5 Red Flags in Freelance Contracts You Should Never Ignore
As a freelancer, contracts are the foundation of your business relationships. But buried in pages of legal jargon are clauses that can seriously harm your income, rights, and professional reputation. Here are five red flags you should always catch before signing.
1. Unlimited Revisions
What it looks like: "The Contractor agrees to make revisions until the Client is satisfied."
Why it's dangerous: Without a cap on revisions, you're essentially agreeing to work indefinitely for a fixed price. Some clients will exploit this to extract maximum value while you burn through hours.
What to negotiate: Request a specific number of revisions (typically 2–3 rounds) included in the base price, with additional revisions billed hourly.
2. Full IP Transfer Before Payment
What it looks like: "All intellectual property rights transfer to the Client upon delivery."
Why it's dangerous: If payment terms are net-30 or net-60, you could hand over your work and wait months for payment—or never get paid at all, with no recourse.
What to negotiate: IP should transfer only upon full payment. Add a clause like: "Intellectual property rights transfer to Client upon receipt of final payment."
3. Non-Compete Clauses That Are Too Broad
What it looks like: "Contractor agrees not to work with any competing businesses for 2 years."
Why it's dangerous: If defined too broadly, this could prevent you from working with most clients in your industry. For freelancers, this is career-limiting.
What to negotiate: Narrow the scope to specific competing companies, reduce the time frame, or remove the clause entirely. As a freelancer, you're not an employee—non-competes should rarely apply.
4. Vague Payment Terms
What it looks like: "Payment upon project completion" with no definition of "completion."
Why it's dangerous: Clients can delay payment indefinitely by claiming the project isn't "complete." Without milestones, you have no leverage.
What to negotiate: Define specific deliverables and tie payments to them. Request an upfront deposit (25–50%) and milestone payments rather than one lump sum at the end.
5. Liability Without Limits
What it looks like: "Contractor shall indemnify Client against any and all claims, damages, and losses."
Why it's dangerous: You could be held financially responsible for damages far exceeding your project fee—even for issues outside your control.
What to negotiate: Cap your liability to the project fee, and exclude indirect/consequential damages. Consider professional liability insurance if working on high-stakes projects.
How ClearTerm Helps
Manually reviewing contracts for these red flags is time-consuming and easy to miss. That's why we built ClearTerm—an AI-powered contract analyzer that:
- Scans for risky clauses like the ones above
- Explains legal jargon in plain English
- Suggests negotiation language you can use
Don't sign your next contract without running it through ClearTerm first. Try it free →