7 Red Flags in Freelance Contracts That Could Cost You Thousands

You landed a new client. The project sounds great, the rate is decent, and they've sent over a contract to sign. You skim it — looks fine — and sign on the dotted line. Six months later, you discover they own everything you created, can demand unlimited revisions, and you can't work with anyone in their industry for two years.

This happens to freelancers every day. The problem isn't that contracts are inherently evil — it's that most freelancers don't know what to look for. Here are seven red flags that should make you pause before signing any freelance contract.

1. Blanket IP Assignment ("Work Made for Hire" on Steroids)

The most common — and most dangerous — clause in freelance contracts is overly broad intellectual property assignment. A reasonable contract transfers ownership of the deliverables you create for the project. A problematic one transfers ownership of anything you create during the engagement, including tools, templates, and pre-existing work.

Watch for language like "all work product, ideas, inventions, and materials conceived during the term of this agreement." This could mean that the blog post framework you've been using for years, or the code library you built before this client existed, suddenly belongs to them.

What to negotiate: Ensure the IP clause specifically lists deliverables. Add a carve-out for pre-existing IP and general tools/methodologies you use across clients.

2. Unlimited Revisions

The phrase "revisions until satisfied" sounds customer-friendly, but it's a trap. Without a defined number of revision rounds, a client can theoretically keep you working forever on a fixed-price project. Your effective hourly rate drops from $100 to $10.

What to negotiate: Specify the number of revision rounds included (two or three is standard). Additional revisions should be billed at your hourly rate. Define what constitutes a "revision" versus a "new request."

3. Non-Compete Clauses That Are Too Broad

Non-compete clauses in freelance contracts are often copied from employee agreements — and they can be devastating. A clause that prevents you from working with "competing businesses" for 12–24 months could effectively shut down your freelance career in your niche.

If you're a SaaS copywriter and you can't work with any other SaaS company for a year, you've just lost most of your potential client base for a single project's fee.

What to negotiate: Push back hard on non-competes. If the client insists, narrow the scope to direct competitors (named specifically), shorten the duration to 3–6 months max, and ensure you're compensated for the restriction period. Better yet, suggest a non-solicitation clause instead — it protects their specific clients without blocking your livelihood.

4. Vague Scope of Work

A contract that says "design services as needed" or "marketing support for the brand" without specific deliverables is a recipe for scope creep. Without clear boundaries, every request becomes "part of the project," and pushing back makes you look difficult.

What to negotiate: Insist on a detailed scope of work attached as an exhibit. List specific deliverables, quantities, and formats. Include a change order process for anything outside the original scope, with pricing agreed upon before work begins.

5. Payment Terms That Favor the Client

Watch for: Net-60 or Net-90 payment terms, payment contingent on the client's client paying them ("pay-when-paid"), or no late payment penalties. These clauses shift all the financial risk to you.

A particularly nasty variant: "Payment upon satisfaction." Combined with unlimited revisions, this means a client can theoretically keep requesting changes and never pay.

What to negotiate: Net-15 or Net-30 is standard for freelance work. Require a deposit (25–50% upfront) before starting. Include late payment fees (1.5% per month is common) and a kill fee for project cancellation. For larger projects, use milestone-based payments tied to specific deliverables.

6. One-Sided Termination Clauses

If a client can terminate the contract at any time without cause or payment for work completed, but you're required to give 30 days' notice and finish all pending deliverables, the contract isn't balanced. You could complete 80% of a project only to have it cancelled with no compensation.

What to negotiate: Termination rights should be mutual and symmetrical. If either party terminates, the freelancer should be paid for all work completed up to the termination date. Include a kill fee (typically 25–50% of remaining contract value) for client-initiated termination without cause.

7. Indemnification Without Limits

Indemnification clauses require you to cover the client's legal costs if your work causes a problem. Reasonable? Perhaps — if it's limited to issues directly caused by your negligence. But many freelance contracts include unlimited indemnification where you're responsible for any claim related to your work, regardless of fault.

Imagine a client misuses your design in a way that infringes a trademark. Under broad indemnification, that's your problem to pay for — even though you had no control over how they used it.

What to negotiate: Cap your indemnification at the total contract value. Limit it to claims arising from your actual negligence or willful misconduct. Exclude claims arising from the client's modifications to your work or their instructions.

The Bigger Picture

These red flags don't mean you should refuse every contract that contains them. They mean you should negotiate. Most clients include these clauses because they copied a template — not because they're trying to exploit you. A professional conversation about balanced terms usually leads to a better contract for both sides.

If you're unsure whether a specific clause is problematic, tools like FlagClause can analyze your contract in seconds and highlight exactly which clauses need attention. It's faster than waiting for a lawyer and more reliable than guessing.

Related reading: How to Review an NDA in 5 Minutes · What to Watch For in Contractor Agreements