer is using any materials in which it has existing intellectual property rights, then those need to be protected. If the customer is supplying to the freelancer materials for the freelancer to use in providing the services under the contract, then the customer should warrant that it has the rights to those materials and indemnify the freelancer in respect of any claims by any third party in relation to those materials.

The freelancer would want included in the agreement a limitation of liability and very limited warranties as to the services provided by the freelancer, so that he or she is not at risk of very large claims from the customer if there are any issues arising out of the freelancer’s performance of the services under the contract.

There are various other clauses that need to be considered, but this gives you an idea of the most important clauses.

Other potentially important contracts may include contracts of insurance, for the freelancer to protect him or her from claims in respect of the services the freelancer provides.

What are the benefits of choosing to work with a solicitor?

The benefits are probably set out in the answer to question 2 above. A solicitor can draft a tailor-made contract for the freelancer protecting the freelancer’s business and reputation. Having a properly drafted contract also provides a freelancer with credibility when approaching customers for work.

There is often a temptation, particularly where money is tight, to copy contracts or parts of contracts. This should be resisted – firstly because it is a breach of copyright, and also because how do you know whether the contract is upäóïtoäóïdate and reflects the current law? I have seen, time and again, businesses which have copied contracts or parts of contracts, resulting in a contract or agreement which does not make sense, and in some cases may do the opposite of what the copier intended. Where a contract or part of a contract is ambiguous or unclear, it is a recipe for disputes ending up in Court. It then becomes apparent that the cost of having a contract properly drafted at the outset is only a fraction of the cost of a dispute upon the contract.

Often, however, it will be the customer which will provide its own contract to the freelancer and require the freelancer to sign it. That contract will have much the same clauses as set out above, but will be drafted from the customer’s point of view. Taking a solicitor’s advice upon the terms of those contracts is likely to be money well spent. The solicitor can point out the freelancer’s rights and obligations under the contract and identify any pitfalls. The freelancer can then take an informed decision as to whether to negotiate upon the terms of the contract (which the solicitor can also do for the freelancer, if required) or whether to accept the contract, being aware of the impact of any terms of the contract and the likely risks.

One final note:

Whether you are choosing a new accountant or web designer to work with Fashion Rider always recommends you do your research and consider all your options.

If you’re still unsure don’t forget Fashion Rider is here to help. Please don’t hesitate in getting in contact and let us take the stress out of if for you. Also if there are any different areas we can help in just let us know.

What is your experience of working with or without a contract?

contact@fahionrider.com

0161 3008 794

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