Freelance & Contractor Vocabulary

Statement of Work (SOW): one of the most important documents in freelancing. It defines what is being built, what isn't being built, when, for how much, and under what conditions. Prevents scope creep and payment disputes. SOW key sections: Scope / Deliverables — explicit list of what will be delivered (screens, features, APIs, documentation). Exclusions — what is NOT included (critical — list common assumptions). Timeline / Milestones — key dates, phases, delivery checkpoints. Price / Payment terms — fixed price, hourly rate, milestone payments, or retainer. Acceptance criteria — how the client will confirm deliverables are done. Change request process — out-of-scope requests trigger a formal change request with new timeline and price. Freelance contract vocabulary: Master Service Agreement (MSA) — a framework contract covering the ongoing relationship (liability, IP, dispute resolution); individual projects are governed by SOWs under the MSA. NDA (Non-Disclosure Agreement) — confidentiality agreement protecting client's business information. IP assignment clause — specifies that IP created during the project transfers to the client upon payment. Intellectual Property (IP) — ownership of code, designs, documents created. Warranty period — after delivery, a defined period (e.g., 30 days) during which the contractor fixes bugs at no extra cost. In conversation: "After two scope-creep projects I learned to put the exclusions list in bold. Now change requests pay for themselves within a week."

Milestone-based billing: payment is released when a specific, agreed deliverable is completed. Structure protects both parties: contractor gets paid progressively (not 100% at end); client pays for tangible, verifiable value. Common milestone structures: 1) Discovery/kickoff payment — upfront; shows client commitment; covers initial research and planning. 2) Mid-project delivery — working prototype, MVP, or first phase. 3) Final delivery + acceptance — completed, tested, documented deliverable with client sign-off. Billing vocabulary: Retainer — a fixed monthly fee for ongoing availability (e.g., 20 hours/month reserved). Predictable for both parties. Time & Materials (T&M) — pay per hour/day; client bears risk of overrun; flexible for evolving scope. Fixed price — one price for the whole project; contractor bears risk; works only with a very well-defined scope. Day rate — a daily billing rate (common in UK contracting). Invoice terms — NET 30 (payment due 30 days after invoice), NET 15, NET 60. Late payment clause — specifies interest or penalties on overdue invoices. Escrow — a third party holds payment until deliverable is accepted; reduces risk for both parties. Kill fee — a percentage payment owed if the client cancels after work has begun. In conversation: "I stopped doing fixed-price contracts without a kill fee — two cancellations after months of work taught me that lesson."

IP Assignment Clause: a contractual term stating that all intellectual property (code, designs, written content, prototypes) created under the contract belongs to the client, typically upon final payment. This is standard in most freelance and contractor agreements. Carve-out: an explicit exclusion from the IP assignment — typically covering the contractor's pre-existing tools, libraries, frameworks, or reusable components they bring to multiple projects. Freelance IP vocabulary: Work for hire (US) — a doctrine where work created by an employee or under a written agreement automatically belongs to the employer/client. Copyright default (EU/UK) — by default, the creator owns copyright; an explicit assignment clause is needed to transfer it. Moral rights — in some jurisdictions, the creator retains the right to be identified as author, even after IP assignment. Open source license compliance — if the contractor uses GPL-licensed code in client software, the client's code may need to be open source too; always disclose. Portfolio rights — contractors often negotiate the right to mention the project in their portfolio even if the work is confidential. Non-compete clause — a clause preventing the contractor from working for competitors; often unenforceable depending on jurisdiction. Non-solicitation clause — prevents the contractor from poaching the client's employees (and vice versa). In conversation: "I carve out my animation utility library in every contract — I've been building it for 5 years and it would be absurd to license it to each client."

IR35: UK tax legislation (officially: the "Intermediaries Legislation", Chapter 8 ITEPA 2003) designed to catch "disguised employment" — contractors who work like employees but are paid through a limited company to avoid employment taxes. Inside IR35: HMRC considers you an employee for tax purposes → you pay income tax + employee NI + employer NI on earnings. Financial impact: contractors typically see 20-25% higher tax burden. Outside IR35: genuinely self-employed; retains tax advantages of contracting. IR35 determination factors: Control — controls their own work schedule and methods (outside) vs client dictates hours and how work is done (inside). Substitution — can send a substitute to do the work (strong outside IR35 indicator). Mutuality of obligation (MOO) — no obligation to accept work or for client to offer it (outside). Financial risk — contractor bears their own business risk (outside). IR35 globally: IR35 (UK) — intermediary legislation. 1099 vs W-2 (US) — independent contractor vs employee; companies face IRS penalties for misclassification. Self-employed vs "bogus self-employment" (EU) — similar concept; labour law in France, Germany, Netherlands scrutinise contractor arrangements. In conversation: "I use multiple clients simultaneously and have a substitution clause in every contract — two things that keep me outside IR35."

NDA (Non-Disclosure Agreement): a legal contract where one or both parties agree to keep confidential information shared during the engagement secret and not disclose it to third parties. Two types: Unilateral NDA — one party discloses; the other agrees to keep it confidential (most common: client discloses to contractor). Mutual NDA — both parties disclose; both agree to confidentiality. When an NDA is critical: client shares unreleased product roadmaps, access to production systems or customer data, financial data, business strategies, or trade secrets. NDA vocabulary: Confidential information definition — the clause defining what counts as confidential; should be clear. Overly broad NDAs ("everything we ever mention") are sometimes unenforceable. Exclusions — information that's already public, independently developed, or received from a third party isn't covered. Duration — how long the NDA applies (typically 2-5 years after engagement ends). Remedies — penalties for breach; often includes injunctive relief (court order to stop disclosure). Freelance contract checklist: ☑ NDA (before sensitive discussions), ☑ SOW (before work starts), ☑ IP assignment clause, ☑ payment terms, ☑ change request process, ☑ acceptance criteria, ☑ warranty period, ☑ kill fee. In conversation: "The NDA I almost skipped for a 'quick project' turned out to cover their entire pre-IPO roadmap — always get it signed."