Create Your Contract

5 minutes

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Create Your Contract

Design trumps willpower. B.J. Fogg, Stanford psychologist

For smaller, lower-risk jobs, include a section at the end of your proposal that says, “If this proposal is executed, it becomes the agreement,” with a dotted line for both parties to sign. Keep in mind that it may not hold up in court, so this solution is for smaller jobs with known clients, and it is only a viable option if your proposal is impeccable, with a very clear scope of work.

Whichever option you choose, don’t start working until the agreement is signed.

caution If this is a bigger job (meaning that failing to collect the full fee would jeopardize your business), then you need a full contract, and you need legal counsel.

I, your humble author, am not a lawyer, and thus this chapter does not constitute legal advice. My lawyer’s name is, incredibly, Art. He speaks in facts, and he drives a Porsche 911. His hourly rate is not low, but there are good reasons I’m OK with that:

He’s good at what he does and I learn from him. For every dollar I give him, I get knowledge that saves me two future dollars. He doesn’t waste time. He makes just enough small talk so that you know he’s a real person, and the rest is business. He’s the one who got our money from the nightmare client from the start of the book, and he continues to save the day as needed.

You can pay a lawyer to draft you a contract from scratch, or you can be resourceful and find a great template, personalize it as best you can based on the type of services you provide, and then pay a lawyer to refine as needed.

Stress to your lawyer the importance of making the contract as succinct as possible (long contracts intimidate clients and delay forward progress) without leaving you vulnerable. I failed to do this once with a previous lawyer, and as a result ended up with a ridiculously verbose contract. I had to pay Art a thousand bucks to make it two pages shorter. It was worth it—clients sign quickly now.

The contract overview looks like:

  • A few pages of normal contract content, setting up the basic rules of engagement, trade secrets, intellectual property, term, and termination. This section normally ends with “responsible parties” (you, and the person you’re reporting to) and signatures. The remaining aspects of the contract are addenda.

  • Exhibit A, the work order. This outlines the services and scope, and in some cases can be copied, or summarized, from your proposal and SOW. If you require special things from your client in order to do this job properly, list those things here.

  • Exhibit B, the payment schedule. This is a more detailed version of the payment schedule you outlined in the proposal. It also includes the agreed rules about travel fees and expenses. These travel expenses, along with any other expenses you expect to incur (such as shipping, purchasing materials, reference samples, etc.) don’t need to be pre-calculated, but their existence should be acknowledged up front and they must be reimbursed within a short period, such as 15 days. You are a creative professional, not a bank for your client to borrow from.

  • Lastly, late fees. I recommend applying a 2.5% to 5% fee to late payments, and this late fee should compound monthly. (Recognize the difference between having a late fee policy and actually exercising it. Be careful and use friendly, human judgement. It’s there to signal professionalism and protect you from flagrant abuse—not to sour a partnership with an otherwise great client who accidentally paid four days late.)

If you can, send the contract electronically, giving the client the fewest possible reasons not to sign quickly (“I don’t have a printer handy” is a common one) so you can get started.

Proposal Checklist

  • Quote the Job

    • Start with covering your own costs.
    • Add a margin based on the industry standard retail value of the work.
  • Write the Proposal

    • Include:
      • Scope
      • Phases
      • Key dates
      • Touch points
      • Fee quote
      • Name of contact
    • Create an agreement with your client around timing of payment.
  • Create a Contract

    • Remember: For small jobs, a signed proposal is good. For big jobs, you need a full contract; have your template ready so it’s quick and easy.
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