You have your own Terms of Business, but what happens when a client wants you to sign theirs instead? Signing a client contract can feel daunting, particularly when you don’t know what you are being asked to agree to.
You sent your Terms of Business to a new client. They set out how you work, when and how you get paid, what happens if plans change and all the other things you need to agree with a client.
Then the client comes back and says they won’t sign yours. They want you to sign their contract instead.
And what’s worse it is written in legal jargon and doesn’t seem to make a lot of sense.
That can feel daunting. You may be worried that asking questions about their contract will make you look difficult or even lose you the work.
At the same time, signing something you don’t understand isn’t a great option either.
Why does your client want you to sign their contract?
Sometimes there is a perfectly sensible reason. An agency working with 20 freelancers may need everyone working on the same terms. It would be difficult to manage a team if every freelancer were working under completely different contractual arrangements.
A larger organisation may have a policy that all suppliers work under its standard contract. You may have a great relationship with the person who wants to hire you, only for someone in Legal, Finance or Procurement to say that the organisation won’t sign your Terms of Business and you need to sign theirs.
That doesn’t mean their contract is right for you. And it doesn’t mean it is wrong for you either.
Before signing a client contract, you need to understand what you are agreeing to.
You may decide to sign it. You may ask for something to be changed. You may decide the work isn’t worth the risk. Or that if that is the deal you need to put your prices up to cover their slow payment and liabilities.
And if your policy is that you only work on your own Terms of Business, you can say no. But it is still a good idea to measure the gap between your terms and theirs.
What you don’t need to do is panic because the contract has arrived looking terribly official and full of legal language.
Start by checking the basics
Before you get lost in the legal language, check that the contract actually describes the deal you think you are doing.
- Are you and your client correctly identified? Check the company name and number where appropriate. We regularly see contracts where even the client themselves has not been correctly identified.
- Does it accurately describe the services you are providing, the price and how and when you will be paid?
- Have they sent you all the schedules, appendixes, policies and other documents the contract says form part of the agreement? It is surprisingly common to receive only part of a contract, or to be referred to policies on an internal system you cannot access.
- And check which law and courts apply. We still regularly see contracts that simply say “UK law” or “UK jurisdiction”. The UK has three separate legal jurisdictions: England and Wales, Scotland, and Northern Ireland. “UK” doesn’t tell you which one the contract means.
A long contract with lots of legal language is not necessarily a good contract. It can still contain mistakes, missing documents and terms that make very little sense for the work you are actually doing.
Then look at what the contract is asking you to promise
Some client contracts are designed for substantial suppliers undertaking projects worth hundreds of thousands of pounds. The same standard contract can then be sent to a freelancer doing a few days’ work.
That is where you need to look beyond how impressive the document appears and understand what the words actually require you to do.
Here are some of the things to look out for.
1. Warranties
A warranty is a promise that something is true.
If you are being asked to warrant something, make sure it is something you can genuinely promise. A contract can contain warranties about everything from ownership of intellectual property to compliance with policies and procedures.
Be particularly careful about promising compliance with documents you haven’t been given or things that aren’t within your control.
2. Indemnities
An indemnity is, broadly speaking, a promise to meet particular losses if something goes wrong.
Don’t be frightened by the word, but don’t skim over it either. Look at what you are agreeing to indemnify the client for, whether there is any limit on that liability and whether it bears any sensible relationship to the value and risk of the work.
It is also worth checking contractual liabilities against your professional indemnity insurance. A contract can make you responsible for things your insurer isn’t prepared to cover.
3. Cancellation and termination
What happens if the client cancels the work?
A client may want you to reserve substantial amounts of time but also give themselves the right to cancel at very short notice without paying you.
Also check how either side can end an ongoing arrangement, what notice has to be given and what happens to work and fees when the contract ends.
4. Payment
“30-day payment terms” do not necessarily mean you will receive your money 30 days after sending your invoice.
Check when the payment clock actually starts. It might depend on an approved invoice, a purchase order, acceptance of the work or the client’s own payment run.
Also look for rights to withhold payment, make deductions or set money off against amounts the client says you owe them.
5. Changing the contract
Look at how changes to the contract have to be agreed and who has authority to agree them.
There is little point having a friendly conversation with your day-to-day contact about changing a troublesome clause if the contract says amendments are only valid when agreed in writing by someone else.
6. Other documents incorporated into the contract
Words such as “incorporated”, “policies”, “schedules” and “appendices” deserve attention.
Those other documents can form part of what you are agreeing to just as much as the pages in front of you.
If the contract refers to a supplier policy, security policy, data policy or other document, ask for it. If there is a link, make sure you can actually access it.
You can’t make an informed decision about terms you haven’t seen.
7. Entire agreement clauses
An entire agreement clause will usually say that the written contract contains the agreement between you.
That matters if you have agreed something different in emails, proposals, conversations or your own Terms of Business. Don’t assume those other arrangements will continue to apply once you sign the client’s contract.
And don’t try to solve the problem by simply signing both contracts. If both documents cover the same work but say different things, you may create uncertainty about which terms apply.
We explain that problem in Why You Should Never Sign Two Contracts for the Same Work.
8. Copyright and intellectual property
This is an area where you really do need to read the words carefully.
There is an important difference between giving a client appropriate rights to use the work you create for them and assigning ownership of all your intellectual property.
A badly drawn clause can be wide enough to catch your existing materials, methods, templates and other things you use across your business. If you rely on them to work for other clients, giving them away could cause a very serious problem.
Also check when any transfer of rights happens. A clause that transfers ownership as soon as work is created leaves you in a very different position from one linked to the client actually paying for it.
Contracts are also increasingly dealing with the use of AI and other tools. If yours does, read what you are being asked to promise about how you work, confidentiality, data and intellectual property rather than assuming an AI clause is harmless.
9. Confidentiality
Most businesses have perfectly sensible reasons for wanting their confidential information protected.
But check what the clause actually covers, how long the obligations last and what you are being prevented from doing.
Sometimes a document described as an NDA contains considerably more than a straightforward promise to keep information confidential.
If a client has sent you one, read Should you sign an NDA from a client? before treating the title of the document as a description of everything inside it.
10. Restrictions, branding and working for other people
Look for restrictions on who else you can work for, whether you can mention the client in your portfolio or client list, and how you can use their name or branding.
Some restrictions are perfectly reasonable. Others are drafted so widely that accepting them could make it difficult to work for anyone else in your market.
Again, the question isn’t simply whether the clause exists. It is what it means for your particular business.
What if you don’t like something in the client’s contract?
You don’t necessarily have to choose between signing without question and dramatically refusing the work.
Ask questions
If the client has rejected your Terms of Business, one useful question is:
“What does your contract cover that mine doesn’t, and why do you need me to sign yours?”
Sometimes there is a good answer.
Sometimes the person who sent the contract has no idea why a particular clause is there. Sometimes Legal or Procurement will change something that is obviously inappropriate for the size or nature of the work.
And sometimes the answer really is: these are our terms and we won’t change them.
You can then decide whether you are prepared to work on that basis.
The earlier you sort this out, the easier that conversation tends to be. Asking sensible questions while everyone is setting up the work is very different from discovering a serious problem the day before you are supposed to start.
You are allowed to decide the contract isn’t for you
There is nothing wrong with having a “my business, my terms” policy. Plenty of freelancers decide they will only work on their own Terms of Business.
There is also nothing wrong with deciding to work under a client’s terms.
What matters is that you make that decision deliberately rather than signing because you’re frightened that asking a question will lose you the client.
A big company sending you a very long contract can feel a bit David and Goliath. But you don’t need to defeat Goliath. You just need to understand the deal you are being offered and decide whether it works for your business.
Need help comparing their contract with yours?
If you’re a KoffeeKlatch customer and you’re currently in support, you can ask questions about your KoffeeKlatch documents in the Customer Support Group.
But if a client has sent you their contract and you need to understand how it differs from the KoffeeKlatch Terms you can purchase a Client Contract Comparison designed for exactly that situation.
We compare the client’s contract with your KoffeeKlatch Terms and give you a traffic-light summary showing the important differences, so you can see what has changed and decide what you want to do next.
