Contracts 101: Key Terms You Must Include in Your Design Agreement
Randall Carter
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Posted Jul 6, 2025
A strong contract is your project's foundation. Learn about the essential clauses—from scope of work and payment terms to intellectual property—that every design agreement needs to protect you and your freelancer.
Contracts 101: Key Terms You Must Include in Your Design Agreement
The Foundation: Parties, Project Overview, and Dates
Clearly Identifying the Client and the Designer
Writing a Concise Project Summary
Clause 1: Detailed Scope of Work and Deliverables
Defining the 'What': A Comprehensive List of Services
Defining the 'How': Final Deliverables and Formats
Clause 2: Payment Terms and Schedule
Specifying the Total Project Cost and Currency
Outlining the Payment Schedule (Milestones)
Including Late Fee Policies
Clause 3: Revisions and Feedback Process
Defining the Number of Included Revision Rounds
Process for Additional Revisions
Clause 4: Intellectual Property and Ownership
Transfer of Rights Upon Final Payment
Designer's Right to Portfolio Use
Clause 5: Termination Clause ('Kill Fee')
Conditions for Termination
The 'Kill Fee'
Putting It All Together
References
Contracts 101: Key Terms You Must Include in Your Design Agreement
A well-crafted contract is the most important tool for ensuring a smooth and successful design project. It prevents misunderstandings and protects both you and your freelancer. When you hire a designer, having a solid agreement in place sets clear expectations from day one. This article will walk you through the non-negotiable terms every design agreement should have, building on our discussion of payment models.
We'll also touch on intellectual property, which is covered in-depth in our guide to NDAs and IP rights. Think of this as your blueprint for creating contracts that work for everyone involved.
The Foundation: Parties, Project Overview, and Dates
Before diving into the complex stuff, you need to nail down the basics. This section might seem obvious, but you'd be surprised how many contracts fail because someone forgot to include proper contact information.
Clearly Identifying the Client and the Designer
Start your contract by listing the full legal names of both parties. Not nicknames, not company aliases – the actual legal names. Include complete contact information too: addresses, phone numbers, and email addresses.
Why does this matter? If something goes wrong and you need to enforce the contract, you'll need these details. Plus, it shows professionalism right from the start. Write it like this: "This agreement is between [Your Full Legal Name], located at [Your Address] ('Client'), and [Designer's Full Legal Name], located at [Designer's Address] ('Designer')."
Don't forget to specify that the designer is an independent contractor, not an employee. This distinction affects taxes, benefits, and legal responsibilities.
Writing a Concise Project Summary
After identifying the parties, include a brief project overview. Keep it to one paragraph that captures the essence of what you're hiring the designer to do.
For example: "Designer will create a new 5-page website design for Client's eco-friendly skincare brand, including homepage, about page, product catalog, individual product page template, and contact page."
This summary acts as a quick reference point. Anyone reading the contract should immediately understand what the project involves. Save the detailed specifications for the scope of work section – this is just the elevator pitch.
Clause 1: Detailed Scope of Work and Deliverables
This is the heart of your contract. A clear scope is your best defense against scope creep – that dreaded situation where a simple logo design somehow turns into a complete brand overhaul.
Defining the 'What': A Comprehensive List of Services
Vague descriptions lead to arguments. Instead of writing "design a website," break it down into specific tasks. List everything the designer will do:
Conduct UX research including user interviews with 5 target customers
Create low-fidelity wireframes for all 5 pages
Design high-fidelity UI mockups in Figma
Develop a 10-component design system including buttons, forms, and navigation elements
Create responsive designs for desktop, tablet, and mobile views
The more specific you are, the less room there is for misunderstandings. If the designer will create icons, say how many. If they're designing a logo, specify how many initial concepts they'll present.
Defining the 'How': Final Deliverables and Formats
Now spell out exactly what files you'll receive when the project wraps up. Designers work with various file types, and you need the right ones for your intended use.
Your contract should specify deliverables like:
Final, editable Figma file with all pages and components
Exported PNG files at 2x resolution for all screens
SVG versions of all icons and the logo
PDF presentation deck showing the design system
Written documentation explaining the design decisions
Include any specific requirements too. Need the logo in black and white versions? Put it in writing. Want the Figma file organized with proper naming conventions? Add that detail.
Clause 2: Payment Terms and Schedule
Money talk might feel awkward, but clarity here prevents major headaches later. This clause eliminates any confusion about costs, timing, and payment methods.
Specifying the Total Project Cost and Currency
State the agreed-upon fee in clear terms. Write out the full amount and specify the currency: "The total project fee is $5,000 USD" or "Designer will be paid an hourly rate of $100 USD, not to exceed 50 hours without written approval."
If you're using a fixed-price model, make it clear that this covers everything in the scope of work. For hourly arrangements, explain how time tracking and invoicing will work.
Outlining the Payment Schedule (Milestones)
Break down when payments are due. The most common approach for design projects is a deposit upfront with the balance due on completion. For example: "Client will pay 50% ($2,500) upon contract signing and 50% ($2,500) upon delivery of final files."
For larger projects, consider milestone-based payments:
30% upon contract signing
30% after client approves wireframes
30% after client approves UI design
10% upon delivery of final files
This structure keeps cash flowing for the designer while giving you checkpoints to ensure the project stays on track.
Including Late Fee Policies
Nobody likes chasing payments. Include a late fee policy to encourage timely payment: "Invoices not paid within 15 days will incur a 1.5% monthly late fee."
Also specify acceptable payment methods. Will you pay via bank transfer, PayPal, or another platform? Include any relevant account details or instructions.
Clause 3: Revisions and Feedback Process
"Can you just make one more small change?" These seven words can derail any design project. Your contract needs clear boundaries around revisions.
Defining the Number of Included Revision Rounds
Be explicit about how many rounds of revisions are included in the project fee. A revision round means you've reviewed the work, compiled all your feedback, and sent it to the designer in one batch.
Typical language might read: "The project fee includes two (2) full rounds of revisions. Client will provide consolidated feedback within 5 business days of receiving each design milestone."
Explain what counts as a revision round versus a new request. Changing a button color is a revision. Adding a new page to the website is a scope change.
Process for Additional Revisions
Sometimes you need more changes than anticipated. Your contract should explain how this works: "Additional revision rounds beyond the two included will be billed at Designer's hourly rate of $100/hour."
Set expectations about turnaround times too. Rush revisions might cost extra. Weekend work might not be available. Put these boundaries in writing so nobody's surprised later.
Clause 4: Intellectual Property and Ownership
This critical clause determines who owns the final design work. Get this wrong, and you might not actually own the logo you paid for.
Transfer of Rights Upon Final Payment
The standard approach in design contracts is simple: you pay in full, you own the work. Include language like: "Upon receipt of final payment, Designer transfers all rights, title, and interest in the final deliverables to Client."
This means once you've paid, you can use the designs however you want. You can modify them, trademark them, or even resell them (though that would be weird).
Be careful about the timing. Rights transfer upon final payment, not before. This protects the designer from clients who might use the work without paying.
Designer's Right to Portfolio Use
Designers build their careers on their portfolios. It's standard practice to let them showcase your project, with some reasonable limits.
Include a clause like: "Designer retains the right to display the work in their portfolio and marketing materials. Designer will not share confidential information or use the work in a way that competes with Client's business."
If your project involves sensitive information, you might restrict portfolio use until after your product launches. Or you might require the designer to show only certain portions of the work.
Clause 5: Termination Clause ('Kill Fee')
Sometimes projects need to end early. Maybe your priorities changed, or the working relationship isn't clicking. A termination clause explains how to end things professionally.
Conditions for Termination
Specify how either party can end the agreement. Common language includes: "Either party may terminate this agreement with 14 days written notice sent via email."
You might also include immediate termination conditions for serious issues like:
Breach of contract terms
Failure to meet deadlines after written warning
Disclosure of confidential information
Professional misconduct
The 'Kill Fee'
If you terminate the project early, the designer still deserves payment for work completed. The kill fee structure might look like:
"If Client terminates the project, Client agrees to pay for all work completed up to the termination date, calculated at Designer's hourly rate of $100/hour. The initial deposit serves as the minimum kill fee."
This protects the designer from investing time in a project only to have it cancelled without compensation. It also encourages both parties to think carefully before ending the agreement.
Putting It All Together
Creating a solid design contract doesn't require a law degree. Start with these five essential clauses and adapt them to your specific situation. Remember that a good contract protects both parties and sets the stage for a successful collaboration.
Before signing any agreement, both you and your designer should read it thoroughly. Don't hesitate to ask questions or negotiate terms that don't work for you. The goal is a fair agreement that lets everyone focus on creating great design work.
Consider having a lawyer review your contract template, especially if you're working on high-value projects. The small investment in legal advice can save you from expensive problems down the road.
Most importantly, remember that contracts are tools for clarity, not weapons. Use them to build trust and set expectations, not to trap or punish anyone. When both parties understand their responsibilities and feel protected, that's when the best creative work happens.