What Is It?
The most important document a freelance web designer or web developer has to create is a contract with their client. The contract is the written mutual agreement between you and your client stating what you will deliver, terms of your payment and what happens if things go awry. In part, it consists of all the items that were discussed beforehand. These items may have been mentioned in advertising, discussion or a written or verbal proposal.

Why Have One?
The reasons for having such a document seem obvious and some of them are. However, there are less obvious benefits you gain by having a written contract. The solemnity of the legal jargon, list of stipulations and the formality of signing impresses on both you and your client that you are making a commitment to each other. That is a very important psychological milestone. A third reason for a written contract is it provides the accepted opportunity for both parties to express their expectations of and obligations with respect to the project. Another reason is to prevent you from doing unpaid work. The contract limits what you are required to deliver. Without that, you may find yourself doing a lot of work for free in an effort to get the final payment for the website or application. The reasons just keep comin’… Having a contract forces your client to truly think through what they are asking for. The typical client will have a general idea of what they want, but they haven’t made the effort to think it all the way through. After all, that’s why they hired you. But, if you don’t help educate them and make them understand exactly what they will be getting, you run the risk of them being unhappy and you gong un-paid. Providing your client with a well written contract will help them think it through.

Tip: Write the most complete contract you possibly can and use it as a template. Review the template after each project and see if there’s anything you want to add to it. If your contract template is clearly written (and it will be) you will be able to simply remove any part of it that isn’t relevant to the the project at hand. Don’t forget to re-number of re-letter the sections below as required.

What Should It Include?
As stated above, the contract should include three things: what you will deliver, terms of your payment and what happens if things go awry. Let’s start with what you will deliver.
This should contain the following:
1. Overview: The name of the website and the major features/functions it will have.
2. Phases: If the work is to be completed in phases, enumerate and describe them here. You may want to include a schedule of client or stakeholder reviews, revisions and testing. Be sure to include what will be delivered at the end of each phase. Be specific. Name the of pages, describe what functionality will be included in the particular phase, etc. If completion of a phase is dependent on the client doing something, explicitly state that here.
3. Ownership: This is extremely important and you should discuss this before you surprise the client with it on the written contract. Typically, the graphic designs are owned by the client. But, there may be aspects of the work you want to retain ownership to. Some people think you should somehow copyright the design of the site. If the rights to the design pass to the client, it would prevent you from using that design, again. But, here you get into complications of what constitutes the design. Usually, a client owns all the HTML, CSS, XML, Javascipt and simple PHP/ASP files (eg. contact form) that comprise their site. In fact, you should, unless you’re trying to ensnare them in some sort of weird maintenance scheme – and you shouldn’t do that for the sake of our industry’s reputation and your karma. If you are a web developer and write a full blown application with a database backend, that’s another story. You may well want to keep the copyrights to that. If there’s any uncertainty in your mind talk to a lawyer, preferably one who specializes in the areas of copyright and intellectual property law. Actually, you should talk to a lawyer, anyway. I’ll cover that in a bit more detail below.
4. Maintenance: Include any maintenance or post delivery work you will be providing here.

The next section is about your compensation.
1. Compensation: State your hourly rate and the expected number of hours (calculate the total) or a fixed rate for the project.
2. Payment Schedule: Be sure to get 33%-50% upon signing the contract. Any “client” who balks at that is refusing to commit to the project. They are wasting your time. State when the remaining payments are to be made with reference to deliverable or project phases. Do not simply say, “Upon completion”. That’s a good way to never get paid.
3. Payment Terms: State the amount of time they will have to make the payment after receiving your invoice. For example, “Payments are due within 15 days of the invoice date. Late payment charges will accrue at the rate of 1.5% per month.” You may also want to state that no additional work will be delivered until the account is current. If you do say that, indicate the effect it will have on the overall project schedule.

TIP: The contract needs to be more “more perfect” than your final product. It is a real, live sample of your work. If there’s a problem with the final site you deliver, you can fix it. If there’s a problem with the contract, your client might not sign it. Then, where are you?

If everything goes as planned, no problem. But, life isn’t that predictable. Your client may decide to cancel the project, fail to provide the content or decide you didn’t deliver as promised. Anything can happen. The goal of this section of the contract is to make sure you get paid for your work and to stay out of court if things get ugly.
1. Limitation of Liability: A standard limitation in your contract should be the exclusion of consequential damages. These are losses that are not caused by a specific act but the consequences of an act. Suppose someone’s website is supposed to be finished by November 30 so it’ll be up in time for Christmas shopping. You try, but the site is late. Without this Limitation of Liability, they can sue you for lost revenue as a result of the site being late. You don’t want that.
2. Binding Arbitration: To help you stay out of court, your contract should state that all disputes will be handled by binding arbitration. Arbitrators are typically retired judges doing a little freelance work of their own. You can who say who will handle the arbitration and who has to pay for it.
3. Choice of Law: This should be stated and it should be the state or province in which you reside. That way, if you do get sued, you won’t have to travel to a different state or country to appear in court.
4. Cancellation: Without this section, there’s no way for either party to get out of the contract other than by fulfilling it or committing a breach of contract. Things are always changing in life and you should provide a way for either party to gracefully terminate the contract in such a way that you still get paid for any work you have already done. You also want to keep your client happy and comfortable with your business arrangement. So, this section of the contract should also protect your client. For instance, they’ve cut you a check for 50% of the cost and they decide to cancel after a week. You should have a schedule in this section outlining exactly what you will refund to them based on the time period involved. Don’t forget to include how many days you have to refund their money. Also, include some formal routine they have to go through to make the cancellation valid. A written request sent by certified mail is a good way to go. Make sure they really want to cancel your contract and aren’t just reacting to a temporary situation that’s put them in a bad mood.

Maintain Control
If possible, you should provide the contract. The client is already holding the purse strings. If they also want to provide the contract you might as well be their employee. The exception to this, of course, is if the job is so frappin’ lucrative that you’d be nuts not to go for it. Even then, show the contract to your lawyer before you sign it.

I’m No Lawyer. Get One.
I am not a lawyer and nothing I have said should be construed as legal advice. What I have provided is my ideas for what should go into a web design contract as well as my layman’s understanding of what these sections mean to you, someone trying to make an honest living creating websites or web applications. Your use of this information is at you own risk. Before you enter into any contract, I advise you to seek legal counsel.