Just Because You Don’t Have A “Proper Contract” Doesn’t Mean There is NO Contract At All
Contracts don't need to be signed to be effective. Oh, and they don't need to be in writing either.
Have you ever gotten stiffed on payment after completing a project because the client said:
“But you never got me to sign any contract. So I don’t have to pay you.”
Then as pissed as you are, you’re forced to admit that the client’s right – you really never got him to sign a “proper contract” (i.e. a formal, official document, usually with the word “CONTRACT” on top). Because:
- Your negotiations with the client were done over text message; or
- Your negotiations with the client were done in person; or
- You did write down the agreement between you and your client, but the client never signed the document
If you find yourself in such a situation, know this:
- This client is a shitty-ass client whom you should never work for again; and
- YOU ARE STILL ENTITLED TO BE PAID!!
Point 1 is obvious. As for point 2: how is it possible?
Because you still have a contract with the client.
A “Contract” Technically Isn’t THAT Piece Of Paper
What is a “contract”?
In legalese, a “contract” is:
“An agreement between two or more persons which creates an obligation to do or not do a particular thing.”
– Augustine Paul JC of the Malaysian High Court, as referenced in “Contract Law in Singapore” by Andrew Phang and Goh Yihan
(I even cited my source so you don’t think that I pulled this definition out of my ass.)
In other words: it’s all about the AGREEMENT.
That intangible, legally binding bond that materialises between you and your client the moment certain conditions (more on these conditions later) are met. Bam.
Therefore, that document/piece of paper which you know as a “contract”? It’s technically not the contract itself. It is only a written record of the contract.
So, it doesn’t matter if you don’t have a formal, official document with the heading “CONTRACT”.
As long as there is a contract between you and your client (i.e. that intangible-legally-binding-bond-thing I mentioned a couple of paragraphs earlier), you’re one step closer to getting paid for your work.
So what is the recipe for a contract?
What Do You Need To Form A Contract?
Sugar! Spice! And everything nice!
For there to be a contract, 4 things are needed:
1. An offer.
This is where one party (known as the “promisor”) promises to do/not do something for the other party (known as the “promisee”).
“I will shoot your wedding on 30 July for you for $X.”
2. Acceptance of the offer.
After the promisor makes an offer, the promisee has to agree to the offer.
For example, saying:
“Okay, sounds good.”
Even something as simple as that can constitute acceptance.
In legal-speak, “consideration” doesn’t have anything to do with being thoughtful.
Rather, you can think of it as the “price” to be paid in exchange for the promisor carrying out his promise.
This is usually some kind of benefit given to the promisor, or detriment suffered by the promisee.
For most contracts, whether between freelancers and clients or other parties, consideration usually comes in the form of $$.
For example, a client (the promisee in this case) might agree to pay you (the promisor) $X in return for you shooting his wedding.
If so, the payment of $X would constitute the consideration for the contract.
4. Intention to create legal relations.
Parties to a contract have to intend to be bound by their agreement. For commercial situations, this usually isn’t a problem.
That’s all there is to it, broadly speaking.
Offer, acceptance, consideration, and an intention to create legal relations. Contract 101.
No signatures required ✍🙅
Except for certain types of contracts which aren’t relevant to this post, there is generally NO need for contracts – or to be precise, the written records of contracts – to be signed for the contracts to be legally binding.
Signatures are usually just a means for the promisee to indicate his acceptance to the contract’s terms. Therefore unless e.g. one of the contract’s terms is that the contract will only take effect if the parties sign the document, signatures aren’t compulsory.
Rather, as long as the promisee gives some kind of signal that he accepts the promisor’s offer (e.g. saying “OK” or replying the promisor’s email to say “I accept your terms”), that will be good enough.
Your contract also doesn’t have to be in writing 📝🙅
As you can see, putting your contract in writing is NOT a requirement either.
(It’s a requirement for only certain types of contracts but we don’t need to worry about these for our purposes.)
This means that a contract can still form between you and your client even if neither of you had written down what you had agreed on.
E.g. if the negotiations for the project had taken place:
- Over the phone
- In person
As long as there was an offer, acceptance of the offer, consideration and an intention to create legal relations, the contract will form.
Which leads us to the next question:
If writing isn’t required, then why bother writing down the contract’s terms in the first place?
Putting A Contract In Writing Helps You Prove Its Scope Later On
It’s all about the proof.
Without any proof of the contract’s scope, what you and your client had agreed on will just be a matter of your word against his if the project goes south later on.
So even if you haven’t prepared a written record of the contract for the client to sign, make sure you still keep your own records of what the both of you had agreed on.
Emails. Meeting minutes. Notes you’ve scribbled on your hand (but take a photo of your notes before you wash the evidence away).
Heck, even any text messages you have sent and received from your client can be evidence of the contract between the both of you:
As you can see: offer, acceptance (even though the client didn’t sign anything), consideration, intention to create legal relations.
Yep, we have a contract!
(IMPORTANT NOTE: For demonstration purposes, I simplified the hypothetical text message discussion between the freelancer and the potential client in the image above. In reality, your offer to the client should include a LOT more terms to protect yourself after the client gives the go-ahead. DO NOT TAKE THE IMAGE ABOVE AT FACE VALUE!!)
But At The End Of The Day, Having A “Proper Contract” Is Still Recommended
All this said, even though you technically DON’T need your contract with the client to be in writing…
And even though informal written records can be GOOD ENOUGH evidence of your contract with the client…
…I would still strongly urge you to have a “proper contract”.
In other words, a super official, formal document that contains all the terms of the contract in one place, with spaces for both you and your client to sign.
This is for 2 reasons:
- By putting all the terms of the contract in a single document, you’ll know exactly what the scope of the agreement is. i.e. what both parties have agreed to do, and also what both parties have not agreed to do.
- When both parties sign the same document, the signatures will serve as written proof of the parties’ agreement on the terms of the contract.
KISS when drafting your “proper contract”
By the way, having a “formal” contract doesn’t mean you need to use complex legal jargon/complicated English like:
“As consideration for the Services Rendered, [Client Name] hereby agrees to pay to [Freelancer’s Bank Account Details], being the bank account of [Freelancer Name], $X (X Thousand Singapore Dollars Only) within thirty (30) days of the completion of the Project …”
Just KISS – Keep It Simple, Stupid. As long as you get your meaning across, that will generally be good enough:
“[Client Name] agrees to pay [Freelancer Name] $X for the Services Rendered by [Freelancer Name]. This payment will be made to [Freelancer’s Bank Account Details] within 30 days of the Project’s completion.”
Both yourself and your client will thank you for it.
What Terms Should Your Contract Include?
Your contract should be as specific as possible.
You don’t want to give the other side wiggle room to get out of doing something just because it wasn’t written down.
For example, when you want to state your payment terms, don’t just state how much you’re asking for your services (i.e. the payment amount).
You should also consider (and include):
- Method of payment: how should the client pay you?
- Payment deadline(s): by when does the client have to pay you?
- Late payment penalties: how will you penalise the client if the client fails to pay you on time?
- Currency of payment: what currency does the payment have to be made in? (You can include it just to be super clear on the currency that you’re dealing in. This probably won’t be as relevant unless you’re handling work for overseas clients.)
For greater peace of mind, you may want to hire a lawyer to draft you a solid standard contract that you can reuse for all your clients.
But if you think hiring a lawyer isn’t necessary for the time being, I would recommend checking out the Tripartite Standards issued by TAFEP (the Tripartite Alliance for Fair & Progressive Employment Practices). They’re a good reference for the basic terms which your contract should include.
With Your Contract In Hand, It’s Time To Take Action
So the next time a client of yours tries to say that he doesn’t need to pay you because “you didn’t give me a contract to sign”, ask yourself if a contract actually has been formed between the both of you.
(Remember: offer, acceptance, consideration, intentions to create legal relations!)
The answer is likely yes – a contract has formed. Then, your next task is to gather all the evidence you can find of this contract.
Email correspondences, text messages, anything.
Then, politely confront the client with all the evidence.
Subtly warn that you may threaten legal action if he doesn’t pay up.
If the client still refuses, you may have to take him to court.
Whether you’ll win the lawsuit may depend on how much evidence you have to support your case.
For example, if your emails with the client state everything except for the payment amount of $X (which was agreed upon in person), you may find it difficult to prove that the client owes you $X instead of $Y.
But if you give your clients a “proper contract” to sign in advance, you may find the process of enforcing what rightfully belongs to you a much easier one.
Do you give your clients a “proper contract”? Let me know in the comments!