Five Risks in Freelance Contracts — From a GC Who Has Seen Thousands
Five red flags in freelance contracts that cost people real money
Right. Let me tell you about my friend.
She is a talented designer. Ten years of client work, strong reputation, never had a serious problem. Last year she took on a project with a new client — a well-funded company, professional-looking brief, good rate. She was pleased to get it.
Six months later she had not been paid. She had not been allowed to show the work in her portfolio. And she had discovered she was banned, by a clause she had barely registered, from working for any company in the same sector for twelve months.
She had signed those terms. They were in the contract. She just had not read them closely.
I have seen this pattern so many times. Not because freelancers are careless. But because contracts are long and intimidating, the important parts are buried, and when you are excited about a new project, reading the small print feels like it can wait.
It cannot. Here is what to look for.
Risk 1: You do not actually own your work
Most freelance contracts include an intellectual property clause. Many say that all work produced under the agreement becomes the property of the client. That can be a reasonable commercial position. The problem is what gets assigned alongside it.
There are three things most people never check.
Moral rights. You created the work. You have the right to be identified as its author, and to object if it is altered in a way that damages your reputation. These rights exist in law, but clients routinely ask you to waive them. Most freelancers sign that waiver without noticing it is there.
Background IP. The tools, processes, code, frameworks and methods you owned before this project started — your working toolkit — can get swept up in a broadly drafted assignment clause. Once assigned, it belongs to the client. You could find yourself unable to use your own methods on the next project.
Portfolio rights. Even where ownership of the finished work transfers, you can ask for the right to show it publicly, reference it as a case study, or use it in pitches. Most contracts do not include this. Most clients will agree to it if you ask. But you have to ask before you sign, not after.
What good looks like: the IP clause assigns the finished deliverables only. It carves out your background IP explicitly. It preserves your moral rights, or limits the waiver to specific uses. And it gives you a right to reference the project in your portfolio. Four protections. Most contracts contain none of them.
Risk 2: They can walk away without a reason, and you are left with nothing
Termination for convenience is standard in many client contracts. It means the client can end the project at any time, for any reason, with a few days’ notice.
What is rarely included alongside it is a kill fee. Compensation for the work you have already done, the time you have blocked out, the other projects you turned down.
Without a kill fee, you absorb the entire cost of their decision to stop. That is not a minor inconvenience. If you blocked out four weeks and they cancel on Monday, you have lost four weeks of revenue with no recourse.
What good looks like: a kill fee clause that pays a percentage of the remaining contract value, calculated on notice given. The shorter the notice, the higher the fee.
Risk 3: The payment clause gives them all the power
There are two ways a payment clause can be written to work against you, and many contracts contain both.
The first is a satisfaction trigger. “Payment due upon satisfactory completion of all deliverables.” This sounds reasonable until you think about who defines satisfactory. The client does. Which means the clock on your invoice does not start until they decide it should. I have seen this used to delay payment for months — not because the work was poor, but because the client had other priorities, or budget problems, or simply no urgency to sign off.
The second is ownership on delivery. If the IP clause says work transfers to the client upon delivery, you have handed over the asset before a penny has changed hands. The client now owns the work whether they pay you or not. You have no leverage.
These two clauses together - satisfaction-triggered payment, and ownership on delivery - are a very effective way to ensure the risk sits entirely with you.
What good looks like: payment triggered by delivery of agreed deliverables, not by the client’s satisfaction. A defined approval window after which payment falls due regardless. And IP transfer upon receipt of full payment, not on delivery. Those five words change everything about who holds the power when the invoice is due.
Risk 4: The NDA is covering your whole career
Non-disclosure agreements are normal. Most client work involves confidential information and it is reasonable to protect it.
The problem is when the NDA is drafted so broadly that it restricts you from discussing your own work, in contexts that have nothing to do with the client’s confidential information.
A clause that prevents you from including the work in your portfolio. A clause that prevents you from naming the client as a reference. A clause that effectively bans you from your own sector for a year.
These are not designed to protect confidentiality. They are designed to control your future.
What good looks like: an NDA that is specific about what is confidential and what is not. Portfolio use, case studies, and client references should be explicitly addressed.
Risk 5: The liability is unlimited, and it is all on you
Many client contracts include indemnity clauses that make the freelancer responsible for any loss, cost, or damage arising from the project.
Read that slowly. Any loss. Any cost. Any damage.
If a piece of copy has a factual error and the client faces a complaint, you could be on the hook. If the website goes live with a bug and the client loses a sale, you could be on the hook. If the project is late for reasons that are not entirely your fault, you could be on the hook.
Unlimited liability clauses are not rare. They are common. And most freelancers sign them without noticing.
What good looks like: your liability capped at the value of the contract. Anything beyond that is a risk you have not been paid to carry.
My friend has a new contract template now. She reads everything before she signs it. She asks questions. She adjusts terms where she needs to.
She told me it felt awkward at first. Like she was being difficult.
I told her: understanding what you are agreeing to is not difficult. It is just business.
Before your next contract, find out what it actually says.
Louise
Originally published at beforeyousign.uk