8 Things You Should Include in Your Terms of Service Agreement

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8 Things You Should Include In Your Terms of Service Agreement

Gary Horsman |


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Dealing with Clients| June 20th 2012

69 Comments

If youve been a solo freelancer for any significant stretch of time, youveprobably learned the hard way that a work project can go horribly wrong. Theyturn out to be life lessons in the long run, but there are ways to protectyourself.Working with bad projects or bad clients generally boils down to mismatchedexpectations and inadequate communication. Your best safeguard is to make sureyou and your client are on the same page before any work has even begun using aTerms of Service Agreement, which essentially puts into clear, written languagewhat you expect from your client and what they should expect from you.By submitting a comprehensive Terms of Service Agreement to your clientbeforehand and having them return confirmation to agree to abide by your terms,you will be saving yourself (and your client) a lot of headaches down the road

and avoiding the kind of surprises that can cause a project to get derailed.1. Billing structure. What are your rates? Do you bill by the hour or by theproject? This is important because its usually one of the first three questionsa new client will ask. Agree with the client what a final estimate includes andwhat will happen if changes are requested beyond the scope of the initialparameters of the project.2. Late payment. Determine the grace period within which a client can submittheir payment after the invoicing date. The standard practice is 30 days, butyou can determine this according to your particular company. Also spell out latefees and/or interest rates for late payments. This will give incentive to your

clients to pay their invoices sooner than later.

Ive known too many freelancers that have rung up large invoices for majorprojects adding up to thousands of dollars only to be shafted by deadbeatclients who walk away with your hard work.

3. Interim charge caps. Ive known too many freelancers that have rung up largeinvoices for major projects adding up to thousands of dollars only to be shaftedby deadbeat clients who walk away with your hard work. If youre working on amajor project or are doing several smaller projects for one client that add upto major charges, put a cap on how much outstanding debt the client can carry.

I personally put a $500 cap on my clients so that when their total bill exceedsthat amount, they will need to make an interim payment to bring it under or facework suspension. This will prevent clients from promising lots of high-payingbusiness without delivering on their word. This is paramount when it comes tonew clients, even those referred by people you trust.You have the option to waive this cap if you have a long-standing relationshipwith a trusted client who pays on time and in full.


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4. Scheduling. Can you service your clients twenty-four hours a day? Weekends?Holidays? You need to have a balanced life, which means you need to set hoursthat make sense with your lifestyle. Set appropriate hours when your clients cancontact you and expect you to work. If you dont want to be woken by a panickingclient at one in the morning, tell them specifically at what time your shopcloses.5. No spec work allowed. This is a controversial subject among many freelancersand prospective clients. The consensus for most is not to accept work on spec.Speculative work involves doing actual work with the hopes of impressing theclient enough that they will provide further opportunities without any guaranteeof payment or that you will retain rights over the work if it isnt paid for. Itis bad practice to allow for this type of work with the extremely rare exceptionof once-in-a-lifetime opportunities. Your time and talent are precious andshouldnt be doled out for free under any circumstance. Spell it out in theagreement: no spec work.6. Termination of services by client. If youre a writer or a designer oranother creative professional and youre submitting a first draft to a clientand they are unsatisfied and want to end the project then and there saying

something to the effect that your work does not meet their needs, they may belooking to get out of paying for the time you spent already, or worse, intendingto steal your ideas for free. An honest client will pay for your time and moveon to another freelancer. Otherwise, youve effectively just worked for spec andreceived a rejection. Set a minimum rate for work done that is immediatelyrefused and where the client does not wish to allow you to continue.It should be stipulated that work that is refused by the client cannot be usedin whole or in part. This may or may not be respected, but can be actionable aslong as the client has agreed to this term and then subsequently violated it.7. Ownership rights. Establish who owns the work after it has been completed and

what rights the owner has to use or modify the final product. You may also wantto consider retaining rights to utilize the work in a repertoire or portfoliofor future promotion while the client retains all other major usage rights.8. Unforeseen or sudden termination of a project. Most freelancers work on theirown, so if some mishap, illness or accident occurs that makes it impossible tocontinue a project in progress, the client needs to know what protections theyhave. You may have to associate yourself with a backup freelancer who will agreeto take over. Otherwise, you can make a provision where files or assets for aproject are turned over to the client to be continued by someone else and billed

for the work done up to that point.Whatever you decide, let the client understand that however unlikely, hiring asingle freelancer has certain risks and that there will be some compensation orprovision made in case of a stoppage.Most clients will act in good faith, so keep an open mind and be willing tonegotiate in instances where there is disagreement. But by explicitly settingthe terms in advance, potential disputes can be avoided and you can focus on


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whats most important: doing great work.DisclaimerYou should always seek independent financial advice and thoroughly read termsand conditions relating to any insurance, tax, legal, or financial issue,service, or product. This article is intended as a guide only.Note: A few times a month we revisit some of our readers favorite posts fromthroughout the history of FreelanceSwitch. This article by Gary Horsman wasfirst published June 12th, 2008, yet is just as relevant and full of usefulinformation today.Photo by Ana_Cotta.

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Tags: Client Liaison contract legal terms of service

Gary Horsman |Website |Other Articles

Gary is a full-time Graphic Designer for a Canadian film distributor andpart-time freelancer living and working in Montreal, Quebec.

Related ArticlesPitching and the Decision-Making Styles of Clients (11)The Ultimate Design Brief (73)7 Tips for Negotiating a Freelance Contract (52)

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Casey L. JonesJune 12th

Awesome article with great tips. I definitely agree with # 3. By requiring ancap limit you could cover yourself in case your client flakes out.

Reply

EricJune 12th

This is absolutely what I need right now. Thank you, thank you, thank you,thank you. Did I mention thank you? Thank you! Eric

Reply

JazJune 12th

This is one of the most useful articles I have read on FreelanceSwitch, (whichis saying a lot).Cheers!

Reply

maveJune 12th

Great article. I agree with all your suggestions, but would add that termsshould include the following:

1] A statement of your working relationship (i.e. that you are an independentcontractor and the relationship does not constitute a work for hireagreement. This is more or less covered under ownership rights bit its agood idea to state this clearly up front especially if you are doing anywork on-site with the client.

2] A statement regarding testing, proofreading and acceptance of final work(this is especially important if you are a web designer/developer). It should

basically outline a time limit for the client to notify you of any errors oromissions in the work (that would fall within the scope of the originalagreement), after which the client must pay extra for those revisions orrepairs. Depending on the type and complexity of work, you may want to givethem anywhere from a week to a month.

3] A statement that client-driven delays or rushes may result in extracharges.As well, In your estimate its important to include the # of versions and # of


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rounds of revisions you will be providing, the scope of the project andtimeline you are committing to.

Reply

cmallenJune 12th

Mave, your additional suggestions are excellent. I am noting them.

Reply

Ian YatesJune 12th

Does anyone know where I can get a good basis/template for a Terms of ServiceAgreement? Apart from sheer laziness in writing one myself id like it to beprofessionally worded

Reply

BarbaraJune 20th

Ian,

The AIGA has a good creative services agreement on their website that youcan use (or at least, they used to). Just adapt it for your particularpreferences and business.

Ian YatesJune 12th

..for web design and development (sorry)

Reply

MikeyJune 12th

Ive been doing web design for a few years now, only now venturing into theworld of freelance, and have to say that these articles are really helping me.

I dont know anyone who knows anything about being a freelancer so its been abit daunting starting out, thank god for this website!


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Great Article, Thanks!

Reply

The Rogue TroubleshooterJune 12th

I dunno, if a deadbeat client shafted me for more than a thousand bucks Id beseriously motivated to hit his car and/or house with a few cocktails and seethem engulfed in flame . Thats my idea of an Interim Charge Cap, I sure ashell wouldnt let them get away with it!

Reply

MelekJune 12th

Great article. I also include this in my web design/dev agreement: Client is responsible for making sure all graphics, images, text provided tome are not protected elsewhere by copyright and that they own them outright.

That i dont guarantee any level of audience or rankings (that way they cantcome back and complain that they arent number 1 on google or that nobody iscoming to their site).

That i can include their work in my portfolio (glad you included this inyour article. its VERY important to be able to showcase your work)

That Im not responsible for their hosting going down (i dont do any hosting

for sites, they use a third party), and if there is an issue with theirhosting, theyll have to resolve it, not me.You should also include where the agreement is enforcible, especially if youwork with clients in different states/countries.

Keep the great advice coming!

Reply

Gary Horsman

June 12th

Thanks for all the terrific feedback. I will seriously consider including theideas posted here by the commenters in future agreement documents.

If youre interested in using my current Terms and Conditions agreementdocument as a template for your own business, Ive made it available fordownload on my blog site.http://qblog.qreativ.com/design/terms-and-conditions-agreement-for-freelancer


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sNo doubt, I will be updating it on a continuing basis.

Reply

Martha RetallickJune 12th

In answer to Ians question, heres a good template for a Web design TOS:http://www.wilsonweb.com/worksheet/pkg-con.htm

Reply

Mark HenricksJune 12th

Weird thing about me. I have freelanced fulltime since 1987, five yearsparttime before that, maybe 3,000 assignments and hundreds of clients, andIve never had someone publish something Ive written and then fail to pay.Ive received kill fees, and even agreed to not get paid for articles thatdidnt work out (small articles, for people I could rely on for much more workdown the road) and once or twice had my lawyer sister write demand letters.But no one has ever stiffed me.

I still like to have an agreement with a new client, for sure, just to makesure we all know whats expected of us. Its happened that people Iveghostwritten books for have (apparently) misunderstood the contract terms andthought they owed me thousands of dollars less than the agreement called for.Those are the times an agreement comes in handy, and then some.

Thanks for the piece.Best,

Mark

Reply

Adam GriffithsJune 12th

This is great advice and is exactly what I needed; after looking through thewhole of the archive finding nothing to suit my needs I am relieved to seethis post.

Thank you!!

Reply


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Ian YatesJune 12th

@Martha thanks for the link@Gary thanks for the link and a great article!

@Everyone else sorry for using the comment space for a question that shouldreally have been in the forum..

Reply

Tuan NguyenJune 12th

Great suggestions. I will include this into my photography TOS.

Reply

Chris KingJune 12th

This a great article! I agree with everything stated whole-heartedly.In my experience, the key to successful and smooth projects always boils down

to setting clear expectations up front, and knowing how to address unforeseenissues that arise.

Reply

SteveJune 12th

Great site!

Reply

meJune 13th

For my photography, any terms of agreement, is listed in the quote.Regards being paid, a 50% deposit usually ensures that youll pitch up andshoot and can cover any material costs. The balance is paid once the shots are

ready. The shots only get handed over when everything is fully paid.


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This way both client and photographer are happy that eachll do their bit.

Any other photographers care to comment? Would love to hear how you deal withthis articles issues.

Reply

SkellieJune 13th

Congrats Gary the article went popular on del.icio.us .Everyone is obviously bookmarking it for future reference, but a little toolazy to read now, hehe.

Reply

Paula

June 13th

Love your site, thought this was an incredibly useful article that I willincorporate. When I first started out freelancing, I searched for this type of

information and couldnt find anything nearly as useful.

Reply

Paul Palmer

June 13th

This is an outstanding article, Gary! Thanks for sharing your T&C with us,also. Ive been a web monkey for a few corporations over the years but Ivejust started my own full-time freelance business and this is definitelysomething I need.

Reply

Tracey Grady

June 18th

This is a marvellous resource, thanks Gary. There are several points you makewhich I will be adding to my TOS. Number 1 is interesting because to date Ihave never been asked what my rates are; instead I am often asked what do youcharge for a website/brochure/email template/etc?.

I also include in my TOS that all preliminary concepts and visualpresentations (comps etc) remain my property and may not be used by the client


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without my written permission; that out-of-pocket expenses (e.g. stock images,

shipping charges, postage) will be reimbursed by the client; and that a downpayment is required before work commences.

Reply

Mark Knowles WriterJuly 5th

I have only been stiffed once, and they were silly enough to leave me withadmin access to their blog

Reply

QuevinJuly 8th

Thanks, Gary. Great article & Im considering your advice. Especially becauseI dont have a TOS on my own site yet. However, Id love to find a good WebDeveloper version that includes coding standards and limitations. I like what@Martha posted, but its from 1999. Thanks for posting your TOS on your ownsite, and Ive downloaded it for review.

Reply

Justin HeidemanJuly 10th

I have been revising my work agreement and this article and the comments havebeen really helpful. One thing I put in my agreement that Ive used in thepast is a blurb about project termination and a kill fee:

If the client decides to terminate the project at any point, the client shallbe responsible for paying Co-Op Media for all work completed to date.Additionally, the client shall pay Co-Op Media for 20% of remaining estimatedwork. The client recognizes that Co-Op Media may have turned down otherprojects and the 20% fee, known as a kill fee, is compensation for this work.

Reply

Javier OdomJuly 13th

Greetings.Do any Terms of Service, restrictions or such apply to the use of this


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article/blog and the information in it?I may have missed it somewhere, but the only thing i can currently think toadd to this wonderful list is in regards to modification of the terms ofservice, and how that is to be handled. A generic and fair concept i can think

of is:

Any and all modifications and or revisions to the Terms of Service must beapproved by both [you/your company] and the Client, and must be submitted inwriting.

Disclaimer: I am not a lawyer, and this post is not legal advice.

Reply

alexkitchinOctober 16th

great article found quite a similar article here talking about legal coverfor freelancers

http://www.freelanceadvisor.co.uk/2008/09/19/legal-cover-and-contracts-for-freelancers-and-contractors/enjoy!

Reply

griffinJanuary 24th

Unfortunately, terms of service when dealing with government institutions inSouth Africa for instance, doesnt help at all. Too much corruption.

Reply

Honest Internet BusinessmanMarch 2nd

Great Article. Everything is included except a template! Everything is easierwith a template you know!

Reply

Vic of BusinessAccentAugust 20th

The number one in the list is very relatively important. Structure of the


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billing should be established. This also includes the term if it is fixed orit varies. I have been issued on escalation fees considering the inflationrate. Thanks for sharing this article.

Reply

essolSeptember 8th

In the case of a webdev project, does anyone know of a template that a clientsigns just when the project, i.e. site, source code, database, etc. is turnedover to the client wherein the client certifies that they have gone over theproject and have found it to be free of bugs, and their satisfaction, etc andthey are waiving all claims of liability to/from the service provider.

The reason being we dont want clients coming back after a few weeks claimingthat a project is full of bugs after being turned over, and after said project

has been worked on by a third party.

Reply

BluepicasoSeptember 11th

well thanks a lot. i just loved it. Well Im another who is being exploited bythe client. well now m gonna create a good TOS for my self. Some of theclients are really annoying.

Reply

coursesJuly 12th

Excellent tips for writers, especially #3! I have to be honest, I neverthought of including #3 in a Terms of Service before great suggestion!

Reply

Fashion ManJanuary 27th

I am just building my terms of service page now.. Glad I came across thispost, thanks for the great list.

Reply


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MikaelJuly 16th

Thanks for all the great information.Very helpful as I am preparing a service agreement now.

Reply

Gary HorsmanAugust 5th

Hi all. A couple of people have asked for the latest version of my Terms ofService Agreement. The link may not be valid anymore, but you can download itfrom my Dropbox account if youre still interested.

http://dl.dropbox.com/u/4289569/ghd_tosa.pdf

Reply

moonsoonmenuNovember 18th

Its interesting you wrote no spec work aloud because we should held acontest for graphic designers to work with us. Of course were making acellphone app, the project is around 100 screens and we only had them doonebut I think spec work is crucial to show your commitment. Not doing specwork is like not writing a cover letter in my humble opinion. Of course having

the contractor do real work before the project is free labor, which I dontcondone. The truth is, the graphic designers who offered spec work for mycurrent projects were on top of the list because they showed me they wantedthe job.

Reply

jpApril 21st

the service contract should be signed before the service order or after theorder? which is more valid?

Reply

Sundae RyeJune 20th


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#3 the Cap Limit; is a great idea. Its going into my contracts TODAY!

Reply

AdamJune 20th

Good post, in the past of the things I overlooked a couple times was having inwritting that I was able to use the work in my portfolio, and that reallyscrewed me a bit.

Reply

JasonJune 20th

I realize this article is old now and all the example TOS links in thecomments are 404 now, does anyone have anything recent to share?

Reply

mobile app developersJune 21st

Really amazing and I agree that these should be included. Actually all thethings lead to make term & service agreement as good as possible and it should

easily be understood by people. Thanks for sharing suggestions.

Reply

BizPlanCompanyJune 22nd

Milestones are key. Write them down so both parties will know what and when to

expect deliverables.

Reply

Dhananjay Kumar GuptaJuly 19th


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Hi everyone, I would like to thank everyone for your nice conversation. I am aB.E. E&I engineer & Im interested to know some detail about freelancingbecause I also want to work as a freelancer. But how should I start ? I donthave any idea.

My field of interest is embedded hardware & software designing & robotics.Till now I have designed many embedded products from my own & it is stillworking better than the market products. So, I want to work as a professional.

Can you please suggest me ?

Reply

JennJuly 27th

I have most of this information already in my terms of service, however theone part I have been struggling with is the termination of services by theclient. I, too, am afraid of putting in hours or even weeks of hard work only

to have the client say they arent

satisfied and want a refund. So I have itin my terms that if the client is unsatisfied for any reason, they mayterminated their contract and receive a 50% refund.

They may or may not like this, but hey, I have bills to pay. I dont work forfree anymore than anybody else does. And I think thats a fair amount. Itsnot like Im only offering a 25% or 10% or some other meager amount in anattempt to rip them off. Its split right down the middle to keep both partieshappy.

Reply

Justin DuranoJuly 30th

Great points! Thanks for sharing those tips. In my past few years infreelancing I usually experienced some problem about scheduling.

Service agreement is very essential for both client and the service provider.

Keep sharing!Thanks,

Justin DuranoEvolve for our Success http://evocess.com/

Reply

BesirOctober 12th


19/22

Hey Guys.. Does anyone want to link to their Terms of Service Agreement?

Reply

lanotdesignOctober 16th

real nice article. very helpful.

Reply

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8 Things You Should Include in Your Terms of Service Agreement