7 Freelance Contract Clauses That Cost Freelancers Money

Clause 01

Broad IP Assignment That Includes Work Outside the Project

IP assignment clauses say that any work you create for the client belongs to the client. That's expected. What you need to read carefully is the scope. Many freelance contracts contain assignment language that extends beyond the actual deliverables to include anything created "during the term of this agreement," "related to the field of this engagement," or "using any Company equipment or resources."

In practice, this can mean that a side project you build on your own laptop over a weekend — if it relates to anything in the client's broad industry — might technically be assigned to the client under the contract. The same logic applies to tools you build for yourself that happen to touch the client's tech stack. Push for language that limits the assignment to deliverables specifically created for the client under this agreement, on client time and with client resources. Keep your side projects explicitly carved out by name or by category if possible.

Ask for: "IP assignment applies only to deliverables created specifically for Client under this Agreement, using Client's resources, during paid working hours. Contractor retains all rights to pre-existing work and work created independently."

Clause 02

Payment Contingent on Undefined "Client Approval"

This is the single clause most likely to result in you not getting paid for work you completed. The language reads something like: "Contractor shall be compensated upon Client's approval of the delivered work." No definition of what approval means. No timeline for the client to review and respond. No process for deemed acceptance if they go silent.

The problem plays out like this: you submit work. The client is busy, or not satisfied, or has changed their mind about what they wanted, or has run out of budget. They don't respond. Weeks pass. They say they "haven't had a chance to review it." You can't invoice because they haven't approved. The contract gives you no mechanism to force the issue.

What to ask for instead: a specific acceptance window (5–10 business days), written criteria for what constitutes acceptance, and a deemed-acceptance clause — if the client doesn't provide written rejection with specific reasons within the review period, the work is automatically accepted and payment is due.

Clause 03

Indemnification That Makes You Liable for Client's Downstream Losses

Standard indemnification means you cover damages that arise from your own mistakes — if you deliver work that infringes someone's copyright because you used a licensed image you didn't pay for, you're liable for that. That's fair. The problem comes when indemnification language extends to downstream losses: you indemnify the client from "any and all claims arising out of or related to your work," including losses they suffer as a result of using your deliverables in their business.

In the extreme version, this means if a client uses a website you built, and their customer experiences a data breach because the client failed to update their plugins, and that customer sues the client — your indemnification clause might arguably pull you into the defense. The client's attorneys will look for every party with indemnification obligations. You should be indemnifying only for claims that arise from your direct negligence, misconduct, or breach — not from how the client uses the deliverable.

Clause 04

No Kill Fee (or a Kill Fee With No Clear Trigger)

A kill fee is payment you receive if the client cancels the project after it's started but before it's complete. Without one, if the client decides mid-project to cancel — because they ran out of budget, pivoted strategy, hired an in-house person, or simply changed their mind — you're entitled to payment only for work already billed to that point. The weeks of preparation, planning, and in-progress work that wasn't yet billable? You absorbed it.

Kill fees typically range from 20% to 50% of the remaining project value. The exact percentage matters less than having a number at all. What also matters is the trigger: the kill fee should apply as soon as the client cancels for any reason other than your material breach — not just if they cancel "without cause," which can be disputed. If a contract has no kill fee provision, add one before you sign. It's one of the easiest things to negotiate because clients don't plan to cancel and don't think it will ever apply.

Clause 05

Unlimited Revisions With No Scope Limit

Some contracts include explicit language about "unlimited revisions." Others just don't define revisions at all — which functionally creates the same problem. Without a cap or a definition of what constitutes a revision versus a new deliverable, every feedback cycle can turn into a complete rework. Clients don't always do this maliciously; they often genuinely don't know what they want until they see what they didn't want.

Define revisions in the contract. Two rounds of revisions is standard for most project types. A "revision" should be defined as changes to existing deliverables within the original scope — not new concepts, not scope changes, not redesigns from scratch. Any changes outside the defined scope should be billed at your standard hourly rate under a change order. Get this in writing and it becomes the mechanism for having the scope conversation with a client who doesn't understand why the third complete redesign costs extra.

Clause 06

Non-Compete Broader Than Your Actual Work

Non-compete clauses in freelance contracts are more common than most people expect — and they're frequently written by lawyers who copied them from employment agreement templates without thinking about what makes sense for a project-based engagement. A non-compete that makes sense for a full-time employee often makes no sense for a freelancer hired for a six-week project.

The common problems: scope too broad (covering your entire field rather than just direct competitors), geography too broad (any market in the country rather than markets where the client actually operates), and duration too long (one to two years is common in templates written for employees). A non-compete that prevents you from doing similar work for anyone in your industry for two years after a six-week engagement isn't just aggressive — it's a direct threat to your livelihood.

Push for scope limited to the client's direct competitors, duration limited to the engagement period plus 90 days, and geography limited to where the client actually does business. Many clients will accept these changes without pushback — they added the clause because it was in their template, not because they specifically want to prevent you from working.

Clause 07

Net-60 or Net-90 Payment Terms With No Late Fee

Net-30 payment terms mean the client has 30 days after receiving your invoice to pay. Net-60 gives them 60 days. Net-90 gives them three months. For large enterprises working with vendors they treat as operational overhead, Net-60 or Net-90 can be the standard internal AP policy. For a freelancer waiting to cover rent, three months is a different calculation.

The absence of a late fee provision compounds the problem. If there is no late fee, the client has no financial incentive to prioritize your invoice over any other AP obligations. Net-30 is standard for freelance work. Net-15 is common for smaller project-based engagements. If a client insists on Net-60, push for a deposit upfront (25%–50%) and/or a late fee provision — typically 1.5% per month on outstanding balances, which is standard and rarely challenged. The late fee provision doesn't mean you'll ever invoke it. It means invoices get paid on time because the incentive is there.