Here's What's Missing from the "Do Freelancers Need a Contract Debate?"
There's been this longstanding debate in the world of freelancers about whether contracts are "necessary" for freelance work. The two sides of the argument are:
No folks who say you can just write everything in an email and get started
Yes folks who say a contract is the only way to make sure you don't get burned
In this article, I'm going to talk through the following:
What's missing from the do I or don't I contract debate
What the actual purpose of a contract is
How to know whether a contract is right for you
What's Missing from the "Do I need a contract" debate
The idea for this blog post came from an article by the Freelance Informer, a UK publication, published in January 2026. The article was reporting on a debate between freelancers that reportedly happened on LinkedIn. The two sides of the debate laid out their typical reasons for why a contract was or wasn't necessary.
The "no" folks said contracts slow things down, scare off clients, and that everything that goes in a contract can be done via email.
The "yes" folks said it's too risky not to have a contract. A contract is how you get paid and protect yourself.
But nowhere in the article did anyone, including the lawyer they asked, talk about the actual purpose of contracts and how that might factor into the debate of whether a contract is necessary. And this to me is a real problem.
Because how can you know whether you need a contract if you don't fully understand the purpose of it?
So before you decide which side of the debate you fall on, I thought it'd be helpful to outline the purposes of contracts, how those purposes play out in real life, and some things to consider in deciding whether you need a contract for a particular project.
Understanding the Purpose of a Contract
Contracts can accomplish a lot of things for your business, but they tend to serve two fundamental purposes:
They define the working relationship with your client
They allocate risk between the parties appropriately.
Defining the Working Relationship
The first purpose is often easier for folks to understand than the second. The way I tell my customers to think about it is that you want to include terms in the contract for the working relationship to go well. To do that, you need to consider what it is that you need from the working relationship to deliver your best work. Then you should consider what your client might need in order to feel satisfied with your work so that they're beyond happy to pay you.
Some of the things that come to mind for people are:
What your working hours are
How and when your clients can communicate with you
What information/accounts you'll need access to do to your job
What response time you'll need from clients to keep the project on time
How you will handle changes in scope or unexpected surprises during the course of the project
How you all will "break up" if it turns out the working relationship isn't a good fit.
All of these things help you set clear expectations with your client and lead to smoother operations during the course of the project, which ultimately results in fewer headaches for you and greater satisfaction on your client's end. As we know, a happy client is happy to pay your rates and also more likely to hire you again.
Allocating Risk Appropriately
The second purpose of a contract has to do with managing risks, both for your business and your client's. This purpose is a bit harder for folks to grasp because risk, especially legal risk, isn't a thing freelancers are familiar with. I've written a longer article on legal risk and why it matters, but for our purposes, just know that legal risk is the potential for financial or reputational loss due to failure to comply with laws and regulations that apply to your business.
When we talk about risk allocation in contracts, the first thing we have to do is identify which risks apply. For purposes of your business, you'll want to think about this in terms of general risks and legal risks. Here are some examples below:
General risks:
Not getting paid by your client
Scope creep
Reputational damage from an unhappy client
Legal Risks:
Losing rights to your intellectual property to your client
Getting sued by your client or a third party
The terms you put in your contract help you manage all these issues. For example, you can include terms in your contract that make it more likely that you'll get paid. You can also include terms that prevent scope creep and avoid project delays. Generally, it's a great practice to include procedures in your contract for how you'll handle unexpected issues. Doing so helps keep your client happy.
For legal risks, you want to consider what kind of intellectual property assets your business owns, not just your business name and logo, but also any methodologies you've developed to deliver your work or thought leadership you've done in your industry. All of those things are intellectual property assets that build the value of your company that you'll want to make sure you don't accidentally sign over to your client in a contract.
Similarly, while getting sued is a lower risk for solopreneur consultants and freelancers, if it did happen, it would be a huge financial strain. That means you want a contract that both further reduces your chance of getting sued and one that limits how much money you could lose in the case of a potential lawsuit.
Once you understand which risks you're most worried about, you start to understand what you might need to put in a contract to manage that risk in a way that's acceptable to you.
How to Know Whether a Contract is Right for You
In case you couldn't tell, the definitive answer to whether you need a contract is "it depends." It's not a clear cut yes or no, but it is an honest answer because whether you decide you need a contract in your business depends on a lot of things.
Here are some things you might consider when you're trying to figure out whether you need a contract:
Is there a certain dollar amount for a project that if your client didn't pay, you'd be really mad or in a financial bind?
For some folks it's anything over $500, for others it's over a $1,000. Figure out what your number is and maybe create a policy that any project at that dollar amount or higher requires a contract.
What's your risk tolerance?
Some people aren't worried about contracts simply because they have a higher risk tolerance, while other folks with lower risk tolerance want a signed contract for every single thing. Knowing what your risk tolerance is is usually a good indicator of whether contracts feel like a waste of time or a requirement.
Do you have a lot of assets to lose (both business and personal)?
If you own a ton of stuff, like cars, houses, investment accounts, intellectual property, client lists, etc., then a contract amongst other risk management tools is probably more of a requirement for your business. The more assets you own, the more you have to lose and the more precautions you need to take to protect what you've got. You can read about how assets impact your risk calculus here.
Are you still dealing with things like project delays and scope creep on a regular basis?
If so, a well written contract can help you avoid these issues so you can save time, take more projects, and most importantly stop working for free.
If you've read this and convinced yourself that you do in fact need a contract, then you'll want to check out my Fix-Your-Template Guide. It walks you through how to create a customized service contract tailored to your business needs.
